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Can The Powerful 'Star Wars' Trade Federation Exist In Real Life?

If Chewbacca lives on Endor ...

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Launch Of Star Wars Attraction At Madame Tussauds

(Photo by Stuart C. Wilson/Getty Images)

In the “Star Wars” movies, the Trade Federation was a powerful conglomerate that controlled interstellar commerce. It had its own private military and even had a seat in the Galactic Senate. It used its power and influence to control prices, force one-sided trade deals with planets, and even control local politics.

The most well-known example of the Federation’s power was when it used its warships to blockade the planet Naboo in response to a Senate law that would impose taxes on the Free Trade Zones. This resulted in the Galactic Republic dispatching Qui-Gon Jinn and Obi-Wan Kenobi to negotiate with the Trade Federation viceroy in the beginning of “The Phantom Menace.”

While the Trade Federation’s machinations are complex, with others calling the shots behind-the-scenes, it still takes gumption for a private company to challenge the government, especially using force. Would any large company in this galaxy have the power and influence to issue a similar challenge to government power?

Today, the Trade Federation would be considered a megacorporation. As the name suggests, it is a very large and powerful corporation or business entity. But it also has significant political power. It may be able to ignore or break laws mainly because governments do not have the power to enforce their laws against it. They set up their own rules and have their own private army powerful enough to topple governments.

Examples of megacorporations are mostly in fiction and portrayed as evil. They include Omni Consumer Products (OCP) from the “Robocop“ movies, the Shinra Corporation from the “Final Fantasy 7” video game, and the Mishima Zaibatsu from the “Tekken” series. A more benevolent example could be Marvel Comics’ Stark Industries, headed by Tony Stark (aka Iron Man).

But there are two real life examples of a megacorporation that existed during the 17th century. The first is the Dutch East India Co. (also known as the Vereenigde Oostindische Compagnie or VOC) which began in 1602 and lasted until its dissolution in 1799. The Dutch government granted VOC a monopoly on the spice trade in Africa and Asia for 21 years. It later had the right to make treaties and conduct military operations. The VOC had its own military (10,000 soldiers and 40 warships) at its peak.

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The other example is the British East India Co. which was founded in 1600 by a group of prominent merchants and explorers and dissolved in 1874. It was given a trade monopoly by Queen Elizabeth I. As the company grew, it not only had control of the spice trade in parts of Africa and Asia, it also engaged in slave trading. It had its own armed forces of 260,000 soldiers — twice the size of the British army at the time. This army was used to conquer and control India. At its peak, the value of the British East India Co. was believed to be $7.8 trillion in today’s dollars.

The idea of the Trade Federation was inspired by both the VOC and the British East India Co.

Today, the world has changed to the point where megacorporations like the Trade Federation are not likely to exist. First, most developed countries disfavor monopolies and have antitrust or competition laws that prevent large companies from unreasonably restraining trade or prevent competitors from entering the market. Also, colonialism is frowned upon today although a few countries are either thinking about it or are simply going for it, regardless of what other countries threaten to do in response.

Lastly, large public companies today are unlikely to spend large amounts of money on private armies or “security expenses.” While they may spend significant amounts of money to protect their famous CEOs, shareholders and investors will not be happy with the company spending billions to purchase mercenaries, tanks, and bombs. And even if they were to have large private armies, governments will easily make short work of them, either with their own military forces or with the assistance of their more powerful allies.

But that doesn’t mean large companies are powerless. While they may not have military might, they may be able to cripple local economies or manage the flow of information which may upset residents and voters.

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For example, a few months ago, when Minneapolis considered passing a law requiring a minimum wage for rideshare drivers, both Uber and Lyft threatened to stop services in the city. This may look like Uber and Lyft throwing out the baby with the bathwater. But they are anticipating that the action will disrupt the city’s transportation and upset both local residents and passengers. They have done this in the past.

When the city of Austin passed an ordinance in 2016 requiring drivers to be fingerprinted in order to protect passengers, Uber and Lyft suspended service in the city for a year. The suspension was lifted when the rule was overturned. Newly formed alternative ridesharing apps in response were poorly received due to frequent crashing.

Google and Meta are threatening to take action against governments that force them to pay news sites for their content. Google has removed links to California news websites in reaction to a proposed law that would require it to pay a royalty to news publishers. This move has been criticized for supporting censorship while suppressing journalism and democracy.

Similarly, Facebook has blocked links to news sites in Canada in response to the Online News Act, which requires companies like Meta and Google to pay news sites for linking content. This move has been criticized for preventing the spread of crucial information, particularly during disasters and for negatively affecting local news sites.

Today, the chances of a conglomerate like the Trade Federation being formed in this galaxy is as likely as the Death Star. But companies seeking world domination have other means to challenge the government.

Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at stevenchungatl@gmail.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

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