This is a human dressed as an imaginary Martian, we think. The book is about a fictional human trying to survive on Mars—and in the process showing how microeconomics work in the real world. Photo by Justin Sullivan/Getty Images
The Martian – Andy Weir
People conflate science fiction with fantasy all the time. Fantasy is magic, wizards, dragons. Stuff human knowledge has proven false. Sci-fi is “speculative fiction”—imaginative thinking about what the world could be like given what we know or can reasonably conceive of achieving.[i] It’s Isaac Asimov asking questions about artificial intelligence and elaborating those ideas in a narrative like I, Robot. It’s Margaret Atwood asking what humanity would do if we figured out a way to mass-manufacture animal organs for protein in Oryx and Crake, and so on. They can be imaginary case studies in microeconomics, and Andy Weir’s bestselling thriller, The Martian, is perhaps the best and most realistic example—one that helps shed light on the difference between “hard” and fantasyland economics.
Physicists read sci-fi, and actually a lot of economists do, too. This speculative narrative function tends to stretch and train the mind, to consider what could be—fathom the unfathomable. Indeed, in many sci-fi epics, economics is a key theme—how do corporations operate in an interstellar world? What is the nature of money in a world where people live to be 500 years old? In the book, Astronaut Mark Watney is stranded after his crew aborted the first ever manned mission to Mars. All he has are the resources left behind and the materials on the desolate planet to get a message back to earth and somehow survive in the years it will take for earth to send a rescue mission. It seems impossible, but page by page we watch him solve puzzles, using his available resources to conjure amazing things. It’s what they call “hard” science fiction. The book operates strictly within the constraints of current human knowledge and technology. And, it’s remarkably accurate (or, at least, so I’m told—I’m no astrophysicist) yet exceedingly compelling. As Watney works out botanical, physical and mechanical problems in detail, you’re on the edge of your seat to see if he can solve the next problem—survive.
Which brings me back to the reason I’m highlighting this in an investing column. The division between “hard” sci-fi and fantasy also explains a lot about “hard” economics and fantasy economics.
Today’s economic world is full of fantasy; theory that doesn’t remotely play out in reality. These kinds of ideas often mislead, are heavily politicized (on both sides) and reflect worldviews more than they reflect hard realities about economic life. Academia is generally the hotbed for pure form fantasy econ—it’s everything from bizarre monetary policies like quantitative easing and macroprudential regulation (terms which both sound like they belong in a fantasy novel), to imaginary utility curves in textbooks. It’s all fantasyland; the horror is when it’s brought to life by policy makers.
Fantasy economics is what pundits and ideologues debate ad nauseam. It hogs headlines and stirs emotions. Yet it has little practical application in the real world or for investors. What matters for investors is how policies and trends impact companies and people in the real world. Do they make life and commerce better or harder? Profits bigger or smaller? Lending faster or slower? Capital easier or harder to come by? That’s what firms adapt to, that’s what drives earnings, and that’s what markets ultimately price in over time. Not theoretical mumbo jumbo. Just cold, hard real life.
The Martian is hard economics of this type. It’s what economics, at its core, truly is. It’s dealing with scarcity, creating something new and useful, and getting more out of less over time (productivity)—all things we do on a daily basis, and the very things that drive growth and earnings over the long run. As we watch Watney utilize his scarce resources on the harshest environment conceivable, we’re watching real economics in action. They call this “engineering” in the book. Engineering is the mechanism, but economics is the driving force, and it in turn is powered by the same human creativity that has powered technological progress and capitalism for centuries. The Martian reduces economics to its barest because it involves one man and his environment. All that’s missing to round out the economic picture is cooperation among other individuals. Which is why this is maybe the best accidental introductory microeconomics book in history—and a parable to remind investors that the real world matters most. (Even if the real world happens to be a fictional Mars.)
Read it for fun, read it for physics, read it for economics. But for Jupiter’s sake, read it.
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[i] In making these two seemingly innocuous statements, I’ve likely angered the totality of both the Fantasy and Sci-fi sets. Nevertheless, I stand by this as a more or less, loose, definition about how to delineate the two.