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The Economics of the Galactic Empire

The ninth episode of the star wars saga, “The Rise of Skywalker,” premiered in theaters worldwide in December 2019. The film continued the stories of Rey, Finn, Poe, and Kylo Ren. Fans were thrilled to see their favorite characters return in this JJ Abrams movie.

With its intergalactic travel themes, colorful settings, and quirky creatures, the sci-fi series might seem wacky to people who can’t tell the difference between Tatooine and Jakku. In fact, the star wars saga is underpinned by an economic and political system inspired and derived from real world events. But the economy of the Galactic Empire can sometimes seem as mysterious as the ways of the Force. Without a galaxy full of taxpayers, how does the Empire get money to fund the manufacturing and deployment of new fleets of Star Destroyers and planet-killing superlasers like the Death Star? Apparently, the dark side economy is more efficient than supply-side economy.

Key points to remember

  • The economy of Star Wars is galactic and governed by the precepts of modern commerce, where planets exchange goods and services, and the intersection of trade routes benefits the nearest planets.
  • There are thousands of currencies used on individual planets, but Republic and Empire support Galactic Credits.
  • The manufacturing operations of Multi-Planet Enterprises are mostly based in the Enterprise Sector, which functions as a sort of free trade zone.
  • Several organizations have signed trade deals and set up consortia or guilds to maximize profits and exert influence within the Senate.

The Similarities Between the Galactic Empire and the Modern World Economy

The scope of the Star Wars economy is galactic and governed by the tenets of modern trade. In this system, the planets exchange products and services with each other. Trade routes cross several planetary systems. Not surprisingly, planets at the intersections of major trade routes benefit from their location.

For example, Bothawui, a planet located in the Mid Rim of the galaxy and referenced in the Clone Wars animated series, is located at the intersection of four major trade routes. It is known for its technology trade and, due to its location, is a popular venue for business negotiations.

Not all Mid Rim planets are used for trade. Some are places of theft and looting. One example is Kijimi, a frigid, mountainous planet that is home to the Kijimi Spice Runners, a group of smugglers.

There are thousands of currencies used on individual planets and by different societies. However, both the Republic and the Empire supported the Galactic Credits. These credits were useful on most planets in the Inner Rim, closer to the economic and trade hubs.

Once a ship went further into space and reached the outer rim of the planets, the credits would lose their value. This problem is most evident when Qui-Gon Jinn attempted to buy parts for Padme’s ship from Watto, but Watto refused to take credits from the Republic. This seems somewhat unrealistic, as US dollars can be exchanged for local currency almost anywhere on Earth. Maybe Republic Credits couldn’t be used on Tatooine because of punishments against planets that violate the Republic’s anti-slavery laws.

On some planets, economic development was so primitive that barter dominated trade. In Jakku, where Rey grew up after being abandoned by her parents, she worked as a junker. She sold coins to Unkar Plutt for servings of food instead of money. The only thing that matters on such an undeveloped planet is eating enough to stay alive.

Some economists have speculated that Rey’s profession alludes to an active recycling economy in the interplanetary system. It does not reject raw metals. It focuses on designed and engineered components, which means the Star Wars economy places a high premium on finished goods rather than raw metals. (In this respect, they are no different from the human race, which places more value on finished products.) Furthermore, economists have pointed to the fact that constant warfare leads to the destruction of metal; therefore, there must be an abundance of metal in space.

A sectoral economy

Just like multinational corporations, whose operations span multiple economies and geographies, intergalactic businesses operate across multiple planetary systems and sectors. However, their manufacturing operations are primarily based in the corporate sector, which functions as a free trade Area all sorts. Located in the Outer Rim, the Enterprise Sector was created to free corporations from the political machinations of the Senate. The corporate sector tax code is a simplified version of the individual tax codes around the world. Companies operating in the sector paid a single tax to the Republic and then to the Empire. Under the Emperor, the operations of the corporate sector expanded to include 30,000 planetary systems, and the Corporate Sector Authority was created to administer the sector.

To facilitate trade, several organizations have signed trade agreements and set up consortia to maximize profits and exert influence within the Senate. The Trade Guild, which pursues trade and commercial interests, is the most powerful of these guilds. Two of its main members are the Trade Federation and the Intergalactic Banking Clan. As the name suggests, the Trade Federation is a consortium of businesses and traders. The Intergalactic Banking Clan is a banking system that controls finances throughout most of the Republic. The latter played a leading role in the Confederacy of Independent Systems (otherwise known as the Separatist Alliance) that split from the Republic during the Clone Wars. Both organizations supported Darth Sidious unaware that he was simply using them to gain power as Chancellor Palpatine.

How Naboo’s economic blockade turned the republic into an empire

In response to increased taxation of trade routes, the Trade Federation blockaded the planet of Naboo with a fleet of battleships. The exact reason for the blockade is uncertain, but there are several theories about it.

In his novel Star Wars: Darth Plagueis, James Luceno described a possible reason for Naboo’s invasion: plasma energy. According to Luceno, Naboo was rich in plasma and had a large extraction and refining facility funded by a loan from the Intergalactic Banking Clan. The planet sold plasma power to the Trade Federation at fixed prices. In turn, they marked up the prices for a substantial profit.

Luceno’s novel is no longer part of star wars canon following Disney’s restructuring of the extended universe, but it makes sense. Remember that Naboo was located in the outer rim of the galaxy and likely had little to no taxation. Taxation of trade routes would have increased transportation costs for Trade Federation members and reduced their profits.

That said, their blockade was just a pretext for the Trade Federation to invade Naboo. The Trade Federation was under the influence of Darth Sidious, who was also Senator Palpatine of Naboo. The invasion set off a chain of events that led to Palpatine being named Supreme Chancellor and declaring himself Emperor.

Here’s how it happened: Palpatine voted to have trade routes taxed, giving the Federation a reason to invade Naboo. This had the effect of making Supreme Chancellor Valorum appear weak. Valorum was removed from office by a vote of no confidence (basically, they impeached him). Palpatine was later elected out of sympathy for the suffering of his home planet of Naboo. Eventually, Palpatine will convince the Galactic Senate (in a move led by Jar Jar Binks) to give him emergency powers to deal with the ongoing Separatist crisis. Of course, Palpatine was also behind the Separatist movement as Darth Sidious. With these new powers and the Jedi eliminated as a result of Order 66, Palpatine had no trouble settling in as Emperor and reshaping the galaxy in his image.

The Star Wars Economy and Nazi Germany

star wars Creator George Lucas once said that he incorporated aesthetic and thematic elements from Nazi Germany into his vision for the Galactic Empire. This comparison is interesting because the Galactic Empire and Nazi Germany came into existence following an economic crisis.

In fact, there are several economic and political similarities between Nazi Germany and the Galactic Empire. For example, Nazi Germany was characterized by its will to war and its military power. The National Labor Service demanded that every German man must undergo compulsory training within the organization.

Typical tasks during national service included planting forests, digging ditches on farms, and building a network of highways. The autobahn was built around this time and Hitler set himself the goal of increasing the size of the German army to 500,000. Trade unions were banned and everyone had to register in a controlled trade union center by Nazi leaders.

The Galactic Empire had a similar economy that was ready for a state of war. The Death Star, which was a space station equipped with a planet-destroying superlaser, is the perfect example of this militarization of the economy. It consisted of state-of-the-art weapons and artillery systems. Additionally, entire planetary systems within the Middle and Outer Rims were dedicated to building clones and war machines.

While the star wars the prequels make numerous mentions of unions in the Republic, such references are absent from the original trilogy. As such, they were probably banned by the Galactic Empire (or George Lucas hadn’t thought of that yet). In fact, the production process of the machines did not require much labor. Instead, it was a process dominated by the droids themselves. As an example, “Star Wars: Episode II – Attack of the Clones” provides a glimpse into humanity’s machine-dominated future. In one scene, Padme, Anakin Skywalker, C-3PO, and R2-D2 are nearly killed trying to break out of a droid manufacturing facility on Geonosis.

Interestingly, as one moves away from the Core Worlds, economies have become less machine-oriented. On planets in the Outer Rim, other industries, such as energy and agriculture, dominate. This difference is reflected in the architecture. For example, the Core World Coruscant is a high-tech society with skyscrapers and flying cars. The Outer Rim planet Tatooine is a relatively primitive place by comparison. On Tatooine, many structures are made of adobe, and moisture farmers survive by producing water. The difference in fortune testifies to the economic power of the powerful central government based on Coruscant.

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