Star Wars: The Galactic Economy and the Real World

May 25th this year was the 40th anniversary of the first Star Wars film. Fans of the franchise may wonder what Luke and Co have to do with economics, but if you study the films and look beyond the quirky creatures and the fantasy storylines, you’ll notice that the Star wars story is underpinned by an economic and political system that mirrors the real world. At its most basic, it is economic problems that lead the Empire into war. That is something we are familiar with.


The galaxy and the global economy

To start with, the Star Wars economy is galactic in scope –a situation similar to the globalised economy—and it is based on the working principles of modern trade. For example, planets trade products and services and the trade routes traverse multiple galaxies. This planets based at major intersections on these trade routes tend to do best, and there are plenty of real world examples that match this. Think of where Hong Kong and Singapore are located in Asia, the position of Dubai in relations to Europe, Africa and Asia, London’s location as a bridge between North America and Europe and the list goes on. It also goes way back in time to trade routes like the Silk Road and the Incense Route of antiquity. Cities along these trade routes grew in prosperity and some of them had a monopoly on specific products.

In Star Wars, Bothawui is poised at the crossroads of four trade routes, This makes it a popular meeting place and a venue for trade negotiations. The intergalactic firms operate across several planetary systems – think Microsoft, Coca Cola and all the global businesses we have today that operate in the same way.

The Corporate sector and free zones

It also has a Corporate Sector, which is really like a free trade zone and it has a simplified tax code compared with other parts of the Empire. To make trade easier they also have trade agreements and consortiums that wield political and economic influence. In the real world, we have the Pacific Trade Agreement, the WTO, the EU and EFTA amongst others that act in the same way. And, there is the Intergalactic Banking Clan – a parallel universe for the IMF, ECB and World Bank?

The German economy of the 1930s

George Lucas, the creator of Star Wars based the Galactic Empire’s economy on that of Nazi Germany. As he pointed out, both emerged on the back of an economic crisis. If you watch the films with that in mind, you’ll see other similarities, including the compulsory military service that made both ‘states’ ready for war. The Death Star station is a war machine and there is a dedication to building military might across the Empire that strongly echoes 1930s Germany.

A Military Industrial Complex

And as in the real world, the planets on the Outer Rim of the system are more oriented towards agriculture, design technology and the further out the planet from the centre, the more primitive its economy. Their distance from the power of a Military Industrial Complex, which results in them having weaker economies reflects the situation in the real world.

If you thought Star Wars was just a bit of fun entertainment, perhaps you’ll watch the whole series again and realise that George Lucas was giving us all a lesson in world economics, in the most entertaining format he could come up with.


I hope you enjoyed this and found it useful. Please subscribe to my blog if you’d like to receive an alert when I post new content.


London – a home for entrepreneurs and entertainment


London is the world’s leading financial centre and has been for some time. A 2017 global study by Z/Yen of the world’s finance cities shows that London still holds the top spot despite the uncertainty about the future after the ‘Brexit’ vote to leave the European Union. In response to the findings of the report, which placed New York, Singapore, Hong Kong and Tokyo behind London in the top five places, London’s deputy mayor explained why the city continues to dominate the financial world: “No other city can provide its unique environment for business success: access to the best talent from around the world, an abundance of high-quality office, co-working, start-up spaces, excellent connectivity, and an entrepreneurial and innovative environment.”

For me, his description captures the essence of London and why it attracts people from all over the world to work there. It has been able to recruit and retain the best global talent and there is a key historic reason regarding that.

Why London became a leader in finance

London got in early at the birth of modern capital markets and English Common Law was the first to impose regulations on the dangerous practice of fractional reserve banking. At the same time, the City of London boys were always looking at innovation in finance. The establishment of the Bank of England in 1694 turned the City into a financial centre and it is the place where modern banking was born, even if we have to go back a few hundred years. The development of Britain’s Empire helped it to gain great wealth and its aggressive traders and money men created an environment unmatched in other places.

Now London also has Canary Wharf annexed to the City and its financial businesses have continued to benefit from being located between America and Asia. Plus, its language is English, which is the international language of business, it has excellent centres of education and it’s in “a country with a high level of technological innovation and well-developed infrastructure, being in a country with a recent history/tradition of liberal economics and being in a country where the Law is strong and corruption, though ever present, doesn’t entangle business with too much risk and uncertainty,” says City analyst and writer Richard Guy.

There are also three good reasons that London will maintain its status after the UK leaves the EU. These are, says Simeon Djankov at Biznews:

  1. The pre-eminence of the British court system in upholding the rule of law, including the protection of creditor and shareholder rights.
  2. The superiority of the UK’s university education in economics and finance over its continental counterparts.
  3. The UK’s tax and employment regulation that is conducive to the industry’s health and profits.

London’s culture nurtures entrepreneurs


I would add a fourth reason: London is extremely conducive to nurturing the entrepreneurial spirit; there is a vibe in London that anything is possible and people flock here to make their dreams happen. This is all supported by the rich culture of London: you can attend the Royal Opera House and on the way home drop into the currently fashionable ‘speakeasy’ bars opening up around Hoxton and Shoreditch, a hub of modern art and high tech start-ups. It has its West End theatres with world-class shows on the doorstep of Chinatown and Soho’s piano bars, some of which date back to the 50s when jazz became popular. Most of all, it has a kind of cosmopolitan mix that seems to spur people on to make what might seem impossible elsewhere happen. And, London has always welcomed this attitude and celebrated it, and I feel confident it will continue to deliver both a top-class service to finance and business, as well as make a major contribution to global culture.