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This is a "Wild Mass Guess" entry, where we pull out all the sanity stops on theorizing. The regular entry on this topic is elsewhere. Please see this programme note.
Labyrinth
David Bowie is a Muppet. The man never ages.
His career before Labyrinth was an elaborate experimental ruse by the Jim Henson company. It's the same style as having Elmo interviewed on a current affairs program, but on a grander scale. After the film was done, he somehow escaped, and he has been maintaining his fame as a security measure and because performance is all he knows how to do (and gods, he does it well...). There are legions of people who would notice if he ever disappeared.
  • Ooh. And Jim Henson never died. After Labyrinth he realized how much more lucrative being a rock star was compared to being a puppeteer. He's been "playing" Bowie ever since.

What we see in the fantasy part of the film is the result of Sarah's deranged and deluded mind after she kills Toby and sinks into insanity.
The end of the movie shows her having a brief lucid moment, though still being in denial about the murder, when her parents get home; then she sinks irrevocably into insanity at the end.
  • Nooooooo!
  • Some people just can't cope with fantasy.

Jareth is of the same Witch Species as Yuko Ichihara from xxxHoLic.
Both of them are masters at screwing around with space and time. Both of them like screwing over ignorant mortals by giving them exactly what they asked for. Both of them have the odd habit of having a new and ridiculously elaborate outfit every time they appear onscreen. Both like flirting with barely-legal teenagers in ambiguously sexual relationships. The similarities are scary.
  • Count D from Petshop of Horrors is another of that species. Same wish-granting theme and elaborate outfits.
  • Alternatively, Jareth is the same type of Fae as the gentleman with thistledown hair from Jonathan Strange And Mr Norell. The similarities are left as an exercise for the reader.
    • Or the same type as the Beldam from Coraline. They both steal children, preside over fantasy realms, change form, have problems with their minions defecting, and can be beaten by challenging them to games (though they will cheat if you start to win).

Jareth is romantically interested in baby Toby.
Sadly, very sadly, this is the plot of the Labyrinth Spin Off yaoi manga, featuring bishounen teenage Toby being stalked for his whole life by Jareth the magical pedophile. Well, he *is* a supernatural being. Presumably with different constructs of what's an appropriate age to begin lusting after someone, or the difference between 'What a cute baby!' and 'Hel~looo, nurse.'
  • This just makes the lyrics of "Magic Dance" a million times worse...
    Dance, magic dance!
    Dance, magic dance!
    Put that baby spell on me
    Jump, magic jump!
    Jump, magic jump!
    Put that magic jump on me
    Slap that baby... make him free!
    Jareth & The Goblins, "Magic Dance"
  • Incorrect. The manga has Toby brought to the Goblin Kingdom to become the new King so that Jareth can run after Sarah in the Real World. As of now, Toby's in major trouble as the new Goblin King, and Jareth is plotting vengeance and/or winning-back of Sarah as her Stalker With A Crush. The yaoi implications are, like the art on the covers, just there to lure in the fangirls.

Sarah, but not Toby, is actually related to the famed Morgan Le Fay, which is why when SHE said the words, it worked.
Meiriona is using this in her own fanworks on fanfiction.net.

The right words were actually "Somebody take me away from this awful place!"
This makes the entire movie a set up for when Sarah inevitably runs back to the generous but cruel Goblin King, who had indeed fallen in love with her.

There Is No Toby.
The "baby" is a creation of Jareth, specifically a Mac Guffin to lure Sarah into his world so that he can evaluate her potential as his Queen. All the trials Sarah goes through in his world are tests of fitness. All her "memories" of Toby are false, and her "parents" most likely either have false memories, too, or are fakes themselves.

Jareth was himself stolen by goblins as a baby.
Hence his human appearance. He was stolen from the Krolock family, and his older brother later became a vampire after inheriting the title of Graf. (Jareth didn't age past about 30 because he lived in another realm.) Both brothers, in spite of completely different upbringings, later fell in love with and lured teenage girls named Sarah who were bored to death with their normal lives. In addition, isn't it obvious that Herbert (Graf von Krolock's son) is SOMEHOW related to Jareth? Just look at Jareth and then Herbert.
  • Not only is that the case, but Jareth was specifically trying to duplicate that with Toby, in a way—he wanted to raise Toby to be his heir. Either he aged at a normal rate and couldn't be the goblin king forever, or he didn't want to be the goblin king forever and, for some reason, couldn't leave without leaving a replacement.
    • The second theory is the implication of Return to Labyrinth, although whether or not it's canon depends on the reader...
    • According to the Book of the Movie, the first theory is partially correct - he ages, but at a much slower rate. The beginning of the book has him realizing he's getting older and that he needs an heir.
      • Actually, his being taken by the goblins and either not aging or aging slowly makes his attractions to Sarah much less creepy. After all, the era he was born in may have considered a girl eligible for marriage at 16, or even 14, depending on how long he has been in the care of the goblins.

Jareth is a vampire

Jareth is an Anthropomorphic Personification tied to Deception.
He certainly seems to operate on a different plane from the other goblins, who might or might not all be constructs he personally created, based on Sarah's books and toys, when he targeted her. Likewise, he follows no particular rules of time or space, but when Sarah stops believing in his power, it is broken, just with a lie. And he cannot show up until she "tells" him to.
  • Alternately, the concept he personifies is stories (since the goblins all seem to come from Sarah's stories); that leads to even stranger implications.
    • Well, let's make a long essay comparatively short:

Jareth is a facet of Dream.
He rules a magical kingdom. He put a girl he had fallen in love with but who refused his gifts into an oubliette. (Sarah/Nada) He offers that same girl the world ("Fear me love me..." / "I would have made her a goddess"). He pissed off a young woman by appearing to have stolen a fair-haired baby, while it was being babysat and mum was out. (Sarah; Toby / Lyta Hall; Daniel) He didn't personally steal the kid. (Goblins / Loki&Puck) The young woman embarks on a quest to get revenge on the king for stealing the kid. (Sarah; the whole movie/ Lyta; The Kindly Ones arc) The young woman gains three allies who help her to defeat said king (Hoggle, Ludo, Didymus/The Kindly Ones) He desires to have "stolen" child take his place. He is defeated, and his power broken, when the young woman comes into the heart of his kingdom, and his kingdom is destroyed by this. (End of movie/ End of the Kindly Ones arc). He has Eighties Hair and long flowing cloaks.

The only real difference is that Sarah got Toby back, while Daniel took over for Morpheus. It's obviously an alternative ending Dream made for himself and his heir to be comforted by.
  • Alternately, Jareth is an entirely separate personification of dreams and stories related to an entirely different attractive anthropomorphic personification of death. Come on. Look at the way der Tod dresses. Watch "Der Letze Tanz" on one of the productions where Elisabeth's wedding dress looks decidedly white and poofy. Overtones of Sarah? You bet.

Jareth is an empty vessel personification-wise— he takes all his personality and important details beyond simply being what he is in the play, with minimal physical description, from Sarah's fantasies.
That's why he wants her to stay- wouldn't you rather be a handsome, cunning trickster-god in really tight pants than just another goblin in a goblin kingdom? The reason for all the puzzles and awkward semi-romantic imagery? Hormones.

The people inside the crystal during Sarah's dream/Jareth's seduction are the other people of his race.
They've been imprisoned by him, either for some crime against him or because he's totally batshit. They continue partying eternally, either because they're under a spell, they like it in there, or they, too, are completely batshit.

Both Sarah and the Goblin King are simply mentally ill humans.
Jareth breaks into the house and steals the kid as Sarah is babysitting. Sarah, not quite understanding 911, follows. She ventures into a small area of the city where the inhabitants don't like the cops but like baby-stealing psychos even less. (This part is justified by reality. Most crooks have a huge soft spot for kids in a good way.) Sarah's allies are friendly humans who want to help save the baby, and they use their underworld connections to do so. It is just fun to image the real world version of the Labyrinth. Maybe the Bog of Eternal Stench is a needle-strewn, long-abandoned crack-house.
  • The other inhabitants of this so-called Labyrinth are simple criminals. They get by, and they aren't heroes, but they aren't crazy either. Jareth, however, works outside the rules and is deeply delusional. Naturally, they would despise and occasionally disregard him— but fear him as well.

Jareth is a creature similar to the elves in Terry Pratchett's Discworld, if not indeed one of them
His actions and motivations resemble those of the Queen of Fairies in the Wee Free Men considerably, and like with the Queen, his world seems to be a reflection of his own mind, and its creatures are either extensions of himself, or wandered in from other places and gotten stuck. His appearance and demeanor are very reminiscent of the elves described in Lords and Ladies. He isn't a sadistic monster, but he clearly struggles with the concepts of human morality, and can't really tell love and possessiveness apart from each other. Of course, the stories take influence from the same ancient myths, justifying the similarity.
  • Elves are canonically an offshoot of the boogeymen and look like small, ugly monkey things underneath their glamours - that is, goblins. They live in parasitical pocket dimensions they can mold to their whims - that is, the Labyrinth. They get off on convincing mortals to worship them and are near helpless against a human that's managed to overpower their illusions. Jareth's an elf that got fed up with all the dog raping characteristics of his kind and decided to head off, start his own kingdom, and play the Trickster God instead! It all makes sense!

Jareth is Sosuke Aizen.
He keeps his zanpakuto in his pants, which Sarah was the only one not to notice. This is why she is presumably the first human to break through his illusion: she was never subject to the full force of the illusions, just the secondary effects that could be broken.
  • Oh my gosh, you made me nosebleed for Aizen's possible crotchitude! You pervert!

Sarah Isn't Crazy; she's the new Goblin King
At the end of the movie, she summons the denizens of the Goblin City to her bedroom; she's not hallucinating them or sinking into insanity, it really is happening. Her bedroom, being her sanctuary away from mundane life, is slowly merging with Jareth's Castle. Having defeated him, Sarah is now the Goblin King (Queen?) and entitled to his realm.

Sarah emerges from the Labyrinth as a Fairest, Toby will grow up to be a Hunter.

Forever touched by the powers of Arcadia, Sarah returns triumphant from her Durance in the Labyrinth, but finds herself growing even more distant from normal humans because she's found real friends among the goblins and hobgoblins she met in the Hedge.

When Toby grows up and finds his sister consorting with monsters (and possibly being able to see through her Mask, having been touched by Jareth's power as a baby), and generally becoming less and less human as she grows more fully into her Fae powers, he'll eventually hear the story of how he was stolen and Sarah came to rescue him, and dedicate himself to keeping the Fae from stealing anyone else.
  • Alternately, Sarah is one of the Wizened. Her Durance certainly had more to do with being cunning than being pleasing, we only think of her as fair because we - most of us, anyway - cannot see through her Mask. She actually looks much like the dweller of the dump who helped her reach one of her most important realizations.
    • Jareth put her through all that because he fell in love with her, in as much as any True Fae can; Wizened durances typically mean pointless, hideous tortures or impossible labors, and they become what they do more than anything like what they were made to be. Since Sarah is as gorgeous as ever and has learned to make friends over the course of the journey, it's unlikely that she picked up the characteristic bitterness and spite that the Wizened all have— however, it may be that she's picked up a dual kith, reflecting her unusually triumphant escape from Faerie by actually defeating her Keeper.

David Bowie is the heir of Gondor.

David Bowie is, however distantly, the direct descendant of King Aragorn, son of Arathorn, and Queen Arwen, making him not only the leader of the Dúnedain (and, by extension, the Númenóreans), as well as the one of the last elves on Earth. This is evidenced by his slow-aging and as his singing.

Jareth is der Tod.
Sarah keeps almost dying. The film takes place while she's well and truly out of her skull. Maybe she's severely ill (or grappling with depression) or something, and the film (as well as her rejection of his affections, symbolic of a refusal to dream away the rest of her life just taking her medication and waiting for death) is her decision to live, with death returned to its proper place. A story element, not something that will rule her life.

Jareth is Toby.
He went back in time to ensure his own future as Goblin King.
  • ... awesome! This is further supported by the name Jareth bestows on Toby ("I think I'll call him Jareth").
    • W-Wait. But Jareth is in love with Sarah, at least so far as one assumes a Goblin King can be. The manga makes it clear that Toby, like Jareth, has very fond memories of his creative elder sister, and regrets her mundane 'growing up,' and sure, he falls in love with a palette-swapped version of Sarah as she was at his age, but... Ohdeargoditmakessense.

Jareth is a Time Lord
His Time control abilities come from his time lord heritage while the smoke and mirror magic comes from his other parent. the labyrinth may or may not be a TARDIS under this theory.