(Steve here – one of our regulars, “Solarius Scorch,” aka Michal, and I talked about him doing a little writing for the Sanctum.  He’s got a killer discussion here of magic and economics, and writes both fiction and fanfic.  Get ready to see your worldbuilding a bit differently . . .)

“Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant. Need as well as greed have followed us to the stars, and the rewards of wealth still await those wise enough to recognize this deep thrumming of our common pulse.”

– Nwabudike Morgan, „The Ethics of Greed” [Sid Meier’s Alpha Centauri]

As we know, humans (and human-like beings) are not rational in their decisions and actions. This irrationality means their choices are not always correct nor optimal, as defined by whatever measure we apply: wealth, happiness, reason or anything else. This is because we have various goals of different natures: we have material needs, emotional needs, preconceptions and simple desires, which often conflict with one another. Thus, people aren’t always rational… but they are always economical.

Being economical essentially means choosing the most efficient ways to achieve our goals, however we define them. It is economical to build a road from your source of water to your home, because the initial effort will pay off by expending less effort in the long run. If someone chooses not to build a road, this is always because it would conflict with their other goals, such as for example “to preserve nature” or simply “to avoid physical work when possible”; therefore this decision is still economical, even if its rationality — or sensibility — is debatable.

This introduction serves to put into context what we’re looking at in the current article: the economy of magic. Magic, as understood in your general fantasy setting, is a prevalent element of social life; even if mages are rare, their products (for example, healing potions) usually aren’t. Therefore, a significant percentage of people have access to means of solving their problems that are fundamentally different from our own experience, or of our ancestors. And naturally, as economical beings, they will use these means, as long as they are more attractive than their non-magical equivalents.

As you can perhaps guess by now, this article’s main argument is: if you have magic in your world, then the world will work fundamentally differently from our own. How much they differ depends on certain factors, such as average accessibility to magic, but the eventual implications will always be complex, deep and affecting the entire society. Therefore you cannot have European Middle Ages with functional magic, because it will no longer look like The Middle Ages! You will end up with a completely new reality that must be largely designed from scratch, as dictated by economics and social sciences.

Let me elaborate on this. To investigate a suitable example, let’s stick with the healing potions and other healing magic for now. Even if they aren’t any better in what they are supposed to be doing than a non-magical treatment, buying affordable healing potions on the market is certainly much handier than carrying a bunch of first aid kits, not to mention hiring a professional healer to use them. A healing potion (or remove poison potion, cure disease potion etc.) may be more expensive, but as long as the cost isn’t prohibitive, certain people (adventurers, explorers, ninja etc.) will use them widely, creating significant demand on the market. Such a demand will certainly result not only in lowering the potion’s prices, bringing even more people into the customer base, but will also change how people perceive healthcare in general: that it’s a matter of fast, straightforward magic rather than unpleasant, long treatments. Non-magical healers would likely be reduced to a small caste of elites that deal with atypical diseases that somehow lie outside the potions’ abilities, or natural medicine folk who mostly tend to the poor. Having a steady supply of potions of cure anything will cause most people to not really care about doctors anymore, instead relying on alchemists (or demonologists, if you want to have a darker twist to this scenario) to ensure their well-being. As you can see, everything related to healing becomes completely overhauled because of one trivial potion we all know so well! And that’s only if we assume potion medicine is only as good as the mundane medicine, even though we all know it’s probably untrue in many cases.

Let us test another example: teleportation. Of course, in most fantasy settings such magic is considered advanced and uncommon. Nevertheless, it is used by a number of specialists, and it doesn’t take many people with extraordinary travel technology to leave a mark on society. First of all, teleportation allows one to instantaneously send people across distances that would normally take weeks or months of travel, often in unpleasant conditions. Even if teleporting large volumes of matter was impossible or impractical, there would be many wealthy people willing to pay for personal transport, or for teleportation of a small shipment. After all, such travel is not only much more comfortable, but also very fast; and in the case of a kingdom-wide important event, like an election, sudden coronation or king’s illness, who wouldn’t pay a hefty price to get there first?

Therefore, teleporting animate or inanimate matter is important, but not as important as teleporting information. This instant communication enables information travel at great speeds, comparable with telegraphs (at least between major centres, where teleportation services are accessible). (This aspect of teleportation also applies to all sorts of long-distance telepathy and similar magic.) You see, feudalism is a form of government most suited to a dispersed society, with significant autonomy given to those who will maintain kingdom’s reign over their territory. These autonomic, hierarchical centres of power are unsuited for everyday cooperation: they are mostly rivals, not friends (as seen in “Game of Thrones”, for example). Bringing them closer to each other, even by instant communication, will likely create very fast rise in tensions, any seeds of dissent in a kingdom will grow exponentially, and I bet we’d have a full-scale war within a year. No feudal government could endure something like this; they would have to evolve or perish. No more Middle Ages, folks.

Since teleports are so fascinating, let’s take at yet another aspect of them: warfare. Almost all ancient and medieval tactics relied upon physical relations between objects, for example if a unit faces another unit or if there is a wall between us and them. If we shatter this system by introducing teleports, all medieval imagery goes out the window: it is pointless to maintain a formation if we can be attacked from behind at any given time, and the most iconic troops — knights, cavalry, pikemen, longbowmen — lose many or all of their advantages. The actual result will of course depend on how rare teleportation is in the given setting, but even if it is fairly weak/expensive, it will still be used at times and will leave a fingerprint on warfare; and if it’s strong (like in Dungeons and Dragons, where you need something like a 4^th or 5^th spellcasting level, but there are easy-to-read scrolls too), we end up with units blinking around the battlefield and teleporting each other high in the air, which may be hilarious, but looks nothing like a proper fantasy battle. I won’t even start on castles and how teleportation makes them next to useless… Honestly, teleportation is a bitch.

What do these several thought experiments on two common magical effects — healing items and teleportation — tell us? That it’s basically impossible to have a world with magic that isn’t completely different from what we know? Now, that wouldn’t be much fun; and it wouldn’t exactly be true either. At the end, let’s have a look at four (of many) possible ways to prevent this from happening:

Masquerade. The name of this trope was made popular by the Vampire: The Masquerade game, but it is extremely common in fiction. As the TV Tropes website explains it, “whatever supernatural or extraordinary groups in the series (…) must hide their existence from consensus reality”[1]. In other words, the general public remains blissfully unaware of magic, or at least of anything conclusive or useful. And if we can believe something like this can be upheld in our world, full of cameras, TVs, tabloids and taxes, surely it would work much better in a fantasy setting? An idea of “no magic in the Middle-Ages… officially!” may not be much in line with the most popular RPGs, but it is fairly common in books and movies, from The X-Files to Dracula. Clandestine mage organizations, vaguely-speaking alchemists, priests performing “acts of faith” or creepy fellows commanding animals that certainly aren’t normal — all this rings a bell to almost anyone, and it can be used to great potential. Playing a brash, fireball-tossing wizard is fun, but playing a fireball-tossing person who also needs to hide their talents from the society is probably more interesting. Just remember to include some proper reasons to maintain the Masquerade in the first place, and you’re good to go.

Non-functional magic. Magic in RPGs usually exists primarily in ways that are simple, easily understandable and easy to utilize: be it spells, potions or some other form, they are all tools for a specific end; in short, it is a type of technology, even if it doesn’t rely upon any tangible machines (compare Way With Worlds: The Differences Between Magic And Technology[2]). And such magical technology is in many respects better than mundane technology, because it works way faster and more economical (even including the high costs of hiring a professional). Therefore, non-magical means of solving problems lose and disappear, as we’ve seen in the examples above. However, if we make a magic system that cannot produce desirable effects, it changes everything: non-magical specialists are still needed! Such non-functional magic can take several forms, the most extreme being “magic has no practical use at all and could as well not exist” to the more moderate “magic works, but is so inefficient (random, for example) it cannot be relied upon” to the relatively weak “magic exists and works well, but its effects are very limited — for example, speaking with the dead” to make it easier to tame. Of course such magic would be hard to work with for both the GM and the players, but could also make for an extremely interesting campaign theme: a functional magic is essentially a boring tool, while a non-functional magic can be mysterious and possibly fascinating.

Unique abilities. This is yet another popular way out: magic exists and works, but is limited to very specific people and cannot be taught to just anyone, or reproduced by some other means. The most obvious example would be Harry Potter, although in reality there are far too many spellcasters in that setting: I am thinking no more than a hundred mages worldwide, and most of them detached from everyday life. This is somewhat represented by the land of Middle-Earth, but also by many superhero settings, by the five sorcerers in Fate series etc. Forget magical universities or wizard taxes: you are essentially a walking god, unique and awe-inspiring!

Suspension of disbelief. This last solution may at first look like surrender: weren’t we considering all this in order to maintain logic instead of just winging it? Well no, it’s not about giving up. Simply, sometimes reality works in such random and even wondrous ways that something clearly illogical becomes real. Such instances are very rare, and certainly hard to work into a world, but sometimes it just happens that something deemed impossible by the old theory actually takes place — the bumblebee takes flight, another theory needs to be made. So, if all else fails, you can always fall back onto the “yes, you think it’s a stupid idea, but you are seeing it now with your own eyes!” argument; it’s okay as long as you do it sparingly, if it helps you have fun. Hell, the players might even try to find out why this works, which admittedly makes for an interesting goal in a campaign — but if they do, may gods protect you if you ignore them!

Naturally, this article left many aspects of magic economy completely untouched; it merely pointed out a few problems and some proposed solutions. The rest will certainly come up in your adventures sooner or later. Good luck!