Solam, as far as it's been said so far, Channelers are the only ones with magical abilities. They are the ones that imbue other people with magical powers, if they so choose.

First off, Solam, your assessment of the origin of magic in this setting is dead wrong.  Magic passes through channelers.  Either way, your platitudes about "money makes the world go round" are completely irrelevant in regard to what we're talking about.

Second, I think we have people missing the point, here.  People seem to be suggesting that, by the current model of the economy, magic is mired with the mundane economy, which it is.  Which is why... I'm suggesting that we change the model to accomodate two separate economies.  This is a game.  It can be made however we'd like with whatever kinds of balance between different elements we'd like.

As for Matberry, you have social entities all the time appear in fantasy that possess immense magical powers but poor infrastructure by conventional development standards.  Just think of Fey creatures.  Also, I'm assuming that you don't have much background in fantasy strategy games, because using magic to summon soldiers is in no way a new idea.  So, Mat, when you refer to seeking out and securing resources, this can be done just as meaningful with summoned soldiers than real ones.  Ideally, though, most armies will be better off with a good strategic mix of soldiers, with real men fleshing out the principle roles and magical soldiers (elementals, fey creatures, magic bound monsters) would serve as auxilliary roles.

People seem to be of the impression that an empire focusing in magic would have an immensely powerful wizard inside of his tower with a vast empire of destitute peasants outside.  This is an innacurate depiction for the system I'm proposing.  A magically powerful civilization would be small in population, because population is a function of the mundane economy, not the magical economy.  Buildings that increase population, house population, and feed population are all a function of the mundane economic system where as a small group of trained and magically infused individuals are part of the magical economy.  The two economies would have 1 or 2 limited resources in common so, at its base level, the player must balance between the two and is unable to blitz forward with both (essence as that limiting resource, perhaps?).  

So what we end up with this system is a plethora of magical and mundane combinations.  You could have a civilization that focuses heavily on wealth and population growth, but little magic.  You could have a small population kingdom of immense magical power and high wealth.  You could have a highly magical kingdom with a powerful upper class and underfed peasantry.  With the current system in place in Elemental where both magic and mundane economy are bound, you have one linear path.  Money helps you make magic, so they both progress at roughly the same pace depending only on what resources you start next to or conquer. 

Let me illustrate how the other system would work more clearly.  The idea is you would use magical power to create infrastructure for your magical economy and mundane assets to create your mundane economy.  Your magical infrastructure would consist of the magical flows and bindings that you create inside of your tower (or any other structural flavor that might exist.)  The stone that is used to make the infrastructure of your magical economy is of trivial meaning when compared to the magic power needed.  To contrast, let's pretend we have a civilization that has both economies balanced.  Their mundane economy would consist of roughly 95 percent of the buildings in their city, 99 percent of the population, and 5 percent of their tower space.  The magical economy would consist of 5 percent of the building space in their city, 1 percent of their population, and 95 percent of their tower space.  Occassionally, you would have elements of the magical economy spill into the mundane economy and likewise. 

Civilizations top heavy in magic will have spatially small cities, small populations, and small armies but a high number of magically adept citizens, magically powerful towers, and a large selection of magical hosts, magical weapons, and soldiers.  Civilizations top heavy in the mundane economy would have large cities, large armies, large populations, but a light nimber of magically adept citizens, small towers, and few magical auxilliary soldiers.

Make sense yet? 

Nice idea Demiansky, kudos to you.

TL;DR: Magic and mundane economy are (or should be) different and not depend on the other for development. Mixing them should boost both though.

Why is not possible to have a strong society and strong magic while having them to be different/split? If both are independent of each other, I don't see why you cannot develop both to a great degree (except for forced balacing reasons). One real limit could be if both shread resources for development but then we would need to detail which resources and why.

We need to know the role of magic in the game world first. So the Sovereign is a Channeler. And except for other Sovereigns (and dragons?), no other Channelers are possible except they are imbued with Essence. No matter how much "War of Magic" this game is, it surely starts with magic being rare rare rare. It might change and have a future in which even the most simple villager sneezes hurricanes and farts fireballs but we should know how that process happen.

The Sovereign has the monopoly of magic for his people. It doesn't depend of his people. In case of no materials/resources needed for the most "simple" magics, he won't need any mundane economy to develop his spells. And any expense he has, is waived by being Sovereign ("Taxes? That thing my servants pay me?"). But what happens to Harry Popoter? The small house where he wants to live and study occupies some land and that land costs money to rent it. And it might need repairs from time to time. And if he needs some special components, he has to buy them. Except that the Sovereign guarantees him free land for his house and free maintenance (channelers could get privileges to avoid mundane expenses, which would allow more focus on magical research), Harry Popoter is going to need some coin. How can he get some coin then? He could use some alchemy spells to create gold but let's not get started on inflation. So he would need to sell his services somehow (his magical ones!), be it creating the typical potions, selling scrolls, going with adventurers for some fat loot... So he certainly might not need a big city to be a powerful channeler but the bigger the city, the bigger the expenses (let's face it, Gandalf "went Gandalf" because he was broke).

But a big city can be a good place for the development of magic. While not being the best place to practice your earthquake spells, cities are the best for any kind of social based spells. Or necromancy. It should make easier to access more uncommon materials/components due to better commerce than a backwater hamlet. So up to certain point and magic types, the biger the cities, the "better" the research. (Harry Popoter could be sorrounded by backstabbers channelers that only think of personal glory) Especially true if the city has the proper buildings that support magical research. But in this case, we would be using mundane economy to fund magical research (because some good labs, libraries and other things certainly helps a lot when researching stuff).

So except for the most complex of rituals/spells, channelers should be able to ignore completely the mundane world when research his magic thingies. So it'd be possible to have a backwater hamlet with a demigod channeler as leader as long as he has a way to keep himself (being Sovereign helps) and has the time to do the proper research (having few lands to rule would reduce the administrative distractions and help to focus on research). And some types of magic would benefit more from such a setup (still not a good idea to practice earthquake spells in the hamlet though) while being hindered in more populated/developed areas. But cities would still provide to be better assets to magical development. The Master Channeler of the backwater hamlet might be the best in the world but the big city produces more and has more chances of developing Master Channelers.

And why cannot magic combine with the mundane economy to boost it? City far away? Nothing better than our Essence Propelled Wagons. Need to improve morale in the whole kingdom? Teleball offers the best theather plays 24 hours a day for only a few extra coins each month! Need a Great Wall for your Kingdom and are in a hurry for it? Earth Masters & Co. can assist you with quick, clean and safe earth shaping magics. Your farm doesn't produce enough? Vi Agro can help you empowering your seed!

After all, all powefull Channelers living in "underdeveloped" countries are only harming themselves for not using their magic to supplement any mundane deficency that their countries have (weather, lack of certain techs...). Why borther ruling a land and not make it prosper? You might as well live a top a mountain, all alone.

Since channelers are the only source of magic it seems that mundane and magical econs will be forced apart(although this might just be wishful thinking). Mundane economies should help magic research up to a certain point, but the difference between having an empire and having a single large city should be negligible. As long as the channeler has errand runners he should be set. Having both should mundane and magical should work thogether, but as a combined arms thing. If i mixed channelar goes up agasint a straight mundane, the mixed's army should lose unless he uses spells to pull it out, and if a mixed fights a straigh magic, the mixed should get his spells crushed but win via his surviving troops. A magic vs mundane straight should be a total slaughter where its simply a matter of getting a soldier to the magic guy before he fireballs the whole mundane army to a crisp.

What i would really like to see though is having the power split set so that a straight magic/striaght mundane alliance between two channelers is stronger then the allaince of 2 mixed. That make having military alliances much more important.

like it.

I agree with the OP. I've wanted to have a system where the player could just have a single tower and be top of the magical class. Its tricky to do, because any building that produces spell research immediatley favors a larger empire, because you can build more of them.

The economy in a world like Elemental may not be based solely on money. Think of the Fallen, do they have farmer Fallen? Will individual Fallen demand payment for their manpower (fallenpower?) so they can buy food from the farmer Fallen to feed their children?, or will they just be happy for the master to not blast them into nothingness? Will there be Fallen unions to stop workplace bullying by the master?

I mean the world has collapsed, gone back to the dark ages, and so who is really going to care about getting paid? In those circumstances I think people would work for free just to survive.

In fact imagine a world..... without money.....

The only way to have a small magic kingdom approach be viable is to hardcap the number of mundane resources that can be put to magic at a low number.

And i always just assumed the fallen made the folks on the bottom of the totem poll do all the boring stuff like farming while the top guys got to go out and kill things. Maybe slaves too? Zombie farmers? Or maybe they feed on the pure essence of blood and war and don't need pathetic human things like fanta and fritos.

Well, in my other post I suggest a way by which the two economie are separated, as well as present a limited resource that every player has that can only be used at any given time for one or the other.  The sovereign is that limited resource.

I cover it in my thread about the Astral Plane. 

https://forums.elementalgame.com/375149

Most of your magic would come from the Astral Plane, and none of your mundane soldiers can go there unless you cast a special planeswalking spell on them (you would have incorporeal magical soldiers doing most of the work in the Astral Plane.)