Rising East Online

Crunch Issue

Harry Potter and the New Economic Order

—Andrew Blake

J.K. Rowling’s Harry Potter stories, and their impact, are part of the New Labour years. Knowingly straddling the boundary between children’s and adults’ literature, constantly invoking current anxieties – about education, or the family, or the problem of good and evil – the Potter novels are among the ways in which we have thought, delighted and feared, through the ten years of the Blair Prime Ministership.

New Labour’s original impact felt magical. The late-on-election-night defeat of Michael Portillo, statements about a foreign policy with an ethical dimension, even the Blair-led popular wash of sentiment on the death of the People’s Princess, gave Cool Britannia an air of enchantment, soon enhanced by the literary phenomenon of Harry Potter's irresistible rise. A few months after New Labour’s first (1997) election victory the first Harry Potter novel was published; the second (1998) was finished partly thanks to a grant, but by the time the third (1999) appeared, it was a global literary phenomenon, backed by arguably the biggest word-of-mouth development campaign since the dawn of the internet.

In that they proselytised and developed literacy, the Potter books were the servants of a significant shift in our ideas about ‘work’ and ‘play’. Indeed, in the post-industrial world, it seemed to many that the economy could only grow through playful, magical, ‘creativity’, and that literacy among consumers was as important as among workers. Addressing this issue, New Labour at its most post-Thatcherite insisted that the ‘creative industries’ would be the saviour of the British economy, and then set up the Department of Culture Media and Sport (DCMS) and numerous policies and initiatives to encourage them. The first DCMS minister, Chris Smith (and/or his policy wonks) wrote enthusiastically about the creation of a culture-based economy, constantly invoking the magic of creativity to encourage people to train for careers in music, art, film, computer games and so on.

Creative Magicians

Sure enough such changes are represented in the Potter books, by the Weasleys. They appear at first to be a 1950s family – the mother at home, the father a harassed civil servant, five children at various stages of adolescence and young adulthood – but there’s more. Two from the younger generation become creative entrepreneurs. At the end of book four twins Fred and George start a business selling their magical inventions (with money given, not lent, by Harry); in book five it is thriving.

This particular form of magic was only patchily effective in the Muggle world. J.K. Rowling herself was a transcendent example of the power of creativity; her UK publisher, Bloomsbury, ceased to be a cottage industry and started aggressively expanding, while the profitability of her American publisher, Scholastic, was also transformed. On the other hand, dot.com rose and fell, while the music industry’s refusal to engage with the internet caused massive contraction, as the rough magic of peer-to-peer filesharing displaced the record shop for the under-25s. British film remained the same hit-and-miss (but mainly miss) phenomenon it had always been. Creativity may be magical, but its results don’t always end up in neat piles of knuts and sickles in the vaults of Gringott’s wizarding bank.

Ah, banking, to paraphrase Dumbledore, a magic beyond anything done at Hogwart’s. One of the older Wesley boys, Bill, works for Gringott’s bank, is nonetheless ‘cool’, pony-tailed and ear-ringed; and he wins the heart of Fleur Delacour, the fairest maiden in the stories. Banking itself proved a far more magical aspect of the economy than ‘creativity’ in the Harry Potter years, and in Bill the books have their very own embodiment of the real creative economy of the Blair era.

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Loving Lucre

Early on in the new government there was a routine outbreak of political shenanigans: Bernie Ecclestone’s donation of £1 million to the Labour party on behalf of the cigarette companies sponsoring Formula 1, followed in short order by the government putting on hold a ban on cigarette advertising at Formula 1. So far, so wearisomely normal. But we began to notice a pattern. New Labour liked rich people. Wealthy MP and media owner Geoffrey Robinson was given a ministerial role for no obvious reason (he may have had ‘political talent’ but uniquely for a politician refused to discuss his ideas in public). Peter Mandelson borrowed money he couldn’t repay - from Robinson, for a flash flat in Notting Hill, so that he could pretend to be rich; Tony Blair and his wife tried to maximise every money-making opportunity, through speaking, writing or buying and selling property. Meanwhile Blair and his cronies told us that there was nothing wrong with being wealthy (a mantra repeated ad nauseam up to and including the Blairite John Hutton’s encomium delivered on March 12th 2008:

‘So rather than questioning whether high salaries are morally justified, we should celebrate the fact that people can be enormously successful in this country. Rather than placing a cap on that success, we should be questioning why it is not available to more people. We want more millionaires in Britain not less. Our overarching goal that no-one should get left behind must not become translated into a stultifying sense that no-one should be allowed to get ahead.’

Allowed to get ahead, is a key phrase. What the Blairites really wanted to do is to make Britain more like the USA, with its massive differentials of wealth and enormous reserve army of labour. So London became a great centre for the very wealthy, because they were allowed to live in it without paying tax on earnings. They and the wannabe super-rich who worked in the City of London fuelled speculation in house prices, which echoed that in the USA. Hedge funds and ‘private equity’ moved massive amounts of capital away from the forms of regulation required by stock markets.

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Money Magic

More people became very rich; most didn’t. In order to create new customers from among the majority who could no longer afford to buy homes (or anything else, without credit), clever capitalists waved their magic wands, and hey presto! In the USA sub-prime was born, and with it, almost simultaneously, a number of bastard children: various forms of repackaged mortgage debt which were basically worthless. When the inevitable collapse of sub-prime threatened a ‘respectable’ bank, Bear Sterns, it was bailed out by the Federal Reserve. State-backed funding – real money – had shored up funds which had never existed in the first place.

Meanwhile across the pond the plucky Brits were doing something depressingly similar. Banks like sometime respectable building society Northern Rock carried out their own aggressive sub-primeish lending campaigns, declaring the resulting mortgages to be surefire assets, and borrowing money nightly against them in order to maintain the semblance of liquidity.

Northern hit the rocks in the closing months of 2007. Six months later, it emerged that Bradford & Bingley (another former mutual society) had also been sailing in extremely choppy waters. There were various waves of alarm in between.

In Northern Rock’s case, when the overnight interest rates went up, but fewer banks were prepared to lend against these worthless mortgages, the result was bankruptcy; or it would have been had HM Treasury not guaranteed it to the extent of £50 billion of taxpayers’ money. Again, real money thrown into a vacuum of non-existent assets. Magic. As I write, Bradford & Bingley Plc seems to have been spirited away from danger by U.S. ‘leveraged-buyout’ firm TPG Inc. Perhaps that will do the trick.

Well, perhaps we were dealing with conjurers rather than magicians here? Not so. The clever people sold nothing to people who thought they were just as clever (and buyers and sellers alike paid themselves accordingly); and that nothing was in the end turned into debts we can all share, while the clevers and their dupes are the only people who have actually been able to spend any of the money they claimed to exist. That’s the net result of the decade of the creative economy, and the real magic of the Potter years: we’re culturally the richer, perhaps, thanks to J K Rowling, but otherwise – unless we’re financial CEOs or other total bankers – all the poorer.

Professor Andrew Blake is Associate Dean of the School of Social Sciences, Media and Cultural Studies, University of East London; and author of The Irresistible Rise of Harry Potter: kid-lit in a globalised world (Verso).

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