The economy of Harry Potter

I will probably return to this after I get through the latest book — as of this posting, I’m at around page 100. Anyhow, my reaction to this article by Megan McArdle was thuburptttt. She complains that the economics in Harry Potter is all wrong because there is no convincing explanation of the supply of magical powers; namely, why they are scarce. She forgets that (a) ability clearly plays a big role and (b) study helps too. McArdle points to the poverty of the Weasleys. Why not just create their way out of that? But given that there is an active productive economy, it should be pretty clear that they can’t just make anything. Indeed, I struggled to think of an example of that. What is more, there is a great deal of inherited wealth. Finally, what economy there is is riddled (if you’ll pardon the pun) with regulation and peppered with monopolies. What is more the wizard folk seem happy with that. Hagrid tells us in the first book that there is only one bank and that is the way it should be.

Now the issue of scarcity comes up in this stuff all of the time. I remember making a McArdle-like point to Ken Arrow many years ago in relation to Star Trek. I pointed out that replicator technology had rendered the economy mute. He corrected me and said that that couldn’t be true because there was only one Enterprise. So there had to be inherent scarcity. I learnt my lesson; there is always scarcity, you only have to know where to look.

6 thoughts on “The economy of Harry Potter”

  1. I don’t know if ability or study matter much to ‘wandwork’. Most of the wand stuff seems to involve just saying the right word, e.g. Harry’s use of Septumsepera – having just read the word somewhere – in book 6. Magical objects, though, seem to take a lot of time and scarce ingredients to make, e.g. the six months it takes to make the luck potion. I guess most of the Weasleys’ poverty concerns inability to buy things that can’t be made by wands, e.g. books. Perhaps the real mystery is why, given the ease of life available via wands, wizards/witches take relative wealth so seriously.

    I guess you’ve got a point about the role of regulations in creating scarcity. Maybe someone should right an article about the crappy legal system in the Harry Potter books.

    BTW, I’m also at around page 100 and reckon I know the answer to one mystery:***************************[Edited for spoiler]. My answer (subtract a letter): BVOU QFUVOJB.

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  2. I’ve yet to read the books, but I noticed the patronum thing too. In practice it’s impossible to hold things consistent for the same reason we can’t have planned economies: it’s too complex. Too complicated.

    A more sensible ‘theory of magic’, if you will, was in the roleplaying game “Mage: The Ascension”, in which reality was essentially malleable by everyone to greater or lesser degrees, but only a few were enlightened enough to work it. Reality was defined by the crushing weight of the “consensus” reality, created by unenlightened masses.

    All of this is grist for the mill for a post I have been contemplating.

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  3. Edited for spoiler? The ‘mystery” *but not its solution is revealed on p3 of the book!

    Re: the utility of ‘Magical Law’, on p105: ‘Are you planning to follow a career in Magical Law, Miss Granger?’ ‘No, I’m not. I’m hoping to do some good in the world.’ Strangely, they’d been discussing what seems like a quite sensible law concerning succession.

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  4. i’m curious about your conversation with Ken Arrow regarding Star Trek. What does ‘there is only one enterprise’ mean? Surely, it can’t mean that the federation has only one starship — clearly there is an armada of ships at the federation’s disposal. It can’t also mean that each ship has but one replicator, although this may be possible.

    I do think that the invention of this ‘device’ trully puts an solid end to the problem of scarcity an economic system aims to manage, i.e. physical scarcity. This leaves humans able to voyage into the stars and become explorers.

    The only real scarcity left is non-physical (time, political capital i.e. prime directive, being human vs being an android, etc.), but then, all stories are driven by this kind of scarcity. You can’t have a story without conflict.

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  5. One thing you could be sure of is that Gene Roddenberry spent more time thinking about the economy of his world than did JK Rowling.

    The magical economy could be compared to some medieval economy, hidebound by traditions and inefficiencies just because they haven’t ever had a discipline of economics. Lots of stuff doesn’t have to make rational economic sense.

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  6. The apparent lack of scarcity is probably what has allowed massively suboptimal institutions to arise. NSW (and subsequently Australia) under Macquarie was forced out of convict based labour created wealth into more meritocratic systems because the land wouldn’t support anything less than optimal and would have died like macquarie Harbour or Norfolk Island colonies did. The American South, a more pleasant local, could survive with a suboptimal system of forced labour and even today is poorer.
    Likewise, magic provided enough for wizarding to survive easily without having anything remotely meritocratic in the wealth distribution, or indeed functioning courts, competition, pluralistic media, democracy etc.

    Which is an interesting way of looking at it.

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