When you write a fanfic, what changes do you make to how the wizarding economy is portrayed?

For me I try to fit what is observed in canon into something with a bit more economic rationale behind it. Now, a lot of the economic aspects of canon are somewhat awkward to combine and I don't attempt to do so. Rather I take what I consider the fundamental economic observations of the wizarding world and attempt to stay true to those.

So, for example, I do not change the fact that in the wizarding world money is necessary, and wealth carries social status, but equally I do not change that even very poor people like the Weasleys can still live with a quality of life which in the Muggle world would be considered Middle Class. Nor do I change the "feel" of the wizarding economy i.e. I do not turn Gringotts into a modern bank, or create a stock market, or a huge marketing industry with brands like in the modern Muggle world (with a few notable exceptions)

One thing that I feel needs to give way, given all this, is currency/prices/retail.

Though it is possible to convert Muggle money to wizarding gold, I think it would be foolish to consider the two economies as comparable in any way. Wizarding prices are set with reference to the largely self-contained wizarding economy, and as such are determined by the economic conditions therein. Therefore I think authors should avoid setting wizarding prices by what equivalent goods would cost in the Muggle world.

Let's talk about a few of those uniquely wizarding economic factors.

Firstly, demand for "essential goods" is much lower because wizards' magic allows them to do for themselves many of the things which Muggles have to pay for. Wizarding culture also much more strongly favours the idea of an inter-generational family home, further reducing expenditures. Consider where you spend the vast majority of your money: rent/mortgage, electricity, gas, water, phone, internet, food. Of these, the typical wizard only has the expense of food. Almost all wizarding goods are in fact luxury goods, not necessities.

Secondly, wizarding society does not use mass production. The vast majority of items on sale will be hand-made, often by the independent proprietor of the shop you are in. There's no outsourcing or globalisation, no long supply chains which cut costs. Just a shop owner who makes stuff and then sells it.

Thirdly, and as a result of the above, wizarding demand for basic goods is much lower than in the Muggle world. Wizarding demand for luxury goods is about the same as the Muggle world but supply is much lower.

With this in mind, I further imagine that A) wizarding wages are much lower than in the Muggle world, because wizards rely less on economic activity to meet their basic needs, so the vast majority of wages constitute disposable income, B) prices of most goods will be much higher than a similar type of good in the Muggle world C) sales volumes will be much lower, further increasing the need for higher prices.

You also have to consider that the wizarding economy does not really have a financial sector like in the Muggle world - no double entry book keeping, no central bank. Gringotts is a holder of safety deposit boxes, not a real bank as understood in the Muggle world. These factors mean that the money supply in the wizarding world is much smaller than in the Muggle world, because M0/M1 (narrow money) = M4. As such the money supply does not increase over time through banking activities. This lack of expansion of money supply would mean that wizarding prices are very stable (low inflation), but it also means that wizarding currency is expensive relative to Muggle money. The supply of Muggle money would be orders of magnitude greater than the supply of wizarding money. There would be no wizarding billionaires, or likely even wizarding millionaires beyond a few million galleons. Even then, the very rich wizards likely have most of their wealth tied up in illiquid assets like land.

All of this adds up to, I believe, a fairly consistent economic position which maintains the core elements of the wizarding economy as seen in canon: an unsophisticated economy built around independent craftspeople and landowners, not unlike the pre-industrial economy of, say, the early 1600s. Financial activity would be limited to small independent moneylenders, not institutional banks.

What it would not preserve, however, are the 1 galleon = £5 exchange rate JKR has used. The exchange rate would be much, much higher.

There is one aspect of the pre-industrial economy which I think has potential for exploration which is not shown much in fanfiction, which is mercantile activity. Now, wizarding society is much less based on raw materials, so this would be a less vital economic sector, but one presumes that there would still be commodities in demand for traders to make money with (potions ingredients, for one). And of course you can have trade not just in raw materials but also intermediate and finished goods.

 

I agree with most of what you said. Lots of people seem to get hung up on the idea of a wand costing 7 galleons so they go through great lengths to dismantle and rationalize how the wizarding economy should work. Except, they use the muggle economy on the basis, which is incorrect. Muggle supply and demand and economic chains are not the same as the wizarding world, so you cannot just apply the same logic.

I mostly just leave the canon economy alone, but if necessary, I'll try to rationalize smaller pieces of it, rather than trying to make everything work

7 galleon wand? Easy. When a dragon is harvested for components, every single piece is used. So, if the heartstrings only cost Ollivander a few sickles at cost, that's because the rest of the dragon is worth thousands when parted out. But is selling wands alone at 7 galleons a pop enough to sustain a business? If you add in things like supplies (wand holsters and polishing kits, which could very well be where most of his profits come from) and add the notion that it's not uncommon to get a new wand every 5 or 10 years, then I think he'll be fine.

Weasley's being poor despite having magic? This is also easy. All because someone has a wand doesn't mean they can do literally everything. Plus, their level of wealth is subjective. Arthur is a Department Head, albeit of a relatively minor department which is technically(I think) a sub department of the DMLE. So he has to get paid some amount of money. So, the difference I think, comes in with his actual situation. As an example, for a wife and husband living by themselves, no children, making 50k a year is enough to get by just fine (assuming you're not living in a huge city, but that's another issue). But, as soon as you start adding children, that 50k gets awfully tight. 7 children plus the husband and wife and suddenly that 50k is nothing, 100k might not even be enough to support a family like that.

What about galleons being made of "gold". There's also an easy answer to that, even multiple ones. The coinage could be enchanted in such away as to be tamperproof, so there would be no actual way to melt it. Or, perhaps "goblin gold" is somehow different than normal gold. It could simply be an alloy, like most coinage. You could further justify it and say the actual gold content is roughly about about 5 pounds worth, leading to the roughly 1 galleon = 5 galleon exchange rate, but I don't think that part's actually necessary. It's just enough to say that they're not made of solid gold, so you can't just lolwalk down to a pawn shop and exchange a single galleon for a thousand pounds and break the economy with a simple thought because no one ever thought of that loophole (which I think is one of the worst cliches).

So yeah, most of it just comes down to the fact that the wizarding world is not the muggle world, so their inflation and cost of living and supply chains and all that stuff is not the same.

 

Something people seem to forget is that wands are essential for any wizard , my head cannon is that the ministry helps and buys some/most of the components , maybe even dragon farms are in effect with dragons being killed en masse .
The 7 galleons are just for the time Ollivander spends creating the wands/ for profits .

 

I'd say that it's a little aggressive to completely rule out magical mass production of simple objects. I'd think that animation spells could easily be used to create the magical equivalent of an automated factory. Failing that, House Elf labor could be another option. We also don't know how many objects can be enchanted at once, what the time investment is, or if there are any material components which could cost significant money.

So to use Ollivanders as an example, if he can whip up hundreds of blank wands in an 8 hour workday with an enchanted lathe and some simple transfiguration, I can see how 7 galleons is reasonable a 5 British pounds per Galleon exchange rate. It also depends on how expensive Cores are- although admittedly, it is implied that Phoenix Feathers are rare. That said, just because Phoenix Feathers are rare, doesn't mean that they're expensive; they may not have many uses outside of crafting wands. Unicorn tail hairs seem fairly cheap, and we don't really know how many (or how often) Dragon Hearstrings are produced. I can't see most of the wood being a large cost either, due to the extremely low mass a wand has compared to a tree, even if such a high quality substance is relatively expensive.

Remember, Ollivander could just be buttering up his clients when he talks about the difficulty acquiring the materials and the exacting craftsmanship that goes into his products. For all we know, dragon heartstrings could be shed every month or so, and the old coot has two warehouses full of them.

Now, whether or not there's a demand for goods in that kind of quantity, that's another issue.

The other concern is how quickly do the items wear out. Realistically, if the items aren't terribly complex or sensitive, Reparo should keep it in working order, which would explain how many hand-me-downs we see in canon. Not to mention transfiguration makes resizing clothes a breeze. The Duplication charm also means that as long as you have the original item, you can create hundreds of temporary copies as needed, and just vanish them when you're done. It brings a whole new meaning to the idea of disposable utensils.

I guess I'd say that there's probably a rather exponential curve in prices. Simple items, like Fred and George's prank items, Wands, Honeydukes chocolate, and books are probably quite cheap and plentiful. Stuff like Moody's Eye, a Wizarding Portrait, or the Weasley's family clock are probably orders of magnitude more expensive.

 

I will get rid of the "17 Sickles in a Galleon, and 29 Knuts in a Sickle" and used more sensible numbers.
I prefer Galleon to contain some gold alloy TM Gringotts.

 

Or there is some form subsidization for orphans/muggleborns getting their first wand, which would explain why it becomes more important later on for Harry to repair his old wand, rather than just get a new one or use the Deathstick.

 

Regarding transfiguration and specialisation:

From what we have seen, transfiguration provides the details of the object you are creating. Contrary to most fanon, you don't need to visualise the result yourself. When Cedric turned a rock into a dog, I highly doubt he knew everything there is to know about a dog's biology and chemistry. I'm not sure it's even possible for the human mind to know all that information and focus on all of it simultaneously. Certainly they don't teach that information at Hogwarts. The only realistic possibility seems to be that the magic fills in all the detail of the thing.

Of course, magic is more than incantation + wand movement, and transfiguration is particularly difficult. But that's just it: the wizard needs to know the rules, processes and theory of transfiguration, not object-specific knowledge.

Further, even though wizards typically use transfiguration for items they require temporarily, this does not stop the magic from being permanent in nature: Dudley had to have surgery to remove his tail, for example.

Given this, it's hard to see much room for a market for of basic objects, whether wizard-made or Muggle-made.

On a more speculative note, I would suggest that the way transfiguration works by default is that it creates a generic object. So, for example, when you want transfiguration to make a chair, it will make a generic, basic chair by default. The caster can customise the result to get something more fancy. This customisation normally occurs by manually modifying the result after it has been created (we generally see, in canon, transfiguration not being done all at once but rather by iteration, with characters modifying bits and pieces of an object in stages). However someone like Dumbledore can create custom objects directly, essentially condensing a whole series of transfigurations into a single transformation.

Now, of course most wizards really suck at transfiguration. It seems to be the hardest class at Hogwarts by quite a stretch, and I imagine most wizards do not have the ability to make fancy objects. However, I imagine most wizards can still manage an uncomplicated, generic, inanimate item, even if it takes them a number of tries.

 

In Bester's book "The Stars My Destination", everyone can teleport (or jaunt, colloquially). No matter their social status, wealth, or disabilities, this is something anyone can do. Instant transport, to anywhere, from anywhere (admittedly, there are rules - having to know where you're going and such).

People with an above bicycles to get around. They don't need to teleport, because they have downtime. The rich use cars. The main character, when blowing great wads of cash, builds a trainline, uses a train, and dismantles the tracks behind himself.


I can imagine something similar being in the HP economy. Anyone can learn to conjure up basic furniture, or transfigure their old and ratty mattress into a squashy purple sleeping bag, although it takes time. As such, the 'lower classes', and the poorer strata, tend to have homes that a finite or two would completely destroy. Expanding charms on the cabinets (so the potato masher doesn't stick), which themselves are transfigured from some wood, and stuffed underneath the sink (transfigured from a large beach shell) where the magically animated knife is top-and-tailing beans.

Contrast that to the Malfoy's home, where every piece of furniture is a bespoke commission from an artist, all of it built by hand and moved into position by teams of workers. The rich don't have to use the same methods as the poor to keep their home running.

It's been a while since I read Goblet, so I could be mis-remembering, but the tents that the Weasleys' borrowed look like two-sleepers, and where really nice inside. The posh tents Harry and Ron walked past where much larger, almost palace like in their construction.

Admittedly, this could quite easily break down - wizards do seem to set great stock by actually doing magic. But there can be a difference between doing magic and needing magic.

 

Furniture probably isn't the best example for what you're talking about. I'd say that food is a commodity the muggle world could provide at a cheaper price than the Wizarding world. If there is a muggleborn/halfblood merchant class, then it almost certainly involves importing food from the Muggles to Wizards. That said, I speculate that most Witches and Wizards are functionally subsistence farmers with a craft or trade on the side, like 1600's Italy or England. I don't think that there's really much demand for muggle goods except from the very rich or the very crazy.

My guess is that more wizards are like Lockhart and Trelawney than like Dumbledore. Seriously though, most of the people we interact with in canon are quite accomplished magically in only one or two areas. Sure, they might be a badass auror like Moody or an herbology genius like Sprout, but that doesn't mean they're well practiced in Transfiguration they learned when they were twelve. We see very few generalists over all. Riddle, Dumbledore, Hermione, and Snape are the only ones that come to mind. The Gaunts may have been so specialized that they couldn't do many of the household charms Molly Weasley holds dear.

Another hypothesis is that the Gaunts were simply so inbred and stupid they didn't care about living in squalor.

For some more extrapolation: When you transfigure a rock into a chair, I suspect that your magic "fills in the gaps" with what you think of as a normal chair, unless you specifically visualize something else. So Draco's default chair would probably be a lot less dinged up than Ron's default chair.

But why would they want to or need to? If your craft-centric model is accurate, bartering your skills in something for someone else's skill in transfiguration seems to be the best option for most wizards, unless they're like Trelawney or Lockhart in that their specialization isn't in high demand. That's how most craftspeople deal with eachother in the real world, after all.

 

For the same reason that on most days I cook my own food rather than paying for a professional chef to do it at a restaurant. My own efforts are adequate and cost me nothing.

 

Are brooms such as Nimbus 2000 mass-produced?

 

No, I don't believe so, in that the spells on them still have to be applied by wizard craftspeople, not some automated process. As Mr Weasley says, there's no such thing as a self-spelling wand.

At the most efficient, they might be an example of batch production. But they could equally well be good old fashioned job production.

 

In order to try and figure out the Wizarding World economy, we need to understand Transfiguration and Conjuring.

Are Transfiguration and Conjuring permanent or not? That question alone would massively change the way any economy is run.

I always had the belief that Conjuring was not permanent under most circumstances. When Conjuring happens, one is turning 'magic' into an object for a certain duration of time. Wizards who understand Transfiguration and Conjuring well might be able to have items last longer/make more complex Conjuring. This would be the case of Dumbledore conjuring sleeping bags for everyone.

I do see Transfiguration as permanent if one knows what they are doing as you are not generating something from nothing but instead changing the structure of an object to something else. Transfiguration tends to be easier if the change is smaller (match to a needle would be easier than a match to a couch).

If we went with this scenario, most people would have to buy some sort of already made object and transfigurate into something they desire. Perhaps old furniture into newer furniture. You wouldn't see people making their own furniture from thin air, as it would not last.

Purebloods, or those who believe more traditional values, would probably enjoy hand/wand crafted items and supporting a local economy. They would see anyone getting muggle furniture and customizing it as barbaric and wrong as well as hurting the wizarding economy. Muggleborns and those more interested in the muggle world would see it has a cheaper, easier and more functional way of doing business. This would probably be a huge reason why many purebloods dislike muggle-born and their new ideas they are bringing in. They are 'destroying a way of life of the locals'.

 

Even worse, did Crouch jr. actually create a new Draco from scratch when he transfigured him into a ferret and back?

 

I am pretty sure the soul stays the same with Draco ferret and Draco boy, and that component probably plays a decent role in transfiguration when you are looking at the more advanced transfigurations.

 

Why don't you just have the £5 to a Galleon a subsidised exchange rate to allow Muggle Borns to buy their stuff for Hogwarts. Stick a cap on it per year and the magical economy that Taure built works even with the exchange rate