A fundamental challenge for large scale space development, and a singularly unwelcome one, is that no one has yet managed to come up with a fully convincing economic rationale. The one that came closest was the first, Arthur C. Clarke's 1945 proposal for a space station to serve as global communications relay and weather observation platform. Everything Clarke predicted has come true, except that it is all done by unmanned satellites - a great idea come to grief because of too much technical progress.
All other prospects remain problematic at best, dubious at worst. Burt Rutan and Virgin Galactic may yet make a go of suborbital tourism, but however cool in its own right (especially for those with $200,000 to spare), this falls at least an order of magnitude short of providing orbital capability, the precondition for going anywhere else.
Space based solar power faces the problem that once solar cells are competitive at all, it is probably cheaper to make more of them and install them on the ground. The classic space industry in SF, mining, is so profoundly speculative that it is a bit iffy even in the context of Romance.
But a discussion over at SFConsim-l led one poster to offer a brilliantly simple workaround: Who needs economic rationality? After all we have had recent and impressive evidence that human beings can be deeply irrational when they see a glint of profit. The amount of money poured into bad real estate investment in the years leading up to the Great Recession is surely in the trillions. You could develop some impressive space hardware with that kind of money.
(The real credit for this conceptual innovation apparently belongs to SF writer Alexis Gilliland, who developed it in his Rosinante novels.)
Speculative economic bubbles are as old as capitalism. The first classic instance was the Dutch tulip mania of the 1630s; at the peak of which a single tulip bulb sold for ten times a skilled worker's annual income, in modern terms about half a million. England's South Sea Bubble, which gave this phenomenon its name, peaked in 1720, and the 'South Sea' (which meant the Pacific) is richly evocative of outer space.
Among the suckers who got taken to the South Sea cleaners were the Bank of England and Sir Isaac Newton, who ruefully observed that "I can calculate the movement of the stars, but not the madness of men." The South Sea Company also spawned numerous imitators during its brief heyday, including one that offered a prospectus for the ages: A company for carrying out an undertaking of great advantage, but nobody to know what it is.
The project that launches the bubble does not need to be plausible, it merely needs to sound plausible. Helium 3, anyone? Wonder drugs from Mars or Europa? Luxury condos in orbit? The possibilities are limited only by greed, naïveté, and imagination. You as a writer need only supply the imagination; your characters, ably assisted by human nature, will provide the greed and naïveté.
Even a bubble needs something to bubble up from, which for this purpose would likely be a foundation of technical progress. From that point bubble psychology takes over. A vast space infrastructure is built built, and keeps being built so long as the promise and profits seem endless.
But eventually the market realizes (belatedly, for most investors) that the profits will not in fact be forthcoming, at least not as big or as quickly as expected. Everyone rushes for the airlocks; most will not make it. (I mean this figuratively, but a literal instance might be part of the larger drama.) The bubble pops and collapses ... and a lot of space hardware ends up on the second hand market, selling for pennies on the dollar.
And thus you get cheap spaceships. As was noted in a recent comment thread, the cost models I use all deal with overall average cost, which is by no means the same as what an individual customer pays at a given moment. A ship may have cost my standard $1 million per ton to build, or a lot more, but in the aftermath of a bubble it may sell for an awful lot less as the owner ditches it in the aforesaid rush for the airlocks.
Bubbles all have a rather similar life cycle, but they vary in their aftermath. Sunny quarter acres in Florida swamps or California deserts may never be worth much of anything, but new technology investments can end up being worth quite a lot, even if it is too late for the original investors. The Internet bubble of the late 1990s really did transform the Internet, and a space bubble really could transform the Solar System, as all those ships that sold for pennies on the dollar end up being put to useful work, profitable to their new owners.
There is in fact an argument that bubbles are intrinsic to technical progress, an argument that has been made specifically about Apollo - not an economic bubble in the classical sense, but a 'societal bubble' of cultural enthusiasm, out of proportion to any near term payoff. When technology creates entirely new possibilities, no one knows at first just how much those possibilities will be worth, and the time and effort needed to do the previously impossible can easily be underestimated.
(I'm indebted to a commenter whose own blog or profile linked the above - I can't give due credit, because I don't recall whose comment it was, and haven't managed to find it again in the comment threads. If it was yours, don't hesitate to comment on this post, to claim due credit.)
So, pour some champagne and raise a toast to bubbles!
The image above, from Astronomy Picture of the Day, is of course not an economic bubble, but represents our galactic corner, including the Local Bubble. This is a region of space, in which the Sun currently resides, that has been largely cleared of interstellar matter, perhaps by an ancient supernova. (Which, among other things, kind of spoils Bussard ramjets.)