I was going to blog about my thoughts on the latest iteration of the magical-realism-versus-fantasy debate, but I realized that I'd already said what I'd planned on saying. But the post and comments are worth reading, Jo Walton's especially. Magical realism's random, seemingly arbitrary, surreal events can be understood as "literalised metaphor" and perhaps as attempts to simultaneously acknowledge and control the dangerous irrationality prevalent in some human societies. But I find its consolation empty, and the act of reading magical realist novels an ultimately hopeless enterprise.
Fantasy proper postulates a new order, a system of magic that fundamentally changes our world. So much of it is a simple set of what-ifs, followed through to their logical consequences. How does human nature and culture evolve to cope with impossibilities and their implications? Where does it lead us? To what fantastical ends?*
Magical realism, so often set in contemporary milieus, pretends to offer change or escape, but ultimately cannot provide either more than symbolically. If it could, it wouldn't be realism anymore. As soon as you allow for the sort of sweeping social change that would actually result from the emergence of magic---since, logically, the emergence of the weird or fey would cause fundamental tectonic shifts in human society, the author loses the trappings of his setting. The introduction of magical elements is a broken promise, and presumes that the reader will not only accept the arbitrary manifestations of magic, but also an irrational lack of consequences from those manifestations.** Human society creates coping mechanisms in response to desperation, tragedy, and violence (sometimes unhealthy ones), but magical realism presumes a lack of systematic response to surreal phenomena. A magical event is dropped in as a symbol and slips without a ripple into the fabric of the "realistic" narrative.
"If it's just a symbol, then the hell with it."
*I find much science fiction indistinguishable from this sort of fantasy, save that the impossibilities are smaller and more likely to occur late in our species's history, with consequently more narrowly channeled effects on our development. But science-fiction authors are perhaps more likely to examine the ripple effects of their changes systematically. In contrast, many fantasy authors devote significant time to outlining the system of magic and then allow the implications to simply play themselves out.
** This insult to the reader, arising from the author's need to preserve "realistic" or contemporary (and thus more relatable?) setting and character behaviors is no less offensive when it's a fantasist or a science fiction author who lacks the courage of his convictions or, alternatively, the intellectual rigor his chosen divergence demands. See, e.g., District 9. But magical realist works seem to elevate this annoying mental weakness to the status of a virtue.