Think Tank: The Economics of Death Star Planet Destruction

How does Death Star planet destruction affect the Empire's GGP? (That's Gross Galactic Product.)


What? You expected us to have a discussion of economics of empire without bringing up Marxist-Leninism?

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.


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!


What? You expected us to have a discussion of economics of empire without bringing up mercantilism?

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.


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?


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.

Price discrimination, and droid discrimination, in action

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.


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.


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.


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