Star Wars: The Economics Of The Galactic Empire

The eighth episode in the Star Wars saga, The Last Jedi, released in theaters around the world in December 2017. Continuing the stories of Rey, Finn, Poe, and Kylo Ren, fans are ecstatic to see their favorite characters come back in Rian Johnson's film. (See Also: Why Is The Star Wars Franchise So Valuable?)

With its themes of intergalactic travel, colorful sets, and quirky creatures, the fantasy series might seem far-fetched to people who can't tell the difference between Tatooine and Jakku, but in fact, the Star Wars saga is underpinned by an economic and political system inspired by and derived from real world events. On the face of it, Star Wars may be an action film; but it is economic strife and imperatives that precede and inform the physical act of war. That dang Trade Federation! 

The scope of the Star Wars economy is galactic and governed by the precepts of modern trade. In this system, planets exchange products and services with each other. Trade routes traverse multiple galaxies and planetary systems. Not surprisingly, planets located at intersection 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 trade in technology and, because of its location, is a popular venue for trade negotiations. 

There are thousands of currencies used on individual planets between different races and society, but both the Republic and Empire supported galactic credits. These credits were useful on most inner rim planets, which were closer to economic and trade hubs. Once a ship got further into space and into the outer rim of planets, credits would lose their value, as governments hasn't taken over these more wild planets. This is most evident when Qui-Gon Jinn attempted to buy parts for Padme's ship from Watto, but Watto refused to take republic credits since they were no good in the middle of nowhere. In Jakku, where Rey grew up after being abandoned by her parents, she worked as a junker, selling parts to Unkarr Plutt for portions of food, because the only thing that matters on a planet with so little development is eating enough to stay alive. 

Much like multinational corporations, whose operations span multiple economies and geographies, intergalactic firms operate across several planetary systems and sectors. But their manufacturing operations are primarily based in the Corporate Sector, which functions as a free trade zone of sorts. Located in the Outer Rim, the Corporate Sector was established to free industry from the political wranglings and machinations of the Senate. The Corporate Sector's tax code is a simplified version of individual planet tax codes. Companies with operations in the sector paid a single tax to the Republic and, subsequently, the Empire. In fact, under The Emperor, the corporate sector's operations expanded to include 30,000 planetary systems and a Corporate Sector authority was established to administrate the sector.

To make trading easy, several organizations inked trade agreements and consortiums to maximize profit and wield important political and economic influence within the Senate. The Commerce Guild, which pursues trader and business interests, is the most powerful such guild. Two of its most powerful members are the Trade Federation and the Intergalactic Banking Clan. As its name implies, the Trade Federation is a consortium of businesses and traders and the Intergalactic Banking Clan is a bank system that controls finances in major parts of the Republic. The latter played a prominent part in the Confederacy of Independent Systems (otherwise known as the Separatist Alliance) that broke away from the Republic during the Clone Wars. Together, both organizations were responsible for propelling Darth Sidious to the top. 

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 dubious but there are several theories regarding this.  

In his novel Darth Plageuis, James Luceno outlined a possible reason for the Naboo invasion: plasma energy. According to Luceno, Naboo was rich in plasma and had a major mining and refining facility financed with a loan from the Intergalactic Banking Clan. The planet sold plasma energy to the Trade Federation at fixed prices who, in turn, 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 logical sense. Remember, Naboo was situated in the Outer Rim of the galaxy and, probably, had little to no taxation. Taxation of trade routes would have increased transportation costs for members of the Trade Federation and cut into their profits. 

That said, the economic pretext for the blockade was simply an excuse for the Trade Federation, which was under the influence of Darth Sidious (who had been posing as Senator Palpatine of Naboo), to invade Naboo. The invasion set off a chain of events that led to Palpatine being crowned Supreme Chancellor and then declaring himself as Emperor.

Here's how it went down: Palpatine voted for the trade routes to be taxed, giving the Federation a reason to invade Naboo, which had the effect of making the current Supreme Chancellor (Valorum) look weak. Valorum was stripped from office with a vote of no confidence (basically they impeached him) and Palpatine was elected out of sympathy for the hell his home planet of Naboo had been through. Eventually, Palpatine would convince the senate (in a move spearheaded by Jar Jar Binks) to give him emergency powers to deal with the ongoing separatist crisis, which, of course, Palpatine had masterminded himself. With these new powers and with the Jedi dispatched following Order 66, Palpatine had little trouble asserting himself as Emperor and reshaping to galaxy in his image.

Star Wars creator George Lucas once said that he incorporated aesthetic and thematic elements from Nazi Germany into his vision of the Galactic Empire. That comparison is interesting because both the Galactic Empire and Nazi Germany came into being on the back of 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 a readiness for war and its military might. The National Labor Service mandated that each German male would have to complete, at least, 6 months compulsory training at the organization. Typical tasks  during the tenure included planting forests, digging ditches on farms and building a network of motorways (the Autobahn was constructed during this time). During this time, the size of the German army increased from 100,000 to 300,000. Even as that number ballooned, the country's other industries, such as energy and agriculture, suffered. Trade unions were also banned during this time and everyone was required to enroll a central labor organizations controlled by Nazi chieftains. In addition, the Nazi party of course was known for its commitment to "purity" of race, meaning that anyone without white skin, blonde hair, and blue eyes wasn't welcome in their world.

The Galactic Empire had a similar economy that was ready for a state of war. The Death Star, which was a space station that doubled up as a war machine, is the perfect example of this. It consisted of state-of-the-art weapons systems and artillery. In addition, entire planetary systems within the mid and outer rims are dedicated to the construction of clones and war machines. Whilst the Star Wars prequels make numerous mentions of trade unions in the Republic, such references are absent in the original trilogy. As such, it is probable that they were banned by the Galactic Empire (or George Lucas hadn't thought of it yet). In fact, the production process for machines was not labor intensive. Instead, it is a process dominated by droids themselves. As an example, Star Wars Episode II: Attack Of The Clones provides a glimpse of humanity's machine-dominated future in a scene during which Padme, Anakin Skywalker, C3PO and R2D2 are nearly killed trying to make their way out of a droid manufacturing factory on Geonosis.

Interestingly, as one moves away from the Inner Rim, the economies became less oriented towards machines. In the Outer Rim planets, other industries, such as energy and agriculture, dominate. This is reflected in the differences between their architecture. For example, Coruscant, which is located in the Inner Rim, is a fairly modern society with skyscrapers and flying cars. Outer Rim-located Tatooine is a fairly primitive society in comparison with structures made of coarse, rough sand and an economy dominated by agriculture.  The difference in their fortunes is testament to the economic power of a Military Industrial complex, one which relies on constant production of machines and systems to prevent.