Economy and Society

Department of Sociology
Faculty of Social Sciences
South Asian University - New Delhi

Ibn khaldon Economic Thoughts

Question: How the scholarly discourse on economy evolved throughout world

history? Highlight some of the theoretical contributions which particularly interested
you through substantiated case studies and examples.

Abobaker sadr Term paper

M.A (Sociology), 2nd Sem
SAU/SOC (M)/2015/11
2016 / 2 / 25

Submitted to: Dr. Mallika Shakya

Assistant Professor of Department of Sociology
 Human society from its very beginning till now has been constantly in
progress and all human kind struggled for betterment and comforted life. From that
time thinking and praxis have gone both together. Human beings constantly used
their pragmatic thoughts for surviving then produced and constructed culture and
traditions for next generations. This debate cannot be concluded weather society
runs by pragmatism or tradition. My understanding is that people in society,
generations to generations, are in a process of experiencing things and creating sort
of knowledge and keep adding to that which is itself constructs a tradition. And then
each tradition is challenged by side of new idea or anomalies. As result of these
challenges and anomalies a new set of ideas and culture would be created. So we are
constantly in a process of making customs. Rules are emerging from these customs in
society. In this essay I try to look at scholarly discourse of economy in world history
and at the end I will focus on Ibn khaldun theoretical contributions to human
economy.

Economy as literal word comes from the Greek as ‘Oikonomia’ meaning

household managing (including sons and slaves), and ‘manorial estate’. Aristotle
(383-322) used this meaning for it (Hann and Hart 2011: 18). Aristotle in his works on
politics and ethics has thought of ‘art of wealth acquisition’. He also considered the
question whether wealth is best to be left in control of private or public. The concept
of economy was exclusively used for the agrarian empires that used to govern the
countryside and extract revenues from the agriculture. While they were not the only
one, there was a significant population living in the cities who were generating
revenue through commerce. These two sides roughly imagined as feudalism and
capitalism respectively. The first political structure was aristocratic rule of elites and
later was democracy of patriarchic kind (Hann and Hart 2011: 19). Aristotle’s
conception of human being as political animal (zoon politikon) was a conscious and
deliberate attempt. Criticizing the market and business (khrematistike) through trade
and commerce, he called it to be an anti-social pursuit of profit and unnatural-
transcending the geographical boundary, hence losing the essence of society. He
believed that humans were meant to live in a society that expressed human nature in
its entirety and for that there is a need for a collective order of the city (polis), its
core unit being the household (oikos). However, he did not mean oikos in a literal
sense -an ordinary household- but was referring to manor house whose aim should
be self-sufficiency (autarkia) through thrift management (Hann and Hart 2011:19-20).
It is evident here that the concept of economy reckoned by Aristotle was very
domestic in nature and believed that the property should be best left in the hands of
private hands i.e. the landlords of the manorial estates.
During the medieval age eleventh century, the rich traditions of Islamic
economic philosopher such as Al-Ghazali (1058-1111), the Persian Scholar and Ibn
Khaldun (1332-1406) contributed significantly to the economic thought. Al-Ghazali
having dealt social utility (maslaha), distinguished necessities, comforts and luxuries
very specifically and offering insights into exchange, production, money, the role of
state and public finances is more important in economic thought for his emphasis of
‘ethical behaviour’ in market and taking one’s business as an ‘obligatory duty’. His
advocacy for cooperation, justice, peace and stability and denouncement of usury
and hoarding are reflections of his background in Islamic jurisprudence (Sharia)
which governs the Islamic economics. One of the embracing goal of the Islamic
economics is to implement economic policies in such a way that the wealth
distribution reaches to the lowest brethren of society.
Ibn Khaldun on the other hand was more concerned with the issue of the
labour -value. He believed that economic value of a good is determined by the
labour spent in producing that good and therefore believed that ‘wealth of nations
depend on the production of arts and crafts’ much before Adam Smith conceived
(Hann and Hart 2011: 22). Ibn Khaldun articulated his coherent theory of state, rise
and fall of civilizations and economics in his book Muqaddimah: An Introduction to
History. The book is not only theoretically sophisticated but also empirically rich. He
also theorized the function of state, importance of stabilization policies,
specialization, types of taxation. He assume minimum role for the state with regard
to economic activities. He believed that engagement of state in trade and production
will increase the bureaucracy and reduce the incentives of entrepreneur to initiate an
economic activity. For this purpose state shall just enact law and play role in
establishment of order in society. Establishment of peace and security, ensuring of
poverty rights and protection of trade route are essential for economic prosperity. If
government policies favor economic activities, economic surplus will increase in such
conditions. The state could collect minimum tax from this economic surplus.
According to him the best taxation policy is the one which does not discourage
economic entreneurship, production and trade. Over taxing of economic surplus and
over expansion of state’s army and bureaucracy will discourage entrepreneurs,
reduce economic activities which finally lead to weakening of state and society. Over
taxation happens will the bureaucracy and military of the state expands to a large
extent. So his conclusion was that state shall keep minimum bureaucracy, minimum
military machine and minimum taxation.
 He also talked about specialization. He said specialization is coordination
among difference factor of production in order to stratify the needs of many more
human beings than themselves. This conception of him was repeated by Adim Smith
as well. For Smith specialization occurs in market hence greater the size of market,
greater the specialization. The profit has the return of human labour or in order
name it is the values of their labour. The point that made him different from Karl
Marx was that he said the values or the price of labour is determined by the supply
and demand in the market. Unlike Marx, he accounted both activities of labour and
entrepreneur as productive. According to him both are maximizing their profit.
Entrepreneur is the one who does coordination, cooperation and direction of factors
of production which is itself a costly process. The entrepreneur is spending both time
and energy for the purpose of finding goods and service for production and
generating profit. So as they undertake risk, they deserve the profit from
coordination of factors of production.
Long time before Adim Smith, he articulated the idea supply and demand. He
said that as there is scarcity of goods and services, the demand and as a result the
price will go high, in the contrary, as the goods are in plaintiful, the price will
naturally go low. Hence the supply and demand are the main factor in determining
the price of goods and services.
With regard to fiscal issues, he understood the values of stability of currency
and monetary policies. He purposed that instability in the value of money as a result
of politicians and rulers debauch will lead to inflation and reduce trust of
entrepreneurs. The state should sustain the purchasing power of the money. For this
purpose an independent monetary agency shall be created under authority of Chief
Justice (a God fearing person) to check the ruler fearlessly.

Adam Smith (1723–1790) is considered as father of modern economy, he

gave the market and labor theory of value but ‘confused’ it with the cost of
production and theory of value. Ricardo (1772–1823) tried to remove Smith’s
‘inconsistency’ but ‘could not be free from confusion himself. Marx (1811– 1889)
tried to take the Smithian and Ricardian labor theory of value to its logical conclusion
by presenting the theory of exploitation and invited opposition from every corner.
The prevailing usage term of economy after 19 century refers to accumulation of
goods and service and this production and exchange requires process of distribution
and exchange while sometimes this exchange cannot be equal. Lately, economic tend
to utilitarianism and focusing on cost and benefit and rational choice.
All though Ibn Khaldun had the first contribution to economy, Adam Smith has been
officially called the "father of economics." Most of scholars in social science do not
share such a view, and they accept Adam Smith one of the great philosophers who
has significantly contributed to the field of economics even by having founded the
original ideas in numerous areas of economic thought. So the development and
evolution of discourses in economy has neglected the contribution of the east. The
Eurocentric discourse of knowledge in general and economy in particular, undermine
the contributions of Muslim and eastern scholars.

References
Hann, Chris and Hart, Keith. 2011. Economic Anthropology: History, Ethnography,
Critique. Polity Press: Cambridge
Karatas, Selim Cafer. Nd. Economic theory of Ibn khaldun and rise and fall of nations
available in: http://www2.uned.es/congreso-ibn-khaldun/pdf/11%20Selim
%20Karatas.pdf

Ibrahim M. Oweiss, 1988. "Ibn Khaldun, Father of Economics," from Arab Civilization,

State University of New York Press,