Saturday 2 July 2016

Weasley’s Wizarding Wheezes Trumps The Pack – social stratification and innovation in Harry Potter

The wizarding world is a divided society. Rowling is clear about this from the start of her seven book narrative, when Hermione is bullied by Slytherin students for being a muggle (someone who has no wizard blood). The existence in the Potterverse of social stratification and its ugly offshoots, discrimination and prejudice, give the books a darker element than simple ‘goodies and baddies’. Certainly, one of Rowling’s aims was to make us question the existence of a status quo that permits arbitrary discrimination, suppresses meritocracy and distorts justice. After all, although Voldemort imposes a new rule of law, it is undeniably founded on preexisting prejudices that were already latent in the wizarding world.

Why do wizards, an educated breed, allow this system to be maintained? Why do they seem ignorant of the economic consequences of social stratification; wealth inequality, suboptimal investment, rent-seeking and cronyism? What impact do these issues have on the wizarding world if left unaddressed, Voldemort or no Voldemort?

The Potterstrata

Wizarding society is a semi-market driven, semi-liberal society. ‘Sort of but not quite there’ would probably be the assessment of its liberal democratic peers if it were a real country today. Indeed, given recent events in Europe, consequences of the Potterverse’s divisions seem particularly pertinent to us. So let us begin.

There are three main classes of economic participant; wizards, goblins and elves. Wizards are primus inter pares, Goblins are essentially second-class finance managers with no real political power, and Elves exist as a type of servant underclass with no autonomy. Added to this, there are squibs and muggles; wizard-born persons who have no magical ability, and human-born persons who do respectively.

There is active discrimination against elves through indentured labour laws, and against Goblins through regulatory oversight from the Ministry of Magic. The status quo in regards to these social groups is so embedded such that any agitation for change is resisted even by supposedly liberal wizards, a prominent example being Mr. Weasley’s advice to Hermione to abandon her Elf Rights campaign.

It’s difficult to levitate your position

Unfortunately we can’t learn much from looking at cases where social discrimination is codified in law, aside from a general observation that of course Goblins and Elves have skills of benefit to the wizarding society that would be fully realized under a more liberal regime. Both are talented magical beings in their own rights, with unique skills such a financial acumen and home management skills that wizards have chosen not to develop.

Instead, we can look at the economic impact of discrimination against those unofficially marginalized; lower-class wizards, muggles and squibs.

The salient point of labour economics in the Potterverse is that upward mobility seems very hard. There are few examples of people ‘moving up the ladder’. Notable examples are the successes of Voldemort and the Weasley twins, albeit via very different strategies (a naked power-grab and a joke shop enterprise respectively). The difficulty of upward mobility in the wizarding world is strange, given that there is universal provision of standardized education through Hogwarts.

Education is generally considered a ‘human capital enabler’; in other words it allows those who put the effort in to develop life-long skills of innovative thinking and analytical rigour, to generate ideas and to challenge them. The logic then follows that any wizard, muggle or squib who attends Hogwarts (and they are all permitted to enroll) is capable of developing themselves and achieving their long-term aims, regardless of their socio-economic background. In turn such personal development, known in the jargon as ‘human capital accretion’, should stimulate the overall economy by encouraging investment through the application of creative thinking; witness Fred and George’s joke shop.

The wizarding education system fails in this regard, given that the above examples are exceptions rather than the rule. Hogwarts seems calcified, the syllabus unchanged for centuries and, aside from some maverick analytical training imparted by Dumbledore to Harry, focused on rote-learning for academic achievement. Harry’s poor results in certain academic subjects, for example, significantly impede his chances of pursuing a career as an auror, a type of wizarding detective.

This does not benefit those who fall outside of the system; squibs and more practically-minded students. If you can’t do the spells, then the system rejects you. No spells means no job in the ministry, viewed as the pinnacle of professional achievement, and it’s not as if start-ups are commonplace as a fallback option; Mr. Weasley considers Fred and George’s endeavour highly risky.

Wingardium Leviosa – raise that economy?

Between the Philosopher’s Stone and the Goblet of Fire (4 years), the price of a Daily Prophet newspaper remains 1 Knut. This tells us something interesting about the wizarding economy; it is stagnant. Textbook economic consensus generally states that an economy should grow at roughly 2% per year, evidenced by a 2% growth in the money supply (i.e. inflation). This is why most Central Banks target an inflation rate of 2%.**

You don’t need to be an economist to conclude that if, all things being equal, the Daily Prophet has earned the same total revenue for 4 years on the trot; they can’t possibly have improved anything at all. Where would the extra money come from? And if they haven’t improved anything, how would they entice more customers, and thus raise revenues.

A dose of innovation would help the Prophet, and the economy, recover from its torpor. Innovation boosts productivity by raising the number of outputs per unit of input, which in turn reduces the price of goods. This makes everyone better off and simultaneously frees up more cash for future productive investments. But innovation comes through encouraging creative and analytical thinking… sounds like a job for Hogwarts! 

**I know, I know, current economic growth theories are open to a great deal of debate! I’m just using the consensus here as a yardstick.
Unknown Editor

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