The Galactic Empire was the ruling government for the entire Star Wars Galaxy between the years 18 BSW4 and 4 ASW4, and continues to control several worlds within it. Since the Yuuzhan Vong invaded this number has dwindled considerably. The Empire portrayed in the films in evil, there can be no dispute there, George Lucas created it to be evil and therefore it is, however the times outside the films are out of his control. In the years that followed the Empire reformed greatly, outlawing slavery and xenophobic practices, but maintaining a very efficient way of ruling.
The Empire is what replaced the old Galactic republic
when it collapsed. The republic collapsed slowly as the bureaucrats took over, its death was sealed when the Chancellor
, was given emergency powers to pass laws without consent of the senate. This is the same way Adolph Hitler
became the dictator
Palpatine began secretly training Dark Jedi, among them was Anakin Skywalker, who became Darth Vader. Palpatine sent these agents of evil out to destroy the Jedi Order. This was completed, sans two, (Yoda and Obi-wan Kenobi). The Jedi gone, Palpatine had no physical opposition.
Palpatine managed to stay in power by creating an almost perpetual war. He was elected into power so he could create a Grand Army of the Republic, to combat the separatists. However, he was also the leader of the separatists. Eventually he allowed the Republic to defeat the separatists, because a new threat to his regime had emerged. The Rebel Alliance.
Palpatine declared a new state of emergency and extended his power again. At this time he was still seen by the masses to be benevolent, but he was slowly creating a system of ruling by fear. The rebels had noticed this and were attempting to put a stop to it. It was around now that he began to refer to himself as emperor of an empire. The Empire was born.
The Emperor commissioned the building of the two Death Stars, the first was designed for the purpose of ruling by fear, but was destroyed by the rebels in SW4, the second Death Star, built in SW6, was designed for taking down the rebels. In a grotesquely arrogant plan, the rebels were lured to the construction at Endor, but were ultimately victorious. The Emperor was killed by his henchman Darth Vader, but would have died anyway when the Death Star was destroyed.
The Emperor had created a very efficient meritocracy within the military and bureaucracy, ensuring that very intelligent and loyal people were at the top. Unfortunately these people were power-hungry and after the death of the Emperor the system almost fell apart in the struggle for power. The assumption the Rebels had made was it would simply be a cleaning up job after the Emperor died, but in fact the Empire lived on.
The system of ruling remained the same, Moffs Governed sectors etcetera, but the position of overall ruler changed hands fairly frequently. The first leader after him was Dark Lady Lumiya, who rallied the Empire against some hostile invaders. Then power fell to Yssanne Isard, who was successful for a while in unifiying the Empire, but ultimately she lost Coruscant and power and the Empire was split between various warlords. The most notable being Grand Admiral Thrawn.
Grand Admiral Thrawn was a tactical genius who very nearly lead the Empire to success, however he was thwarted by his bodyguard, who turned against him. Thrawn was really the last hope for the Empire. It is true however, that the Emperor himself was resurrected as a clone, but the clone was mad and stopped by Luke Skywalker and his sister. After that the Empire became very fractionated, only reunited when the various squabbling Warlords were executed by Admiral Daala. She was defeated when she tried to attack the Jedi Training Academy. She handed power over to Admiral Pellaeon, who was Thrawn’s second in command. After years of keeping peace in the Empire, he eventually signed a historic treaty with the New Republic, approximately 19 ASW4.
The Empire retained many planets that preferred the more efficient style of governing, it is no longer evil, and is semi-democratic. However, with the invasion of the Vong, the Empire lost many of the worlds under it’s control. It is currently allied with the New Republic in fighting against the invading aliens, but, like the New Republic, it is losing badly. The fate of the Empire remains undecidedd.
The Empire originally worked on a system of advisors and a ruler. The Emperor would make the final decision, but the senate could influence it. He would call the senate and listen to their opinions, then give his, and let them argue it with him. This was not necessarily fair though, because he had at some point gained great skill in the dark side of the force and so could influence their minds. However the much of the senate was falling under the sway of a young senator named Leia Organa, from Alderaan and he suspected (correctly) that she was involved with the Rebel Alliance, this lead to him permanently dissolving the senate just prior to SW4
A new system was devised by a governor named Tarkin. He proposed a system where the Galaxy is divided into sectors according to the amount of rebellion going on in them. Each sector would be ruled by a Moff and would contain several star systems, the Moff would collect taxes and enforce the New Order and would answer to a Grand Moff. A Grand Moff would be in charge of several sectors, and would answer to the Emperor himself. Moffs would also have the power to control the military in their sector, but could be overruled by a Grand Moff.
But there was much corruption, Moffs could be bribed and often followed personal agendas, rather than working for the good of the Empire. The Emperor however, had another plan. He wanted to know that worlds would fall in line, so he commissioned the building of a superweapon, a space station so powerful that it could destroy a planet. The Death Star. After demonstrating it by destroying the peaceful planet of Alderaan, he intended never to use it again. He believed that the mere ability to destroy worlds would be enough to bring the Galaxy fully under his control. However the Rebel Alliance managed to steal the plans for the Death Star and found a weakness. The managed to destroy it, much to the Emperor’s rage.
The Empire has a largely nationalised economy, it has a policy of taking businesses by force to fund its war effort. At the beginning of SW4 Luke mentions that the Empire is looking a little closely at his uncle’s farm. This is because the water farming industry there was making a substantial profit, and the local Moff, Tarkin, had decided that the industry was worth enough to be integrated into the Empire.
The Empire had very large expenses, if you consider the amount of Storm troopers they have to pay and the amount of Star Destroyers they need to pay for it isn’t cheap, a single TIE Fighter costs 30,000 credits. And that is just the military budget. The Empire did not, however, have extortionate taxes. People living under the Empire were reasonably comfortable, the Empire paid through the huge businesses it owned. In a large galaxy there are almost unlimited resources, and therefore the Empire was able to create jobs to make itself more money.
But resources alone are not enough. The Empire also needed workers for its huge construction projects such as the Death Star. The Emperor’s own xenophobia helped here since he could legalise slavery and allow the kidnapping of what he saw as the lesser species such as Wookies. The Empire has since illegalised slavery, but is still able to support itself by restricting it’s military construction.
Sources: www.starwars.com, the movies, the books