Potternomics part two: What is magic?

In this blog post I present an economic perspective on what magic is in the Harry Potter saga and how the principles of economics can be used to analyse this society.  Since the big difference between wizards and muggles is the use of magic it seems to appropriate to write a post about what magic actually is. I hope you find this text interesting, if you have any questions or feedback, please send me a message or comment on this blog post. In an earlier post I discuss poverty and wealth in the wizarding world, that post can be found here.

(For detailed references and footnotes, please click here for pdf)


From different perspectives, we will view magic differently. If you were to ask a physicist, chemist or some researcher from any other natural science discipline to describe what magic in the wizarding world of Harry Potter is, they would perhaps tell you something along the lines of magic being “a means of willingly invoking the improbable behaviour of living or dead matter,” as Dr. Immo Garrn writes in a blog post where he makes an attempt to create a model for the physics of magic in the potterverse. He further discusses the process of performing magic as being a way to manipulate/transfer electromagnetic energy in different ways. In this post I want to instead present a view of magic from a social science point-of-view.

The study of economics is the study of human behaviour and society. The economist would therefore, if given the same question, describe magic from its role in society. In most respects, the magical population does not differ from the non-magical population. Both wizards and muggles (people without magical abilities) constantly find themselves in situations where they need to make choices taking into account the trade-offs they’re forgoing. The students at Hogwarts, to give just a few examples of the similarities of life choices in both societies, dwell over what subjects so study, what career to pursue and what quidditch team to support. The big difference between the muggle society and the wizarding one is the existence and use of magic in the wizarding society; it’s likely that this difference of technology can explain in some parts why the two societies have evolved so differently from each other in terms of economic, social and political institutions. For example, people hold different occupations, their cultural norms are foreign and the functions of their governments vary.

Magic’s role in society is what the economist would call a technology. In economics, technology has quite a specific yet broad definition, namely “The sum total of knowledge and information that society has acquired concerning the use of resources to produce goods and services.” Technology doesn’t refer to the actual computers, radar systems and wheelchairs we use, but rather the knowledge and know-how of the way we do things. The technology of a society therefore accumulates over time, as we learn better ways to do things. It’s a very broad way to look at technology I shall say. If, by trial and error, you conclude that folding the toilet paper is more effective than crumbling it when wiping your butt, then that discovery is to be considered a piece of technology since you have found a way to produce clean bums using less resources.

What differs the technology of the wizard society (i.e. magic) and the technology of the muggle society is not that either is superior to the other, they are basically different in kind. In some respects, wizards have more effective and cheaper ways to cater their needs and preferences. For example in transportation: wizards can travel long distances in only seconds via apparition, port-keys (similar to what we would call teleportation) and the floo network system (traveling via chimneys). Muggle technologies for travel, which include cars, escalators and planes, are extremely more expensive in terms of time spent when trying to get from point A to point B. Muggle technology however is vastly superior when it comes to communications. While wizards uses owls to send letters as their primary way to communicate with people in other locations, muggles have developed radio, telephones and the bloody internet.

When the technology in a society evolves, for example when there is a scientific breakthrough, we see increases of productivity. In a market economy where there is competition, productivity increases will transfer into lower prices on goods and services. Improvements in technology do not affect prices uniformly in the economy however. When machinery makes farming cheaper, this affects the prices of wheat but not equally the prices of newspapers. Relative prices (the price of a commodity measured in terms of other commodities) are not stable, but change in response to technological development. People might talk about prices being high or low, but what we actually mean is that they are high or low relative to what else we could spend that same money on.

I’ve read some attempts to calculate the exchange rate between muggle money and wizarding money (the currency used is called Galleons) by finding examples of commodities that are priced in the Harry Potter books which also exist in the muggle world and then compare prices. That approach, I argue, isn’t very useful exactly because the relative prices in each economy are different. If however trade would become established between the two economies, it would make a lot of sense to use this approach.

Since muggles and wizards rely on completely different technologies in their production of goods and services, the relative prices in each economy will differ a lot. This is assuming there is no trade between the two economies, otherwise some people would buy goods cheaply in one world and go sell them in the other world making a nice profit; at the same time pushing up the price of this good in the first economy, and pushing down the price in the other. The flow of goods and services between the muggle world and the wizarding world would continue until prices eventually converge so that it no longer would be possible to earn easy money this way.

There is very little interaction between muggles and wizards and therefore it’s not far fetched to assume that there’s little or practically no trade between them. When Harry joins the Weasley family to attend the quidditch world cup, even the muggle-enthusiast Arthur Weasley struggles with the muggle currency when he is going to pay for their accommodations, having to ask Harry for help. Reversely, muggles do not seem to have any knowledge of the workings in the wizarding world. They continue to utilize their inadequate muggle medicine, such as stitching wounds, and wizards seem to wish to keep it this way.

When the prices in these two economies converge, a lot of changes will occur in society. It will have more dramatic effects than just changing what goods people buy in the supermarket. Since the muggle economy is so vastly bigger than the wizard economy, the convergence of prices would probably mostly mean that the prices in the wizarding economy would adjust to the prices in the muggle economy. Let’s imagine life in the wizarding world since the changes will be more dramatic there. In areas where magic is superior to muggle technology, prices of goods and services will rise because producers will suddenly have a much bigger market to sell to, and hence they will raise their prices in order to make bigger profits. In areas where muggle technology is superior to magic, prices will fall because a lot of cheaper muggle-made goods will be imported to the wizarding world. This will inevitably put some producers out of business, raising the unemployment of the wizards and witches employed in those fields of work. In the short term, there will be both winners and losers on the production side when trade is established.

In the long run though, there will be a shuffle in the labour force. Fewer wizards will work in the areas where muggle techniques are better, and more of them will work in the areas where magic is finer. These dynamic effects on the production sectors can be seen when trade is established between countries in the real world who didn’t trade before. This is why most well developed countries outsources a lot of manufacturing and farming to less developed countries. When more and more wizards change occupations and start working in sectors where wizards have a comparative advantage, the price on these stuff will go down a bit again.

So, is this on the whole good or bad? The way the price system works is that it will incentivise people to focus on the things they do best relative to other people; I wrote a post about this earlier for the one who is interested in learning more. This is where the biggest gains of trade are to be found: with increased specialization and division of trade across economies, the overall welfare will be raised. But, if there really is that much to gain from trade, why do the wizards choose to abstain from trading with the muggles? Well, that is not a question of what makes economics sense, but what makes good politics. All over the world we see countries enacting protectionist policies, closing their borders and creating barriers to trade with foreigners. Sometimes they claim it is to save jobs from being outsourced abroad or to help the domestic economy and sometimes they claim these trade embargos are set up to punish foreign countries or their leaders. The question of why this makes good politics is a subject I plan on writing a post about later.

In this post, I’ve presented an economic view of magic in the world of Harry Potter. The wizarding community differs from the muggle’s by the type of technology they use. Since the two economies are isolated, their relative prices differ, which is why we cannot calculate the exchange rate between muggle and wizarding currencies based on examining prices in each economy. If trade were to be established between the the two worlds, a higher degree of specialization and division of labour would allow for increases in wealth in both societies. Why the wizarding community chooses not to, however, is a question about politics, not economics. I hope you found this post interesting, if you have any questions or objections, please don’t hesitate sending me a message or comment on my website!

Big thanks to Collin Peeples for valueble feedback 🙂

Politics of Harry Potter and the Prisoner of Azkaban

In this post I analyze the political system of the wizarding world of Harry Potter after reading the first three books in the saga. We don’t know much about the political system in the magical society because it’s not explicitly described. But we can from the story, inferring from the behaviour of government agencies and government employed characters, draw conclusions about the political institutions in the magical society. In an earlier post I wrote about wealth and poverty in the wizarding world from an economic perspective titled “Potternomics part one: how do wizards get rich?”. More blog posts about the economics and politics in Harry Potter are to come.

(For detailed references and footnotes, please click here for pdf)



The Ministry of Magic is the equivalent of a government in magical Britain. The wizarding world is a society existing parallel with the non-magical society, in the Potter-books referred to as the muggle world. There is little interaction between the muggle and magical societies in Britain, in fact, most muggles are completely unaware of the existence of magic and the wizarding society.

In the first two books, we don’t get to know much about the Ministry. We know of it’s existence after Harry is introduced to the magical world; Hagrid then explains that the Ministry’s main job is to keep the magical world secret from the muggles. The headmaster of Hogwarts School of Witchcraft and Wizardry, Dumbledore, is highly respected by the people at the Ministry, which is why he is allowed to run the school without much interference. In the second book, it was not until there had been four attacks on students that the Ministry did step in. However, the Minister for Magic, Cornelius Fudge (head of the Ministry), didn’t seem too keen on investigating the cause of these attacks. Instead he decides to send the school groundskeeper Hagrid to prison, saying that he is “under a lot of pressure,” and he’s “[g]ot to be seen to be doing something.” Fudge doesn’t appear as an evil character, but this event neatly illustrates the not-so-romantic behaviour of the government in magical Britain.


The story in the third book

In the beginning of the third book, we learn about a person with the name of Sirius Black escaping from the high-security magical prison, “Azkaban.” Black is considered a very dangerous criminal, and the news of his escape spreads fear in the magical society. It is reported in the newspaper, the Daily Prophet, that Minister Cornelius Fudge goes so far as to even inform the muggle Prime Minister about the crisis, and that the muggle press is used to get people to report any sightings of Black without revealing that he’s a wizard.

Throughout the whole book, the Ministry conducts a large-scale search operation to catch Black but without much luck. In addition to the Ministry appealing to the public for tips on Black’s whereabouts, Arthur Weasley, working in the ‘Misuse of Muggle Artefacts Office,’ tells us that all Ministry employees were pulled off their regular jobs to help in the search.

The most severe measure taken by the Ministry in the search, however, was the deployment of hundreds of undead creatures called dementors to guard the entrances to the wizarding school Hogwarts, and to patrol it’s nearby village, Hogsmeade. Dementors are described as the most terrifying creature in the magical world, feeding by draining the happiness of humans. During his first encounter with a dementor, Harry resultadely collapsed from the draining in a horrid scene. The Dementors are usually employed to guard the magical prison, Azkaban. Hagrid describes being held there with constant draining by the dementors as a most horrible experience. “Yeh can’ really remember who yeh are after a while. An’ yeh can’ see the point o’ livin at all. I used ter hope I’d jus’ die in me sleep …”.

The Ministry does in fact not seem to have full control of the dementors. The dementors approach and enter the Hogwarts train in the beginning of the school year, frightening and draining on the hundreds of students onboard. Later in the school year, over a hundred dementors advanced onto the school quidditch stadium during a match, almost resulting in Harry’s death. An event that infuriated the headmaster, Dumbledore, who had resolutely refused to give dementors permission to enter the school grounds.

The Ministry gave the dementors permission to use, as Professor Lubin expresses it, “their last and worst weapon”: the dementor’s kiss, on Black if they were to find him. When the kiss is performed, the dementor sucks the soul out of their victim and it is described as a fate worse than death.

The Minister for Magic, Cornelius Fudge, says the dementors are there for the people’s protection and safety; although one can definitely question if these measures really were proportional to the perceived danger Black posed, or if the Ministry did more harm by their efforts than they did good. In retrospect, we know Black was innocent of the crimes he was imprisoned for and didn’t really pose any danger at all. It can also be mentioned that this is not too long after a war within the wizarding community and a lot of criminals failed to be trialed; consequently still being out there. Why the Ministry focuses so much effort on this one criminal seems like a strange priority.

Not only does it seem that the measures of the Ministry are an overreaction and out of proportion, the Ministry was also very unsuccessful in their search. Not only did Black succeed at hiding from the Ministry, he even managed to sneak into the heavily guarded school at multiple occasions during the school year without getting caught. Of course, Black is an animagi meaning he has the ability to transform into an animal (in Black’s case into a big black dog). Having developed the ability without reporting it to the Ministry of Magic is a punishable crime; it is reasonable to believe it’s a very rare ability, since only 7 wizards have been registered the last century.

Even if it’s a rare ability to have, should’nt it at least have struck someone at the Ministry as a possibility that Black was an animagi? In the fourth book of the series, Hermione works out that the reason why paparazzi reporter Rita Skeeter was able to spy and eavesdrop on private conversations to dig up gossip is that she was an unregistered animagi, possessing the ability to transform into a beetle. If a fourteen year old girl can figure out that Skeeter could move around undetected thanks to being an animagi, how come no one at the Ministry even though of the possibility the same could be the case about Black?

In the fourth book of the series, Harry Potter and the Goblet of Fire, Harry has no problem communicating by owl post to Sirius (who still is on the run from the Ministry), even though Sirius is in hiding in another country and Harry has no idea where he is. If owls don’t have any difficulty delivering mail to people anywhere on earth even if the sender doesn’t know where they’re sending it to, finding people shouldn’t be too hard for the Ministry.

Some possible reasons for their failure is basically that the Ministry is a terribly inefficient organisation or that the people working there simply are incompetent. Or what if they didn’t really intend on catching Black? Perhaps the purpose of these large scale operations were something else than what was stated? Government agencies might not always be truthful, especially in countries that don’t have democratically elected officials. In a democracy, we can at least hope that politicians will try and enact the policies they believe is good for the country, because they otherwise would be voted out of office by the citizens. When leaders don’t need the support of the public to stay in office, things tend not to go too well historically.

The problem is not really that the wrong people become leaders. Henceforth the answer is not getting “the right people” in political power. Even the most well-meaning, selfless and virtuous person must, in order to use a position of political power to do good, first get in a position of power. A person with political ambitions must have the pursuit for power (or when in a position of power, to maintain that position) as their first priority. Because if that’s not the case, someone else less virtuous and more elastic in their morals will take their place in office.

So, how does one get in a position of power in the magical world? We don’t know much about how Ministry officials are appointed, but we know enough to conclude that magical Britain is not a democracy. In the first Harry Potter book, we find out that the head of the Ministry, the Minister for Magic, is chosen, not elected.The answer is instead gaining the support of some key political players. Loyalty is the currency of political power in the same way that money is the currency of economic power. Losing the support of these unknown yet influential key players means you’re kicked out of office. This is what happens later in the series when Cornelius Fudge in his own words is “sacked” as Minister for Magic and replaced by the more ruthless Rufus Scrimgeour without the mentioning of an election or any campaigning for the office.

It is reasonable to assume that the interest of these key players influences the behaviour of the Ministry. The fact that we don’t see a change of leadership in the Ministry after such a fiasco of catching Black indicated that the key players in fact might not have been too disappointed with Fudge’s actions. The hunt after Black spread fear and panic in the magical community, normalised intrusive and controlling measures and created acceptance for evasive government intervening in people’s lives. When people feel unsafe, they will more easily accept or perhaps even demand greater government control and security services.

It is not at all unlikely that this would be in the best interest for the political elite, whom can then use this opportunity to increase the size and authority of the government; in the process increasing their own influence and power. We know that a lot of former death eaters are in positions of power in the magical society, such as Lucius Malfoy. These people would of course know Sirius Black was no ally of theirs, and they would probably know he was innocent. His escape, however, created an opportunity they could take advantage of.

(Spoiler warning ahead)

Towards the end of the book the story takes a twist and we find out that Sirius Black in fact is innocent of the alleged crimes he was sent to azkaban for, and that he escaped to take his revenge on Peter Pettigrew who had betrayed him and the Potter family, resulting in the death of Harry Potter’s parents. Black gets caught, but with the help of headmaster Dumbledore, Harry and Hermione, he escapes yet again.


There are a lot of subjects linked to the topics of politics and power in the Harry Potter books. For example, in the third book, Harry Potter and the Prisoner of Azkaban, we observe the power struggle between the corrupt Lucius Malfoy and the good and honest Dumbledore, the disobedience and distrust towards the legal process when Dumbledore, Harry and Hermione liberate Black from captivity, and how the desire for power brings Peter Pettigrew to betray his friends. In this post I have focused on analyzing the political system in the wizarding world in the third book.

The Ministry of Magic gives an appearance of incompetence or malice by being incapable of, or unwilling to, conduct the search operation for a dangerous criminal to which they claim to be so devoted. This is not a result of an accidental appointment of bad political leaders but a natural consequence of the design of the political system in the wizarding world. It is obvious that the Ministry does not have the interest of the public in mind, even if they claim so, and we should not assume so when analyzing the behaviour of the government in Harry Potter. What we see is the slow progression of the Ministry of Magic into a more authoritarian state regime, disguised as a concern for the safety and security for the citizens. This transition will be even more visible (and darker) in the books following.