Lee

What’s the economic calculus behind the Empire’s tactic of A) building a Death Star, B) intimidating planets into submission with the threat of destruction, and C) actually carrying through with said destruction if the planet doesn’t comply?

Doesn’t the Empire take a huge economic loss from the lost productivity of an entire planet? They were presumably paying taxes and providing resources to the rest of the Empire. Presumably the loss of that planet’s output would have to be made up by increased output from other planets that were either slacking in productivity due to rebellion or threatening to rebel and withdraw from the Empire altogether. It doesn’t seem to make good economic sense.

McNeil

This is a pretty standard imperial tactic for dealing with rebellion. The Romans would do this in the eastern empire every once in a while. A city would become a hotbed of rebellion, threatening to pull other cities into the action. The Romans would wipe out that one city, no matter how wealthy (Palmyra comes to mind) to put any other potential rebels on notice. Kind of like a mastectomy. You lose one productive part of the body in order to keep cancer from spreading.

As America has learned in recent years, chasing down rebels is hard. One key part of our strategy, preventing the Taliban from sheltering inside Pakistan, has failed completely because so many Pakistanis welcome the Taliban. Imagine if we’d just nuked every town in Afghanistan in 2001. Pakistan would be a lot more hesitant to shelter them. Of course, the American people wouldn’t have accepted that course of action and the Afghans and Pakistanis knew it.

To my mind, this is why the rebels are on Hoth in the second film. Palpatine, the absolute monarch, had a new apocalyptic technology. Like Truman and Hiroshima, he need to prove to everybody that he was willing to use it. He nukes Alderaan and so all the habitable planets have turned the rebels away – too afraid of the Empire’s new weapon. Why else would the rebels set up shop in such an inhospitable place? There’s not a planet with Cancun-like weather anywhere in the Empire?

This dichotomy is why I don’t think you can have a democratic empire. You need an unaccountable monarch to make the ruthless decisions required to hold disparate cultures together.

As for the economics, it really depends on the number of planets in the empire. Based on the number if representatives in the senate we see in the prequels, there are hundreds of planets in the empire. The loss of Alderaan hurts, but is better than letting the rebellion spread to other planets. That would require long-term occupations in several places, and even in this long-ago, far-away place, Halliburton’s prices are steep.

Perich

War in general makes poor economic sense. Thousands of lives are lost and millions of man-hours are spent producing things that will break, explode or be exploded. Even the shittiest factory in the world at least produces crappy T-shirts. It may produce them at a higher cost than would justify the operation of the factory, but at least at the end of the day there’s some shirts.

The strategic calculus of the Death Star, on the other hand, may be more rewarding.

One of the more effective negotiation tactics, from a game theory perspective, is to convince your opponent that you’re crazy enough to do something stupid. An example is the purchase manager who’s willing to walk away from a 6 month negotiation process if one measly line item in the contract isn’t changed. This would cost both the buyer (him) and the seller (the other party) lots of money! That’s crazy! But if everyone believes that this one guy will jettison an entire deal just because one detail doesn’t please him, then people start paying attention to him.

The more famous pop culture example is Dr. Strangelove. The Russians have built a Doomsday machine that will blanket the world with radiation if a nuclear weapon goes off at certain Russian targets. This is crazy. The loss of the entire world hurts the Russians much more than the loss of Stalingrad would hurt them. And yet, if the Doomsday machine can’t be turned off, the U.S. has no choice but to back down.

The Death Star is clearly that kind of negotiating threat. The loss of an entire planet hurts the Rebellion, but it probably hurts the Empire too. And yet if the Emperor can show that he’s committed to vaporizing an entire planet, that makes open revolt a very frightening proposition.

Fenzel

I always assumed the Death Star was primarily designed as a cost-cutting measure. Consider the discussion between General Tagge and Grand Moff Tarkin:

TARKIN: The Imperial Senate will no longer be of any concern to us. I have just received word that the Emperor has dissolved the council permanently. The last remnants of the Old Republic have been swept away. TAGGE: That’s impossible! How will the Emperor maintain control without the bureaucracy? TARKIN: The regional governors now have direct control over their territories. Fear will keep them in line. Fear of this battle station.

There is a political angle here, of course – the Emperor doesn’t want to share power, so he abolishes the Senate. But there’s an economic angle, too.

It’s pretty clear at this point the Emperor can do pretty much whatever he wants. He could have installed puppets in the Senate. He could have continued to dominate it and made an ongoing token effort to deal with their bullshit (which is really what government is all about and why conquering the world isn’t as fun or sexy as it sounds). He could have installed some sort of other system or infrastructure to support, you know, a galactic empire. One person, even with Dark Side force powers, can’t rule too many people at once. He can maybe manage a team of 20-100 people, and that’s assuming he has some small degree of magical mind control at his disposal.

For the Empire to actually exist as an institution, it needs to have the mechanisms in place to exist – namely, donks like Queen Amidala and Senator Jar Jar Binks who basically just sit around and handle boring government work. And you also need people everywhere. Like, if the Emperor controls everything, he needs to make sure every Speeder Registry office in every settlement on Tattooine has somebody working the counter except during major Imperial holidays. And he needs to pay them something (they can’t all just be clone slaves – that’s clearly not how the Empire works). If you don’t pay your people, they tend to first, be lazy, second, take bribes and be likely to betray you, and third, leave their posts or actively conspire against you.

To maintain order, the Emperor would generally need a MASSIVE, MASSIVE bureaucracy. The Old Republic built up a serviceable one over thousands of years, but that took a lot of time, money and effort, and in the end it was bloated, ineffective, and ultimately subverted against the Old Republic.

The more you spend on bureaucracy, the less control you have directly over your Empire. The less you spend on bureaucracy, the more you have to tighten your grip, and the more star systems slip through your fingers.

So, the Emperor and Tarkin focus on making one really huge, high-impact investment: The Death Star. They throw in Alderaan as part of that investment. This doomsday weapon will supposedly free up their resources to spend less on administration, personnel and infrastructure, and continue to function without a Senate. It seems like a big investment until you realize how much they save by not actually having a functioning government.

This is an attractive option even today, as politicians look to pay for tax cuts and handouts to core constituencies by laying off or cutting salaries and benefits for bureaucrats and government workers, as well as by skimping on infrastructure.

The problem, of course, is that it doesn’t work. The underpaid, undermotivated, poorly managed stormtroopers can’t even track down the Empire’s most wanted fugitive androids in an extremely sparsely populated area where they have undisputed control. If Tatooine still had meaningful senatorial representation and local government, Luke never would have gotten off the planet. Whole systems just break away and form not just a resistance, but a giant frickin’ fleet of spaceships that destroy not one, but two death stars. The failure of leadership is so total and complete that Tarkin is killed in his own fortress and the Emperor is murdered in his own office by his own right-hand man.

It’s a lot like assuming having nuclear weapons will allow you to dictate policy and control people and places pretty much for free. In reality, to control a place, you have to spend a lot of resources, no matter how powerful you are. Because people will continue to have problems and complain even if you threaten to kill them, and not dealing with those problems, no matter how strong you are, eventually leads to the failure and collapse of your administration.

The Death Star is a cheaper solution to the problem of projecting imperial power across the galaxy, but cheaper solutions are worthless – and turn out to be much more expensive in the long run – if they don’t work.

Stokes

Mark’s question assumes that every planet has a trade surplus. In the case of Alderaan, at least, that probably isn’t true. The whole point of empires, according to the classic Leninist line, is that they sustain an unrealistically high standard of living for the bourgeoisie and the plutocrats back home by exploiting the cheap labor and undeveloped natural resources of the conquered territories.

Empires need two things to sustain themselves: new markets for manufactured goods, and new exploitable sources for raw materials. A third element, not mentioned by Lenin AFAIK but presumably necessary, is a well developed military industrial complex back home to help turn those gas reserves/indigo plants/poppies into kerosene/fabric dye/opium in such a way as to profit the elites. Blowing up Alderaan is not much of a loss by this way of reckoning. It’s part of the galactic first world: there’s no new market, no new stock of raw material to be found there. And from what little we see of the planet, it’s not a *crucial* part of the Empire’s infrastructure. (one doesn’t imagine that the emperor – a sane one, anyway – would offer the same treatment to Geonosis). By reducing the number of citizens, the Empire can increase the per capita benefit to its remaining citizens.

Furthermore, let’s remember that Alderaan isn’t GONE. It’s just blown up. Suddenly all the metallic elements that were languishing away in the planetary core are floating around in the void, ripe for the plucking. And anyone who can plausibly claim to have owned them is dead. You can build a lot of Death Stars with that much tungsten. Well, not even a lot — but maybe one. Like any military industrial complex, it’s a self perpetuating cycle: if you’re going to build battle stations the size of planets, you’re going to need to harvest planets’ worth of resources to build them.

Perich

Are the mineral resources really there, though?

We don’t know how exactly the Death Star works, but it does blow a planet apart. It turns it into chunks. Han Solo drops the Millennium Falcon out of hyperspace at what he presumes is a safe distance from Alderaan and is instantly surrounded by debris.

While it does take a lot of energy to dig into a planet’s crust and pull its precious minerals out, I’d presume it takes more energy to fly around in space and catch the minerals when they’re distributed at random over an area 100,000x in volume.

That said, I like Stokes’s reasoning on the relative macroeconomic value of Alderaan. From a strict resource-management perspective, Alderaan’s probably a net importer of goods. Blowing them up reduces demand. That lowers prices for the exporting worlds, which sucks for them – but the Empire probably sets prices by fiat anyway!

Fenzel

Stokes is a little too mercantilistic in his appraisal of the galactic economy for my taste. Places that generate demand, provide skilled workforces and developed infrastructure, and drive final demand are really important for an economic system – and not just as loci for exploitation. And it’s not like everybody in a developed market shares the prosperity and income of the elite – and that all the poor people are on the outside when you’re making the distinction between home turf and foreign conquest. There are a lot of poor people in rich places. The Roman Empire was really good at exploiting Italians – it’s not like everybody in Italy was high on the hog while the provinces did all the work.

I don’t doubt there were a lot of people up shit’s creek economically when Alderaan went away. Anybody off-world who owned anything lost everything, any supply chain that involved it was wrecked.

But trade surpluses and deficits aren’t really that important. Productivity and demand are also important, as is the loss of capital.

So I think the loss of Alderaan is a pretty big loss economically – it’s not trivial.

But isn’t the Galactic Empire this vaguely huge collection of hundreds or thousands of worlds? So in that way, it doesn’t hurt that much.

And also, I feel pretty strongly that we as contemporary Americans are all way more attuned to very small economic changes than is generally useful. Economic trends have a lot of noise and not a lot of signal, and they tend to play out over long periods of time. Plus, and I hate to be insensitive, but people make do with a lot more or a lot less, and if they have bigger things to worry about, they’re often glad to get by.

So, say the destruction of Alderaan is a shock that brings on a galactic recession that lasts a couple of years. We would be screaming about it, but what does that really mean to the Emperor? We’ve already established he doesn’t even really care about governing his Empire effectively. The larger questions of whether to build a Death Star or to reinvest in more ships and personnel makes the loss of Alderaan pretty insignificant to him even if it does affect a bunch of people’s livelihoods who didn’t live there. And then that all, in turn, is insignificant next to the power of the Dark Side.

Lee

Back to the point re: trade surpluses, I don’t know if my original question assumes that every planet has a trade surplus. But to your point about how empires exploit resources from conquered territories, well, that’s what you see with Coruscant (trade deficit; takes from outer worlds–how can it not? The entire surface of the planet is developed) and places like Alderaan (trade surplus, has natural resources and commerce that are exploited by the Empire). Or am I missing something here?

Fenzel

We have no idea whether Coruscant runs a trade deficit or surplus, because we have no idea what it exports or what kind of value is added by its manufacturing infrastructure.

We also don’t know anything about the importing and exporting of services in developed areas of the Galactic Empire, we don’t know much about how Emperor Palpatine collects or diverts public funds, and we don’t know much about entities on Coruscant that may own affiliates on other planets, and how or whether the value of the product of those affiliates accrues to the home planet.

Just because our own economy is pretty industrial, imports a lot of resources, and runs a trade deficit, that doesn’t mean ever developed economy that imports a lot of resources runs a trade deficit.

We also would want to compare the growth in any trade deficit to growth in consumption and government and business purchases of domestically produced goods and services.

One thing I’d add that makes this a lot more complicated is that in the Star Wars universe in particular, a lot of major projects with economic impact seem to happen deep in outer space. How does this affect the economies of planets? How do they administer their payment systems? Spaceships sometimes seem really cheap, at other times they seem really expensive – we meet a lot of smugglers and small-time merchants who happen to have access to spaceships, but do enough people have access to spaceships for there to be significant private participation in the economic activity around a major deep space project? The fact that Mos Eisley is pretty small seems to hint that the economies of the major planets aren’t very mobile – that you can’t, say, hop in a shuttle, go out and set up a magazine stand next to a Death Star construction site, and wire the money home to your family, like you can at, say, a U.S. military base in Afghanistan.

So this would make it seem like at least by the time of the Empire, the government is handling most of the big economic projects itself – that you have a huge shift in the economy between Episode III and Star Wars OG Proper where the private economy kind of collapses and the government is really the only game in town.

This would indicate that, were the rebellion not to overthrow the Emperor, the Empire probably would have run into a hyperinflation crisis, especially in areas where the Empire procured supplies, technology and manpower to run its big projects. Either that or you’d have to see some major advances in technology and infrastructure on the private level so that you’d run into, say, more Alderaanians doing business on and around the Death Star.

With the private economy really in the shitter and the government running the show, this would lessen the apparent impact of the loss of Alderaan a lot, because its capacity utilization was probably really really low. It would be a big loss in growth potential, but not a big loss in regular growth, because being run by an insane dictator with the powers of evil magic was preventing the free flow of capital to places like Alderaan where it might be used productively by private enterprise.

McNeil

I don’t remember what happens to them in the end, but the prequels introduced the trade federation, a guild-like, racially insensitive, enterprise with a seeming monopoly on all interplanetary trade. If we can assume that Palpatine co-opted the federation system, then the entire empire operates on a early version of mercantilism – something akin to the Dutch East India Company. It actually makes sense, considering that the only people we see engaged in trade in the imperial era are smugglers (Han Solo), bounty hunters (Boba Fett), crime lords, (Jabba the Hutt), gray-market independent business operations (Lando Calrissian), and the Empire itself.

Fenzel

This also dovetails with the idea of the Empire’s economy not being all that sophisticated – being heavily based on mercantilism and guilds, very protectionist, and not really making the most of its very advanced technology or huge diversity of member planets.

Lee

Thanks guys, you answered my question. And then some.