An Economic History of the Fall of the Galactic Empire

My dear brother,

I’m sending you this message from a small settlement on Kashyyk. For whatever reason, these Wookiees tolerate me for now. I can cook an excellent bantha surprise without getting hair in it. That seems to please them. I’m thankful for sanctuary in relatively neutral territory. A coalition claiming to be the New Republic lists my name among the thousands they wish to capture and try for war crimes, because I once worked for the Empire as an economic adviser. I also hear rumblings of a so-called First Order, fanatics loyal to the defunct Empire who would flay me alive for treason.

So for now I stay hidden.

But even if I have to stay in exile, the truth about the Imperial downfall doesn’t. Whoever comes next to rule the galaxy needs to know: the Empire was not defeated by a self-taught Jedi or a pathetic fleet of misfits, but by its own towering hubris.

Here is what almost no one seems to have put together: The Death Star’s destruction was inevitable even if the Rebellion never attacked it. I will explain myself, but first, some background.

At the time, I worked in the Imperial capital with hundreds of other advisers, and I can tell you with certainty that the destruction of the Death Star came as a complete shock to everyone but me.

That is to say, I was the only one in my circle who did not harbor delusions of the Empire’s invincibility. It’s not that I’m an expert on battle station design. I knew nothing at the time of its particular fatal weakness. My clairvoyance was not due to any special knowledge of the Death Star itself. My study of chaotic systems and risk, and especially my knowledge of what the Death Star project truly cost, made the conclusion unavoidable.

The linchpin of the whole thing, what made its construction possible while simultaneously guaranteeing its doom, was the Imperial credit currency. Oh, yes, it was “backed” by the formidable assets of the InterGalactic Banking Clan same as the Republic credit it replaced, but there was a key difference. The IGBC was nationalized after the Clovis scandal. Nearly everyone remembers this as the Emperor squashing corruption, but this was also the moment the definition of “backing” started to get… fuzzy.

No one really cared that IGBC began minting credits without enough shares of stock to redeem them. After all, anyone who wished to cash in his credits for shares of stock in IGBC, a banking behemoth now sponsored by an invincible Emperor, was never turned down. Things seemed to be humming along as they always had. They only resorted to this practice because Vader demanded a permanent and practically infinite line of credit, at a low interest rate, for the Emperor and the industries that served his military. The currency had to flow no matter what.

The Empire could now marshal the funds for enormous projects without raising taxes on a single world. This was very popular. Most thought I was crazy for protesting. I was even brought before Vader to voice my objection, and I made my point as ferociously as I dared. Have you ever been lifted off the ground by an invisible Force that grabbed you by the throat so hard you thought your entire neck might snap? Consider it a small mercy that the Jedi are finally extinct.

It is now cold comfort, but history has vindicated me. What I told Vader, and what I’m telling you now, is that the Emperor’s banking maneuver had a price. The energies of the people of the galaxy were redirected away from whatever they had been doing, and into extremely expensive endeavors that could never be completed. The new system only made them appear viable. A day would come, I said, when trillions of people, the Empire itself included, would discover they had been putting their sweat and treasure into costly projects that had no future. All would suffer a lot of unnecessary pain and loss as they tried to reorient themselves and figure out where they went wrong.

And the Death Star was the mother of all these costly projects. Its name was only passed along in whispers, but nothing escaped the fearsome shadow of Stardust. Farmers became machinists and Stormtroopers. Construction crews stopped building apartments and started building barracks and dormitory megaplexes. Shipyards that once built commercial freighters refit to produce ever more massive starliners for the wealthy and Star Destroyers for the military. Tailors became arms dealers. Worlds once known as bread baskets of the galaxy were strip mined for Death Star construction materials. And most people participated willingly in this demolition of their livelihoods because it was so financially rewarding at the time. In the years it took to construct the Death Star, the banking and industrial titans of the galaxy enjoyed record profits which showed no sign of slowing. Even industries not connected with the military were booming.

It seemed like the Empire could do no wrong, but just as I risked my life to tell Vader, all this apparent prosperity was only sowing the seeds of the Imperial system’s destruction. As the construction of the first Death Star drew to a close, the first cracks started appearing. Without a steady stream of massive orders for raw materials, worlds that had retooled from agriculture into mining were left with giant useless plains of bedrock where their farms used to be. Now accustomed to being doted upon by the Empire, they demanded aid and they got it. The builders of the housing megaplexes were finding they overbuilt; it was tough to get tenants now that staffing for the secret project was winding down. A shortage of customers for huge starliners threatened to bankrupt the shipyards. For being such good servants of the Navy and the Stormtrooper corps, these too received aid from the Imperial throne.

This seemed to quell the galaxy’s worries for a few months, even in spite of Alderaan’s destruction. But all confidence in the new Imperial order exploded into dust with the first Death Star. The Rebel Fleet only proved in a sudden shock what the Galaxy already knew: the Empire had deprived its subjects of their futures, even when they thought it was giving them a new one.

Such is the way of the Dark Side, I suppose.

In the turmoil following the incident at Yavin, trillions of citizens made a run on the IGBC banks. The Empire was reeling, but the Banking Clan had stood for millenia so how could they be insolvent? Or so went the thinking at the time. But by then, Imperial credits outnumbered IGBC shares fifteen thousand to one.

The response of the Emperor was a masterpiece of economic malevolence. In his thirst for power, he was creative, patient, and absolutely ruthless. He immediately outlawed the use of other money instruments. Citizens everywhere had their bank accounts drained to bail out his favored industries, and the Imperial credit was severed entirely from Banking Clan assets. Billions of people lost their jobs, their homes, and their savings all in the same year. The Emperor blamed this on the terrorism of the Rebellion, and started an indentured service program whereby people worked directly for the Empire to avoid destitution.

And that is how the Second Death Star was built by an army of slaves. The entire galactic economy had become Palpatine’s to command. The black market, which had already been huge under the tightly restricted pre-Death-Star economy, absolutely exploded under these conditions. Did you ever notice how almost everybody seemed to know a smuggler or a hitman?

By the time Skywalker killed them, the Emperor and Vader were already walking dead. A slave economy cannot support a whole galaxy. The capacity of hundreds of worlds had been demolished to feed the Emperor’s thirst. Governors, sick of watching their people work themselves to starvation to feed Coruscant, began to peel away. The Empire, the biggest lie ever told, had been found out. Had the last Jedi joined them he would have ruled over ashes.