The Star Wars films and universe might be some of the best sci-fi creations of all time --- and frankly, we’re biting our nails waiting for The Last Jedi to come out on December 15, 2017! But what makes these space films so great? As any super fan will happily explain, the movies are fun, the characters are relatable, and the stories are timeless. In fact, part of the reason we feel such a connection to the stories might be that the films were largely based on real-life history from our very own planet Earth.
The politics of George Lucas's galaxy got a bit convoluted in some films, but this article isn’t about to get into a fan battle over how far he went. Instead, to tide us all over until the next installment of our favorite franchise, we'll dissect the real historical basis for his iconic films.
While Lucas has said that the soul of Star Wars is mythological, a 2013 book called Star Wars and History, which was a collaboration between the director and a group of historians, identified the many historical leaders and events that inspired the sci-fi film universe. Among the diverse inspirations for the series were the Vietnam War, Ancient Rome, the Knights Templar, and the Nazi regime.
In fact, the stories that take place in the Star Wars galaxy even have a solid basis in economics! George Lucas carefully worked a lot of continuity into his series over the years, and he managed to succeed in tying all the stories together into a coherent universe. Let's see how he did it — viewing the films in the current chronological order.
In order to understand how the economy in the Star Wars Galaxy works, let's first clarify a few real-life economic terms.
Episodes I, II, and III: The Clone Wars
You may or may not remember the scene from Star Wars Episode I, where Qui Gon Jinn and little Anakin's owner, Watto, are bartering over the cost of a ship on the planet Tatooine. Qui Gon: "I have 20,000 Republic Dactaries."
Watto: "Republic credits? Republic credits are no good out here. I need something more real."
Qui Gon goes on to try and use his Force powers on Watto to take the fiat money, and let it be. Watto scoffs, "What, do you think you're a Jedi or something? Mind tricks don't work on me. Only money."
First and foremost, a "Fiat Currency" is money that holds no actual value. It's only valuable, because the government says so...like the US Dollar. During inflation, the value of fiat money can become worthless. You can look at Venezuela as an example of this. At the time this article was written, you can trade 8,493.97 Venezuelan Bolivars with only 1 US Dollar. That's pretty bad, and it's proof that fiat currency is not always the best way to go.
In the Star Wars Universe, fiat currency was introduced as the "Galactic Credit Standard". It was all started by the InterGalactic Banking Clan, which resides on the planet Muunilinst. You don't get to see these guys in the movies. They make an appearance in The Clone Wars animated TV series in Season 6 — episodes 5, 6, and 7, and become a huge plot point for everything that happens "behind the scenes" after Star Wars Episodes I, II, and III.
The thing about the InterGalactic Banking Clan was that they never took any political side. There were two sides — The Republic, and the Separatists. Since the money was made of Republic Credits, they could distribute as much as they wanted. This is called "war profiteering", and it has happened in every real-life war.
They are located in a neutral zone, similar to Switzerland's Swiss banks. The Banking Clan gave loans to whoever they wanted, because all they cared about was making a profit on interest payments. This is similar to banks in the real world. You won't get denied for a mortgage simply because you're a Democrat or a Republican. All the bank cares about is if you're paying back your loans on time.
It turns out that the Banking Clan was not holding any money in their reserve. They used the loan payments from one side of the war to lend to the other side, while they pocketed the interest. The bankers eventually get arrested for embezzlement, and there needed to be a new transition of power over the banks.
Just like in the real world, you can say that money is the root of all evil. Long story short, Senator Palpatine "saves the day" by gaining control over the "corrupt banking system". At the time, everyone was very happy about Palpatine's rise to power, but anyone who has seen all of the movies knows that this is bad news. Senator Palpatine is the man who eventually becomes the evil Emperor who manipulates Anakin to join the Dark Side. For the rest of the Clone War, Palpatine restored the bank to its neutral state, but this was just a "long con" in his larger master plan.
Episodes IV, V, and VI: The Rebels vs. The Empire
Enter: Emperor Palpatine. There are several similarities between Adolf Hitler's rise to power on the back of an economic crisis, and Emperor Palpatine's new seat of power. Many other strategies are very Nazi-like, and George Lucas did this on purpose. In Episode III, we see that he kills off all of the Jedi Knights, who would have been the only good guys left to oppose him. He convinces Anakin Skywalker to become Darth Vader, and everything begins to get a little crazy.
Once his Empire was established, Palpatine made is mandatory for all of the planets in the galaxy to begin using the Galactic Credit Standard. Only now, the name was changed to "Imperial Credits." This is similar to when a nation takes control over another, and forces them into using the winner's fiat currency.
This happened to countries in Nazi-Occupied Europe. They were forced to use "Reichsmarks", which was the currency created by the Nazi party. However, the Reichsmarks were not distributed freely among these newly occupied countries. While their original economies collapsed, they were slow to help re-establish the prosperity of these new territories until they officially won the war.
While it's never fully addressed in the Star Wars movies, this also seems to be the case. Despite the fact that everyone is using Imperial Credits, the common people still seem to struggle with money. The new economic system didn't stop the little scavenging Jawas from trading the scraps they find in exchange for goods and money on Tatooine. Han Solo had to resort to shady under-the-table deals in order to make a living, and finances seem to be a very tense topic of conversation on nearly every planet.
With control over the banks, Palpatine was able to basically print his own money. This is how he could afford to build The Death Star and all of the other ships that were necessary for maintaining control. Printing money out of nowhere causes inflation. As I mentioned earlier, inflation of fiat currency can seriously damage an economy, leading to a depression.
According to Zachary Feinstein, an assistant professor from Washington University of St. Louis, the Death Star would have cost the equivalent of $419 Quintillion US Dollars ($419,000,000,000,000,000,000) based on the estimated cost of materials estimated from the analysis of the Star Wars economic system. Wow.
After the Battle of Endor in Star wars Episode VI, the Empire was defeated. Luke, Leia, Han Solo, and Chewbacca all stand and receive their awards, and they all live happily ever after...Not so much.
Episode VI and Beyond
After the fall of the evil Empire, The Galactic Credit Standard no longer existed. Zachary Feinstein explains in-depth how the economy would have collapsed. In order to prevent the economy from collapsing, Feinstein says, there would have had to be a bailout of 15 to 20% of the entire galactic economy, in order to keep it afloat.
Planets began distributing their own currencies. Without one big empire to unite them, this made trade more difficult, and the overall economy of the galaxy suffered. Just like the economy of Germany after the end of World War II, it would take years for Europe to recover.
On Jakku, the planet where Rey lives in the beginning of Episode VI, she scavenges for metal parts, and trades them in for portions, or food. To be specific, they were "poly starch bread" and "veg-meat" packets left over from food rations used for the members of the Empire's military. They would have been scavenged from fallen Imperial ships. In real life, NASA has been working on the technology to figure out how to preserve food during multi-year missions into space, which is going to be very important, if humans actually colonize Mars. So, hopefully, Rey's meals are at least just as fresh as they were 20 years earlier.
In a dire economic situation like Rey experiences on Jakku, it’s nearly impossible for someone to escape a life of poverty. If our history offers an indication, any economy where people suffer becomes an easy target for dictators to take over, if they can offer a solution. In The Force Awakens, we can already see that the mysterious Snoke manipulated Kylo Ren over to the Dark Side, and that he’s leading a new army. The impoverished galaxy is primed for a new dictator.
But where did the money to build this army come from? And how will this affect the galaxy? We really look forward to finding out more in The Last Jedi.