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artisanal film reviews | by maryann johanson

question of the day: How would the economy in Harry Potter’s world differ most significantly from our own?

I stumbled across an article at The Economist recently headlined “The Harry Potter economy.” How cool is that?! I thought: a serious economics magazine is extrapolating upon the economic implications of magic. That is some mega-geekery.

As it turns out, the article is just another rundown of the money side of the Harry Potter franchise in our muggle world: how rich Rowling is, how much money the books and movies have made for everyone involved, etc., including a sweetly baffled section on fanac — fan fiction, fan films, that kind of thing — that appears to believe that active, creative fandom was invented by imaginative 12-year-olds around 2003 or so.
Anyway, the article got me thinking: Well, what about the economy in Harry Potter’s world? Clearly, Rowling gave it some major thought. There’s not only money in the wizarding world, and shopping — significant portions of some of the books take place in Diagon Alley, the wizard shopping mall — but also class issues: there are rich wizards and poor wizards, so obviously being able to do magic is no guarantee that you’ll be well off. (Are there unscrupulous witches and wizards who use their powers to gain muggle wealth? What do wizards and witches think of muggle wealth? Does it somehow not “count”?)

What do you think? How would the economy in Harry Potter’s world differ most significantly from our own?

(If you have a suggestion for a QOTD, feel free to email me. Responses to this QOTD sent by email will be ignored; please post your responses here.)



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  • Psyclone

    I believe it was Chamber Of Secrets that mentioned that it was possible to exchange “Muggle Money” for wizard currency. However, said exchange rate must be quite imbalanced since wizards have very little use for Muggle technology. They’d probably only use Muggle money to buy stuff like food or furniture. Using magic to accumulate Muggle wealth (the first thing that came to my head was using Vanishing to create a waste disposal company) would probably not be worth it since you’d have to keep it up for a long time to get a decent amount of wizard money which by then the Aurors would probably be breaking down their door for violation of the Statute of Secrecy.

    (Man, this is possibly the geekiest thing I have ever written)

  • Tony

    I actually started to wonder about the supply and demand chain after watching the Order of the Phoenix. How do they get the supplies to build and maintain the ministry of magic? Is there a magical sweat shop where underage witches and wizards are forced to produce cheap goods?

  • Isobel

    Well, there is a big underclass in Harry Potter – all the other magical beings. No-one needs money to pay for servants, ’cause they’ve got house elves. I can only assume that the Ministry of Magic was used using a fair amount of slave labour from other magical beings (I think Rowling makes a comment about the irony of the golden statue in the middle of the entry hall? It’s been a while since I’ve read it and I’m at work so no books to refer to!).

    I suppose, seeings as magic has been around in the Harry Potter world for it’s whole history, wizards and witches accumulated wealth in the same way as muggles did, so I don’t think there really would be that much difference. I’m not even sure it would be easier to get money be nefarious means – I expect there’d be some kind of magical something or other that would identify a real galleon from a fake!

    Interesting thought Psyclone about having to use muggle money for food etc – I don’t think Rowley mentions any farmers in the magical community, and they don’t create food out of nothing.

  • Brian

    I love The Economist and really enjoyed that article in the Holiday edition. This is an even cooler topic, since I am both a geek and an economist. :-)

    First of all, I think the points made by Psyclone and Isobel about the interaction between the Muggle and Wizard economies are spot on. Rowling doesn’t show us much about the lives of most wizards outside Hogwarts, but I imagine that a great many of them live smack in the middle of the Muggle population and interact quite frequently, for precisely the reasons Psyclone and Isobel mentioned: They need everyday goods. Furthermore, I think they’d have a pretty easy time getting the resources they need for just about anything — going to Tony’s question. Why? Gold.

    Since the Wizarding world’s currency is still on a gold standard – indeed, it’s literally gold, I must conclude that even a relatively poor wizard is spectacularly wealthy in Muggle money. As of today (Jan. 22), gold is worth somewhere in the neighborhood of $1100 USD per ounce. If just one golden Galleon is indeed pure gold, you can imagine how handy that would be if you wanted to head down to the Muggle supermarket to buy your groceries.

    Of course, you can’t just walk into the market and pay in gold, so you have to have some kind of exchange method. And since you can’t have wizards walking into Muggle banks with piles of gold all the time without raising suspicion, then Gringotts must have some underground way of interacting with Muggle financial markets. I suppose that Wizards could magically counterfeit Muggle money, but it’s much more interesting to consider the possibility that the Wizarding economy is subtly and profoundly interacting with the Muggle economy.

    There would obviously be a mutual interest in the Wizard and Muggle financial worlds to protect the value of gold. If the Wizarding world needs Muggle resources to maintain the huge Ministry bureaucracy, and to preserve the complex network of secrecy necessary to keep them hidden from Muggles (not to mention the everyday needs of wizards) then they’d want to keep the price of gold as high as possible. Meanwhile, you can imagine the economic turmoil that could be unleashed if the staggering quantities of gold in the Gringotts vaults started flooding the Muggle markets. Both sides would want very tight control over the interaction of markets.

    So, it makes sense that the Wizarding bank would be in London, the financial capital of the world. It would furthermore make sense that it’s mutually beneficial for Muggle bankers and Gringotts goblins to keep the interaction totally secret, save for a select few people in the highest echelons of the Muggle banking world. (Just as the Ministry of Magic maintains a secret connection to the British Prime Minister’s office, which not even the PM is aware of at the start of . . . oh, one of the books.) Thus, the Wizarding world maintains its vital purchasing power, the secret nature of wizardry is preserved, and the Muggle markets are able to keep the price of an emergency economic resource and investment vehicle high.

    Wow, thanks for posting this, MaryAnn. I’ve flexed my brain more in the 30 minutes it took to reason that out than I have all week!

  • Brian

    Oh, one more point: My thesis begs the question, “If wizards are so gold-rich, why do some of them (e.g. the Weasleys) seem poor?” Same reason as Psyclone mentioned. They’re on a different standard, mostly, as Muggle technology is mostly useless to them and they have their own social and economic hierarchies. They just have a different set of expectations about their standards of living, just as our standards of who is “rich” and who is “poor” in the US are very much different than they are in, say, West Africa.

  • Bluejay

    That’s impressive, Brian, seriously. I wonder if J.K. Rowling thought this all out, or if she just lucked into a scenario that happens to make economic sense?

  • Brian

    @Bluejay: I suspect it’s a little of both. Whatever the case, it’s fun to think about!

  • Isobel

    Apparently JK Rowling spent a vast amount of time setting up her world (although perhaps didn’t go into the economies in any great detail). I would love to get my hands on all that background sort of stuff for a nosey.

  • fett101

    I imagine that a great many of them live smack in the middle of the Muggle population and interact quite frequently,

    I’m not so sure about that. Take the instance where Mr. Weasley has to take Harry to the Ministry of Magic via muggle means. He has issues handing money, using turnstiles, etc etc. Perhaps this is just a Mr. Weasley thing but it’s often mentioned how he is one of the few who deals with muggle technology. The magic world seems to try and keep itself as separate from the muggle world as possible. Even more so in the case of the elitist class, such as the Malfoys.

    Perhaps there are a select number of wizards who’s sole purpose is to act as muggle/magic liaisons? Or maybe there are magical farmers and ranchers? There is a herbology class after all, and the Weasleys do have a garden where they grow some food.

  • Brian

    @fett101: Good point about Mr. Weasley, the muggle tech comments, etc. We have only read about a select few people in the Wizard community who do live in relative isolation, mostly in pastoral settings. The Weasleys live in the country in the middle of nowhere, and his reaction to things like turnstiles isn’t too far off from the reaction of lots of normal country folk in the big city. The money-handling would seem to poke a big hole in my theory, but then again, given the family dynamics of the Weasleys, I wouldn’t be surprised if it’s Mrs. Weasley who does all the shopping. :-)

    There must be city wizards somewhere, especially near the Ministry in London, and all the associated wizard businesses and institutions there. They can’t all be Floo Network commuters who come in from the country. There’s clearly a network of wizard/Muggle world portals in London, in plain sight of Muggles, and it’s implied that lots of wizards do go in and out of these. Also, lots of wizards seem to like wearing ordinary Muggle clothes (in the movies anyway) — gotta get those somewhere.

    I suppose it’s possible that they all do live almost completely hidden even in the city, in more places like Diagon Alley, etc., and that there’s a completely parallel Wizard economy with Wizard groceries, builders, furniture-makers, clothing brands, etc. Just seems like it would be sort of redundant. It makes good economic sense not to produce something yourself if someone you can trade with produces it more cheaply.

  • fett101

    Definitely the groceries and other materials. Gamp’s Law of Elemental Transfiguration says you can’t create food or such from pure magic, but they can certainly use magic to craft things such as furniture and clothing (Hermione talking about learning to knit without magic comes to mind). I don’t think Rowling ever started the four other restrictions.

    Hermione: “Your mother can’t produce food out of thin air, no one can. Food is the first of the five Principal Exceptions to Gamp’s Law of Elemental Transfigura—”
    Ron: “Oh, speak English, can’t you?”
    Hermione: “It’s impossible to make good food out of nothing! You can Summon it if you know where it is, you can transform it, you can increase the quantity if you’ve already got some…”

    Heck. They could have fields full of slave elves too. Working all day in the hot sun and singing old elven gospels. That’s a pretty horrible vision, actually.

    I guess it can be seen as a flaw and a feature that Rowling didn’t expound on the wizard world as much as she could have. It makes it impossible to know this stuff definitely but also gives people the chance to think of it on their own.

  • Kathy A

    Don’t forget the mention by Ron of the one Squib in the Weasley family, who is now an accountant. There have to be many Squibs or wizards/witches who just decide to drop out of the magical community and live as Muggles.

    I’ve also read several fanfics that postulate that some of these dropouts end up working in investing in The City for Gringotts, which makes sense. I’d guess that those goblins have many humans, both Muggle and magical, investing their gold in the market.

  • Brian

    Heck. They could have fields full of slave elves too. . . . That’s a pretty horrible vision, actually.

    Yes, the extent to which a lot of the Wizarding society depends on slave labor is fairly disturbing. It’s dealt with as sort of a “cute” side story in the books, but it has huge economic and societal implications.

    Slavery is a horrible practice, but it is very economically efficient, especially when you have a whole class of people who simply are not interested in doing certain kinds of work. Enslaved house-elves enable the high quality of life for wealthy families like the Malfoys even for whole institutions like Hogwarts, who would otherwise have to spend loads of cash on servants, and might have a very hard time finding wizards willing to work as servants anyway. (If you could use magic, would you want to be employed as someone’s maid?)

    Moving away from slavery might destabilize the whole economy of the Wizarding world, as it did in the American South after the Civil War. (That’s why the war started in the first place! It wasn’t simply that Southerners just loved owning slaves; their entire economy was built on it.) Maybe that’s one of the reasons why Rowling shifted focus away from that after bringing it up in the fourth book . . . too big an issue, and too much of a distraction from the main plot.

  • JadeFox

    For a while Forbes did a section called the Fictional 15, a list of the richest fictional characters. In 2005 Lucius Malfoy made the list with them estimating he has a net worth of 900 million. I’m guessing they did this in muggle money, not galleons.

    They also went further and wrote up this article:

    http://www.forbes.com/2005/12/01/potter-malfoy-wealth_cx_de_05fict15_1201malfoyprofile.html

    I guess even Forbes can have moments of geekiness.

    I was always interested in the way house elves were viewed in the wizard world. It wasn’t just the Malfoy type wizards who looked down on them. It seemed like everyone, except for Hermione didn’t care much about their well being. I don’t think Rowling actually abandoned the idea of slavery in the wizard world. I think she wanted to give us a small taste of it as an example of the many dark sides that the wizard world had.

  • Brian

    I remember those Forbes lists! I love it that Lucius Malfoy is a Halliburton investor.

    Are we opening up a whole new genre here? Is there such a thing as Fan-Nonfiction? Fanalysis? Fanomics?

  • Alli

    I agree that gold is essential. Ron’s brother Bill is a curse breaker for Gringotts in Eygpt. What he did exactly for the bank is never made clear, only that he hung out in a lot of tombs. I always thought he was either protecting, discovering, and/or stealing buried treasure for the bank. However, I’m still not sure how much the two worlds economies really interweave. The Wizarding World goes through great lengths to keep themselves hidden. In fact I imagine there would be strict laws preventing certain interactions. Hopefully JKR mentions this in her encyclopedia (aka The Scottish Book).

    ON A SIDE NOTE the HP fandom’s having an online fundraiser for Haiti this Saturday (Jan 23rd). JKR’s donated a signed copy of the series and a personal message. There’s also signed books by Neil Gaiman and Terry Pratchett for those interested. (Sorry, Maryann, I hate when people hijack and spam threads, but it’s a pretty cool fundraiser for Partners in Health, and since there are a lot of fantasy and sci-fans here, I thought I’d mention it).

  • Knightgee

    I think the thing with the House elves is that in lore, elves and fairies, particularly Brownies, a lower class type of elf or fairy that are often portrayed as being people who are willing to do things like clean your house and such usually for things like food and drink. I think Rowling tried to complicate this mythology by not portraying them as happy little workers willing to do any chore so long as you paid them in milk and bread, but indentured servants barely above being slaves. I do think she eventually moved away from this because it was way more complicated than she could afford to deal with at the time, but also because the latter books in general seemed to focus less on the Wizarding World as something to be explored and more on the immediate conflicts being created by Voldemort.

  • Dr Rocketscience

    J.K. Rowling’s world building is an interesting little creature. There are aspects of it that are rich and detailed and wholly believable. And then there are aspects that fail epically. A lot of the problems, I think, stem from the style of the first few books. One of the brilliant aspects of the series is how the style matures with Harry, so that while The Philosopher’s/Sorcerer’s Stone is a fine read for mid-grade schoolers, The Deathly Hallows is clearly intended for the YA audience. Unfortunately, aspects of her world building from the first book carry through the entire series for the sake of consistency. (No points for pointing out how inconsistent Rowling can be – I think she’s trying.) As a result, things that were appropriate in the first couple of books become bizzare in the last couple.
    For instance, it’s easy to see how the average wizard’s inability to dress appropriately in front of Muggles was inserted to give 10-year-old readers a giggle. But by 17, you start wondering, “How is it possible they could be so inept?” Rowling repeatedly refers to Hogsmead as “the only all-wizard community in Britain.” That means most of the rest of the British wizards – some several thousand families, I would imagine – all live in close proximity to Muggles. How could they not at least know enough not to go out in spats, a frock coat, and a stripped swimming costume”, as in Half-Blood Prince?
    Similarly, money and wizards is a problematic issue. Sure, it’s cute how wizards use precious metal coins with funny names. But does the wizard community provide for all it’s own resource needs? And how did Arthur Weasley pay for the old Ford, or the Black family for property in London? And honestly, if Arthur’s life-long ambition is to “discover how an aeroplane stays up in the air”, why does he not step into any bookstore in England and pick up any book on aeronautics?

  • Bluejay

    One of the brilliant aspects of the series is how the style matures with Harry, so that while The Philosopher’s/Sorcerer’s Stone is a fine read for mid-grade schoolers, The Deathly Hallows is clearly intended for the YA audience.

    A little off-topic, but I think that aspect of it will make it an interesting experience for my daughter (3rd grade) as she barrels through the books. She just read Sorcerer’s Stone last week, and now she’s halfway through Goblet of Fire. HP’s original (grade school) readers had a chance to breathe and do some living in between each book, so they could handle the series’ increasingly mature themes; now that the books are all available to read in a week-long binge, I wonder how that affects the experience of school-age readers who are just coming to the story now? I guess we’ll have some interesting conversations.

  • MaryAnn

    Holy crap, this is why I love you guys: You’re such cool geeks. I ask a completely dorky question, and you treat it seriously. (((hugs)))

    the possibility that the Wizarding economy is subtly and profoundly interacting with the Muggle economy.

    Oh, that must be the case, mustn’t it? The big muggle investment houses and banks must have a wizard desk, mustn’t they?

    So, it makes sense that the Wizarding bank would be in London, the financial capital of the world.

    Not just London, though, surely. There must be muggles in New York, Hong Kong, and Tokyo who delve into the wizard economy.

    a select few people in the highest echelons of the Muggle banking world.

    Obviously some muggles do have knowledge of the wizarding world, and without too much consternation being caused. Hermione’s parents, for instance. No one really seems to care that they know about wizards, and not just because their daughter is so brilliant.

    Is there such a thing as Fan-Nonfiction?

    *snort* Fan nonfiction! I love it!

  • Paul

    Malfroy’s family wealth: I found the choice of stocks interesting. Why not have the family invested in tobacco companies? I read an article a year before the Great Recession ago about how if you invested in the market like a normal person, investing $5000 fifty years ago would get you a great return, investing only in green stocks (companies that try to be eco-friendly, don’t use child labor in foreign countries, etc) you would make about %15 less than the regular person, but if you only invested in Big Tobacco companies, you’d be a millionarie.

    I wonder if the Wesley’s house looks older just because of the wear and tear of having so many wizard kids running amuck.

    As for the politics, as I remember a British pol is not informed of the Ministry of Magic until they become the Prime Minister, but I could be mistaken. I sometimes wonder what it would be like to become President and start getting CIA briefings every morning.

  • misterb

    MaryAnn,
    Great question! I would have to say that :

    You can Summon it if you know where it is, you can transform it, you can increase the quantity if you’ve already got some…

    violates some of the basic laws of economics which are, after all, about scarce goods – If you can transform lead into gold, you would decrease the value of gold rather precipitously.

    My theory is that the wizards attempt a distorted imitation of muggle life – thye don’t have to have Galleons or jobs, etc, but they do anyway because it seems like they ought to.

  • fett101

    The only thing that could turn metal into gold was the Philosopher’s Stone and the only one in existence was destroyed in the first book.

    Scarce goods in the wizard world seem more to relate to magical objects then general consumer goods. Wands, brooms, charms, vanishing cabinets, etc require specific magic, hairs, herbs, woods, spells and such to be made.

  • misterb

    Here’s what I don’t get:
    if a plant can turn water, dirt and sunlight into food – why can’t a wizard? The only explanation is the Rowling version of Roger Rabbit’s law.

  • fett101

    Roger Rabbit’s law.

    First time I’ve heard this and Google’s got nothing. Please elaborate? :D

  • misterb

    From MaryAnn’s recent post:

    But these represent an appalling magic of convenience, which either works or doesn’t depending upon whether it’s “funny” or not. (Roger Rabbit might understand this logic. No one else will.)

    The actual RR quote is:

    Eddie Valiant: You mean you could’ve taken your hand out of that cuff at any time?
    Roger Rabbit: No, not at any time, only when it was funny.

    I’d state Roger Rabbit’s Law as:
    In fiction, plot trumps realism.

  • LaSargenta

    From Kathy A.:

    Don’t forget the mention by Ron of the one Squib in the Weasley family, who is now an accountant. There have to be many Squibs or wizards/witches who just decide to drop out of the magical community and live as Muggles.

    I’ve also read several fanfics that postulate that some of these dropouts end up working in investing in The City for Gringotts…

    Just wanted to restate this. It is what makes the most sense to me and that was the only post I noticed it in.

  • LaSargenta

    Urg! Html fail! That first paragraph outside the blockquote box should have been in it. I didn’t realise I had to remove returns inside a quote!

  • dgrhm

    That’s a great question because it begs a deeper question. Why would wizards need money?

    Money gives them the ability gain influence and political power within the wizard world. Where Muggles would be concerned with material wealth, wizards would be more interested in magical wealth. Magical wealth is based in knowledge. The more a wizard knows, the more powerful he/she can become. In the wizard world, knowledge is power! Magical secrets are the most valuable commodities in their world.

    The Malfoys have considerable wealth which gives them considerable political influence, which would make them more powerful wizards. By contrast, the Weaselys have limited means, and therefore limited political influence.

    A society of wizards would benefit wizardkind. A group of scholarly wizards need resources to do their research so wizards could focus on learning to enhance their magical abilities without concerning themselves with mundane muggle-like concerns.

    The wizards in Harry Potter’s world have built a class based system. The lower classes are the non-wizard servant classes. The lowest of them all are the house elves.

    Such a system serves the wizards to go about their lives in a parallel manner to muggles. Wizards use magic to enhance their lives, muggles use technology to enhance their lives.

    Each society’s advancements have cost. Wizards use enslavement of magical creatures, Muggles exploit natural resources. So, in Harry Potter’s world, wizards, like muggles, have the same petty concerns and have the same kinds of ambitions; greed, power, political influence.

    This leaves an interesting and unanswered question, why didn’t the wizards simply enslave muggles to do their bidding?

  • Shadowen

    Well, Harry Potter doesn’t contain Harry Potter, even though it does contain Harry Potter, so even if a JK Rowling exists there approximately US$1b wouldn’t have been funnelled to her accounts. That’s a difference right there.

  • Alli

    This leaves an interesting and unanswered question, why didn’t the wizards simply enslave muggles to do their bidding?

    dgrhm, Grindelwald wanted to for “The greater good.” So some did try, but these wizards were considered pure evil by most of the community. Remember, You’d be asking muggleborns to enslave their own parents, for example. Voldemort was trying to “weed” out this problem in his new empire. Get rid of the “mudbloods” and then go after the muggles. Whether he’d use muggles for economic gain or for his own sick pleasure, I don’t know.

  • Left_Wing_Fox

    I’m probably going to lose the “Left_wing” out of my user name by going into this, but I’m not quite as disturbed by the slavery of the house elves.

    The big problem is that this is a fantasy novel, and the house elves are not human; they have different needs and goals from the human populace; much in the way a pet has a different role in our society. That may seem like an intellectual cop-out, but even in real life, we have appliances which take the role that servants used to play, as well as living creatures we keep as pets. How intelligent does a pet have to be before the dynamics of “owner and property” become creepy? How smart can a toaster become before it needs the sort of rights that human beings have (I’m thinking of the talking toaster in Red Dwarf, for instance). If that distinction seems clear, bear in mind that PeTA already seems to think that housepets are indeed slaves.

    If you take the needs of house-elves in the books literally, and don’t assume an unreliable author, the dynamic is less about master and slave, but as Employer and employee, with the “payment” being an intangible: appreciation. We can’t apply the real-world standard of slavery in this instance because the fundamental conditions on which real-world rules are based don’t apply.

    It’s one of the problems I have with the general intersection of the real and the fantastic: changing the rules in a fantasy changes the rules of engagement. It’s like people banging on about the nature-worship of Avatar, when Avatar actually has a living breathing networked supercomputer of trees with physical access points starring as that being. The other way is true too; I find this happens a lot with fantasy with a political bent, where assumptions made by the author that affects their world are intended to be applied to the real world, where those assumptions may be wrong. It made much of the “Sword of Truth” series such a wallbanger for me, when his perfect libertarian ideals ran smack against my own views of reality.

  • CB

    If you take the needs of house-elves in the books literally, and don’t assume an unreliable author

    Hmm… I think I might try to restart the Potter series (stopped at book 2), but this time assume an unreliable narrator. Might be more fun. :)

    Maybe try to do it like that fake Noam Chomsky commentary on Lord of the Rings.

  • smitha

    can i know where to find these fanfics? as a potterhead and an econ major, this is worth a million galleons to me!

  • Tonio Kruger

    So how many galleons does it take to make an armada?:-)

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