So the differing magical species have had to learn how to "trade" with each other so they can get the benefit of the other's superior skills without giving away too many of their own. This is the nearest my Fairy Kingdom gets to "politics" but the different groups have taken to it well. And to date most "trades" are successful. (There haven't been any wars or riots because things have got out of hand).
The Queen and her Council "solve" problems by merely issuing laws about them but it is down to local community leaders to actually implement them. So they too have to get together to work out how best to do this. It has been noted that the community leaders have talked more in the last century than they had in the previous millennium!