On Ibn Khaldun`s Contribution to Heterodox Political Economy

On Ibn Khaldun’s Contribution to
Heterodox Political Economy
Adil H. Mouhammed*
Abstract:
The aim of this paper is to demonstrate that Ibn Khaldun made an
early contribution to heterodox political economy. Although he developed many
important ideas that are consistent with the neo-liberal model of development –
such as the benefits of the free market, the division of labour, free international
trade and optimal tax rates – Ibn Khaldun also developed ideas that are relevant to
heterodox political economy. These include the mode of production; evolutionary
changes of people, institutions and dynasties (or empires); the importance of labour
as the source of profits, properties of nations and economic development; the idea
of a business slump; imperialism and looting; and the immorality of early
capitalism. Essentially, his contribution to economic thought can be considered as
an indispensable non-Western source for many heterodox ideas.
1
Introduction
Ibn Khaldun ‘had no equal in any age or country until Vico appeared,
more than three hundred years later. Plato, Aristotle, and Augustine
were not his peers, and all others were unworthy of being mentioned
along with him’. (Flint 1894, p. 87)
Abd al-Rahman Ibn Muhammad Ibn Khaldun al-Hadrami, the great North African
historian, was born in Tunis in 1332 and died in Cairo in 1406. He is best known
for Muqaddimah (The Prolegomena or An Introduction to History), in which he
strove not only to explain the various cultural causes behind the rise and fall of the
imperialistic Arab dynasties, but also to transform history into a science. In the
process, Ibn Khaldun analysed relationships and categories that are compatible with
early capitalism, as classified by Max Weber (1961), Joseph Schumpeter (1951)
and Julian Freund (1969). There are, for example, references to private ownership,
employers hiring workers to produce output for the market in order to make profits,
the extension of trade via the domestic and international division of labour, and the
interruption of this trade due to business slumps. These early capitalist categories
and relationships are, furthermore, examined in a scientific manner. Historical facts
are gathered and ordered in a systematic fashion to discover a web of interrelated
causes and effects that hold the social phenomena together. This approach, which
Ibn Khaldun called the sequence of causation and which has already been
admirably examined by L. Haddad (1977), is very similar to Thorstein Veblen’s
(1904, p. 365) sequence of cumulative causation and what Gunnar Myrdal (1957,
p. 11) calls the circular and cumulative causation.
Muqaddimah, and hence the analysis that it contained, was available and
known to European scholars before the twentieth century. Joseph Spengler (1964,
p. 268), in a penetrating work on Ibn Khaldun, believes that the Muqaddimah was
completed in 1377 and issued in printed form in the 1850s. But there is evidence
that the ‘manuscripts of Ibn Khaldun’s work were extremely plentiful’ before this
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date and that Ibn Khaldun’s ‘ideas were known in Europe since the seventeenth
century’ (see Gates 1967, p. 422; Boulakia 1971, p. 1117). Numerous studies of Ibn
Khaldun’s work have since been published, and insightful studies on Ibn Khaldun’s
specific contribution to political economy, such as those by Spengler (1964), Jean
Boulakia (1971), L. Haddad (1977), I. M. Oweiss (1988), D. Weiss (1995) and
Abdol Soofi (1995), have provided an analysis of Ibn Khaldun’s views on
methodology, production, prices, distribution, population, environment
degradation, monetary theory, aggregate demand, imitation, business slumps, and
growth and development. Other modern scholars, such as Ernest Gellner (1961) and
Suphan Andic (1965), argue that Ibn Khaldun’s analysis of society is
complementary to Marx’s ideas. Gellner (1961), for example, believes that Ibn
Khaldun’s and Marx’s revolutionary systems are comparable on the grounds that
Ibn Khaldun’s vision of dissident tribes destroying the ancient regime is similar to
Marx’s vision of the proletariat destroying the nouveau regime. Indeed, in the
context of Ibn Khaldun’s anticipation of Marx, Andic (1965, p. 25) argues that
there is ‘a tendency in the West not to take into account the share of oriental
thought in the history of modern social and political thought, because of the
enthusiasm to emphasize its European origins’.
In this paper I expand on this literature by examining Ibn Khaldun’s
heterodox interpretations of economic and social relationships. I believe that these
heterodox interpretations are complementary to the orthodox interpretations that
have been emphasised by Spengler (1964) and others. In this context, heterodoxy in
political economy may be defined as the act of analysing and changing capitalist
reality, and it covers various approaches to economic analysis, such as Marxian,
socialist, institutional, social, feminist, Post Keynesian, behavioural and
Schumpeterian economics, to mention a few (Howard and King 2001). This view
takes the capitalist economy as an historical stage that is based on power,
exploitation, exclusion and conflict. This exploitation is associated with immorality,
poverty and inequality in income distribution in such a way that an insufficient
aggregate demand arises. Enterprises subsequently cannot sell their goods
domestically and this compels the capitalist élite and its government to engage in
imperialist adventures for exploiting other helpless nations by using military forces.
These dominated nations are used as sources of labour force, material inputs, markets
and savings. In this environment, patriotism (which reflects irrationality) and
militarism become very important institutions for ensuring global capitalist
hegemony whose outcomes are wars that benefit the vested interests. This uncertain,
complex and dynamic reality requires all economic, political and social forces to
affect each other, in a way that a cumulative process of causation is generated that
ends with the transformation of the existing system, whether through the evolutionary
establishment of new cooperative institutions or through the revolutionary impulse.
The paper consists of six main sections. Section 2 deals with Ibn
Khaldun’s view of the modes of production. Section 3 is devoted to Ibn Khaldun’s
ideas on change and evolution. Section 4 analyses labour as the source of profits,
the wealth of nations and the process of development. Section 5 develops Ibn
Khaldun’s ideas on the business slump (or crisis), and section 6 investigates
colonialism and looting. Section 7 analyses capitalism and immorality, and a final
section is devoted to a summary and conclusions.
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2
The Mode of Production
Ibn Khaldun thinks that the way people make their living, or their method of
production, determines their social and economic conditions. Since there are
various ways of making a living, there are different conditions and institutions that
reflect these methods of production. In his words: ‘It should be known that
differences of conditions among people are the results of different ways in which
they make their living’ (Ibn Khaldun 1969, p. 91). For example, farmers and
Bedouins do not have well-developed capitalist relationships because the economic
surplus generated within such social groups (or tribes) is controlled by the family
and tribal leaders. They nonetheless follow their own rich traditions and laws, and
exploit their own division of labour and ability to cooperate to produce
commodities. These tribal societies are, furthermore, not isolated. They trade
commodities with towns and cities and, through the resulting social contact, imitate
and adapt certain characteristics from these urban centres.
The individuals who constitute these tribal societies also depend on their
own resources to protect their land and property. This self-reliance generates a high
degree of solidarity and tribal loyalty, which in turn generates both a respect for
authority and a tendency to revolt against authority. That is to say, this solidarity
creates a revolutionary impulse within these groups to rebel against rulers and
thereby to establish their own authority. They are not accustomed to being
dominated by external social forces and they resist such domination, although they
like to remain loyal to their internal rules. They also carry their revolutionary urge
to the urban centres to impose their own royal authority. It was this revolutionary
spirit that induced Gellner (1961) to refer to the Bedouins as Marx’s proletariat,
since the latter were thought to have enough solidarity and revolutionary spirit to
change capitalism.
In contrast, Ibn Khaldun presumed that sedentary people exploit the
division of labour to produce commodities within commerce, service and
manufacturing sectors. He describes the production process through the example of
bread production, where various tasks, such as kneading and baking, are divided
among workers who are employed by the owner (the capitalist). This production
process is social and (early) capitalist in nature because the owners of the means of
production hire workers to produce output that exceeds their needs, and they sell
this output for a profit so as to purchase both necessities and luxuries. This
economic surplus is, furthermore, used to expand and sustain this mode of
production. In fact, the economic surplus can be exported to other countries through
international trade and, indeed, the latter is pursued to support the developmental
process. Other social institutions arise to serve the same purpose. Sedentary people
build houses, castles and fortifications, and develop advanced methods of finance
and rules to maintain property rights. They also require government police and an
army to protect them from enemies: ‘[Sedentary people] have entrusted the defence
of their property and their lives to the governor and ruler who rules them, and to the
militia which has the task of guarding them’ (Ibn Khaldun 1969, pp. 94-5).
Ibn Khaldun believes that those people who adopt this sedentary life
(especially those who are educated) and who are subject to these government
controls and laws become disciplined and submissive before the law, and that this
decreases their ‘fortitude’ (1969, p. 96). This is because government laws and
regulations, as well as education, eventually weaken the people’s ability and will to
revolt: ‘Governmental and educational laws influence sedentary people in that they
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weaken their souls and diminish their stamina’ (Ibn Khaldun 1969, p. 97). He
thinks that domination and intimidation also weaken people’s power to resist
because these methods destroy their solidarity and make them conservative. This
explains why the oppressed and dominated people cannot resist (Ibn Khaldun 1969,
p. 96). In fact, the dominated people will perish: ‘The group that has lost control of
its own affairs [and become an instrument of someone else] thus continues to
weaken and to disintegrate until it perishes’ (Ibn Khaldun 1969, p. 117). This
analysis is, of course, similar to the Marxist view of the way education and tradition
breaks down the resistance of the working class (Marx 1967, Volume I, p. 689).
The opposite is true for the people who have not lost control of their
affairs. Their solidarity creates strong ties and unity to defeat other social groups
who seek to dominate them: ‘If the direct relationship between persons who help
each other is very strong, so that it leads to close contact and unity, the ties are
obvious and clearly require the existence of a feeling of solidarity without any
outside prodding’ (Ibn Khaldun 1969, p. 98).
The implication of Ibn Khaldun’s view is that if solidarity within social
groups is strong, their ability to resist other social groups is strengthened. The
eventual defeat of the weaker social group also strengthens the successful group. In
his words: ‘If one group feeling overpowers the other and makes it subservient to
itself, the two group feelings enter into close contacts, and the defeated group
feeling gives added power to the victorious group feeling, which, as a result, sets its
goal of superiority and domination higher than before’ (1969, p. 108).
This domination may, however, create its own destruction. If the
domination is brutal, the dominated people will react strongly against the ruler. In
contrast, if the domination is kind and just, particularly when people are not
oppressed by its laws and restrictions, then there will be no resistance. He explains
this phenomenon by invoking human nature: ‘man must by necessity be dominated
by someone else’ (Ibn Khaldun 1969, p. 95).
Ibn Khaldun’s analysis of the mode of production provides a prelude to
Marx’s analysis. Both believe that economic conditions, particularly the
production process, are the driving forces behind the development of all aspects
of society. Both think that the division of labour can generate a surplus that can
be sold for profits. Marx believes that there is a conflict between productive
forces and the relationship of production, and that this gives rise to an inevitable
revolution and change of the superstructure and the economic base, whereas Ibn
Khaldun thinks that isolation and the marginalisation of people, the ruled, will
ignite strong solidarity among them in a way that induces a revolutionary
takeover that, in turn, creates new institutions. Ibn Khaldun does not analyse the
revolution through the notion of the class struggle, as Marx does, but instead
regards the isolation and intimidation of the ruled by the ruler as an urgent need.
It can be stated that Ibn Khaldun has no comprehensive discussion of the
realisation of class struggle and its revolutionary outcome, as Marx does.
However, the revolutionary tribes of Ibn Khaldun are similar to the revolutionary
proletariat of Marx: ‘the world of Karl Marx did not replace the world of Ibn
Khaldun: the two existed side by side within one country’ (Gellner 1961, p. 386).
This combination tends to create instability and changes that ruling groups do not
cherish.
Indeed, Ibn Khaldun’s ideas of the impact of conditions on people and how
they react by forcing revolutionary changes place him in the same category as Marx
and Veblen. The associated combination of strong solidarity and revolutionary
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urge, Gellner (1961) argues, was the dynamic force that enabled Ibn Khaldun’s
social tribes to dislodge the French and the British forces from various places in the
Middle East. The specific dynamics of social change within Ibn Khaldun’s writings
are the subject of the next section.
3
Change and Evolution
Ibn Khaldun’s evolutionary ideas are clearly presented throughout his work. He
criticises historians for various reasons, the chief of which was their ignorance of
change and evolution. Historians, he points out, ‘neglected the importance of
change … in their treatment of (historical material). [Also when] they turn to the
description of a particular dynasty … [t]hey do not turn to the beginning of the
dynasty. Nor do they tell why it unfurled its banner and was able to give
prominence to its emblem, or what caused it to come to a stop when it had reached
its term’ (1969, p. 7). Similarly, Ibn Khaldun realises that nations along with their
institutions do change and evolve over time. For example, the
old Persian nations … were succeeded by the later Persians, then the
Byzantines, and then the Arabs. The old institutions changed and
former customs were transformed, either into something very similar, or
into something distinct and altogether different. Then, there came
Islam. Again, all institutions underwent another change, and for the
most part assumed the forms that are still familiar at the present time as
the result of the transmission from one generation to the next (Ibn
Khaldun 1969, p. 25).
For Ibn Khaldun, the entire reality transforms when there is a general
change of conditions. These transformations may be very radical in that they create
a new reality with new institutions. He states: ‘When there is a general change of
conditions, it is as if the entire creation had changed and the whole world been
altered, as if it were a new and repeated creation, a world brought into existence
anew’ (1969, p. 30). Although Ibn Khaldun understands changes and
transformation, he provides only one factor as the driving force, namely ‘the
contact between different people or classes and the consequent imitations and
intermixtures’ (Issawi 1950, p. 8) The contact, taking the forms of social
communications and personal exchange, may lead some excluded social groups to
imitate the revolutionary action taken by other indigenous or foreign groups. This
action is used to destroy the ruling dynasty. Or the contact may result in the
imitation of certain high-quality institutions developed by other communities. This
form, which can be considered an evolutionary form, allows the people to succeed
by changing their daily habits of mind. Some societies think that this is the best
way to change because it is compatible with their culture. In any event, both
methods create changes, but at different speeds.
Not only do conditions, institutions and customs change and evolve over
time, but even the colour of people is subject to evolution and change when the
environment changes. Ibn Khaldun attributes blackness and whiteness of people to
climatic conditions of hot and cold. When people ‘go through a very severe
summer … their skins turn black because of the excessive heat’. In contrast, in the
north the ‘heat … is weak in this region, and the cold is severe in all seasons. In
consequence, the color of the inhabitants is white … Further consequences of the
excessive cold are blue eyes, freckled skin, and blond hair’ (Ibn Khaldun 1969,
pp. 59-60). If people of the south move north and vice versa, then people’s colours
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change from black to white and vice versa as the conditions change. He argues that
black people ‘from the south who settle in the temperate fourth zone or in the
seventh zone that tends toward whiteness, are found to produce descendants whose
color gradually turns white in the course of time. Vice versa, inhabitants from the
north or from the fourth zone who settle in the south produce descendants whose
color turns black. This shows that color is conditioned by the composition of the
air’ (Ibn Khaldun 1969, p. 60). A consequence of this argument is that
discrimination against people on the basis of their colour becomes self-defeating
behaviour. It is, after all, absurd to discriminate against people due to their
location.
Ibn Khaldun uses a stadial theory of development to frame these
evolutionary changes. Specifically, since the goal of Ibn Khaldun’s intellectual
system is to explain the reasons behind the rise and fall of a dynasty (or an
empire), he believes that a dynasty passes through five stages. The first stage is
the stage of success, the overthrow of the previous dynasty and the establishment
of a new royal authority: power administered through the state (or a dynastic
state). In this stage, ‘the ruler [government] … collects taxes, defends property,
and provides military protection … He does not claim anything exclusively for
himself’ (Ibn Khaldun 1969, p. 141). Regarding the issue of money that comes
through tax revenues generated and paid by the business economy to the
government, Ibn Khaldun anticipates a key tenet of supply-side economics when
he contends that a lower tax rate can stimulate business enterprises and enhance
income and tax revenues, and that these revenues can be used to strengthen the
military forces of the dynasty (see Nagarajan 1982; Laffer 2004; Mouhammed
2004). He points out that, at the ‘beginning of the dynasty, taxation yields large
revenues from small assessments. At the end of the dynasty taxation yields small
revenue from large assessments’ (Ibn Khaldun 1969, p. 239). Also, when
tax assessments and imposts upon the subjects are low, the latter have the
energy and desire to do things. Cultural enterprises grow and increase,
because low taxes bring satisfaction. When cultural enterprises grow
and increase, the number of individual imposts and assessments mount.
In consequence, the tax revenue, which is the sum total of [the individual
assessments], increases. (Ibn Khaldun 1969, p. 230)
President Reagan stated this very same argument at the Illinois Forum Reception
in Chicago on 2 September 1981 and in his news conference on 1 October 1981
and used it to justify his tax cuts.
Indeed, the first stage can be called the stage of the rising dynasty, and
the primary elements in this state of society are group feeling (solidarity) and the
availability of dynastic money through the taxation of business enterprises. As
Ibn Khaldun (196, p. 246) explains: ‘Any royal authority must be built upon two
foundations. The first is might and group feeling, which finds its expression in
soldiers (or as strong army). The second is money, which supports the soldiers
and provides the whole structure needed by royal authority’. Solidarity
(asabiyyah) in this context is defined as an ‘affection and willingness to fight and
die for each other’ (Ibn Khaldun 1969, p. 123). This group feeling makes the
dynasty very powerful because all citizens support and defend it. In Ibn
Khaldun’s (1969, p. 130) words: ‘The temper of dynasties is based upon group
feeling. If the group feeling is strong the (dynasty’s) temper likewise is strong,
and its life [will be] of long duration’. Also, group feeling generates a sense of
superiority, which in turn breeds leadership. It should be noted that the Asabiyyah
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is similar to both Marx’s idea of class consciousness and to Veblen’s idea of
corporate solidarity and of the rising dynastic state. Marx was interested in the
way class solidarity amongst the proletariat induced the transformation of
capitalism, while Veblen analysed the solidarity of large corporations when
making money, not goods, and, in a slightly different context, the way it
underpinned the rise of the German imperial state. However, although Ibn
Khaldun would have approved of Veblen’s use of solidarity to explain the rise of
the German state, his use of this idea differs from its use by Marx and Veblen in
that he saw it as being applicable to all social groups regardless of their social
rank and wealth.
In the second stage, which one can call the stage of the ruler’s selfishness,
the ruler controls his own people and claims all the dynastic achievements for
himself. In Ibn Khaldun (1969, p. 141) words: ‘[the] ruler gains complete control
over his own people, claims royal authority all for himself, excluding them, and
prevents them from trying to have a share in it’. As a result of the ruler’s selfish
behaviour, a division (or conflict) is initiated between the people and their ruler
(government). The excluded social groups therefore try to rebel to establish their
own system.
The third stage is the stage of leisure and tranquillity. The ruler constructs
large buildings and monuments, and initiates big construction projects and spacious
cities. He inspects soldiers and presents gifts to ambassadors, and performs a
variety of ceremonial activities to impress friendly dynasties and frighten others.
This stage, according to Ibn Khaldun (1969, p. 142), ‘is the last during which the
ruler is in complete authority’.
In the fourth stage, the ruler simply imitates his predecessors because he
‘thinks that to depart from tradition would mean the destruction of his power’ (Ibn
Khaldun 1969, p. 142). Andic (1971, p. 31) describes this stage ‘as one of stagnation
characterized by contentment, peacefulness and imitation’.
The fifth stage is the stage of waste and squandering. The ruler wastes
economic resources on pleasures and amusements, and acquires parasitical
followers. The ruler also seeks to destroy the people (his original followers) who
helped him to establish the dynasty. This selfishness concentrates power and
engenders the exclusion of other social groups, which in turn weakens solidarity:
In order to prevent [his original followers] from seizing power, and in
order to keep them away from participation in it, the ruler needs other
friends, not of his own kin, whom he can use against [them] and who will
be his friends in their place … This, then, announces the destruction of
the dynasty and indicates that chronic disease has befallen it, the result
of the loss of the group feeling on which the [dynasty’s] superiority has
been built … Thus, the dynasty came to belong to people other than
those who had established it. Power went to people other than those
who had first won it. (Ibn Khaldun 1969, pp. 146-7)
This causes the first foundation on which the dynasty was based, the group feeling
(solidarity: asabiyyah), to break down.
The second foundation on which the dynasty is built, namely tax revenues
(and hence the economic base), is also weakened over time. The shortage of tax
revenues usually results from the extravagant (luxurious) expenditures practised by
the ruler and prominent citizens and from the heavy taxes imposed by the dynasty
on people and business enterprises (Spengler 1964, p. 290; Haddad 1977, p. 203).
When government expenditures are allocated to wasteful activities, this type of
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spending will be copied by the subjects in an effort to keep up with the ruling class.
All parties will have to spend more and will, inevitably, become needy. In Ibn
Khaldun’s words:
The expenditures of the ruler, and of the people of the dynasty in
general, grow. This [tendency] spreads to the urban population. It calls
for increases in soldiers’ allowances and in the salaries of the people of
the dynasty. Extravagant expenditures mount. It spreads to the subjects,
because people follow the [ways] and customs of the dynasty. (1969,
p. 249)
In order to obtain the necessary funds (tax revenues) to meet expenditures, the
government has to find new avenues for collecting taxes. The only solution is to
impose new taxes on people and business enterprises:
[The ruler] must invent new kinds of taxes. He levies them on
commerce. He imposes taxes of a certain amount on prices realized in
the markets and on the various (imported) goods at the city gates … In
the later (years) of a dynasty, taxation may become excessive.
Business falls off, because all hopes (of profit) are destroyed,
permitting the dissolution of civilization … This situation becomes
more and more aggravated, until the dynasty disintegrates. (Ibn
Khaldun 1969, p. 232)
This situation is aggravated when other social groups are deprived, by the dynastic
state, from participation in the process of decision making. These groups take
advantage of this economic crisis of the state and assert themselves. With solidarity
and new ideas, they can seize the political situation and establish a new dynasty by
force.
The previous analysis clearly demonstrates the fact that Ibn Khaldun’s
explanation regarding rising dynasties is useful for understanding the phenomenon
of the rise and fall of empires such as fascist states. The group solidarity that is
genetically related to the survival of a social group is the core of nationalism,
patriotism and imperial hegemony. This kind of patriotic fervour provokes people
to support imperialistic schemes of the ruling class in the sense that these schemes
are important for the benefits and the survival of a nation. Of course these schemes
are easily implemented under conditions of technological progress, financial
abundance and conservatism, as they establish the essential foundations for
militarism. For Ibn Khaldun the driving force of financial abundance for a rising
dynasty (or empire) is the capitalist economy with minimal government
intervention, high labour productivity, free international trade, and low tax rates on
business enterprises.
In many ways Ibn Khaldun’s analysis of the rise and fall of dynasties is
similar to Veblen’s (1915) account of the rise of the German Dynastic State.
Veblen (1915, p. 161) considers group solidarity to be an important element for a
rising dynasty because it generates royal authority, military power, loyalty and
patriotism. The second main element that propels such a dynasty is war
technology, which enhances the military power of the army. Veblen (1915, pp.
211-37) also thinks that the high tariff and high tax policies implemented by the
German government functioned at cross-purpose with the dynasty’s goals. This
implies that Veblen, like Ibn Khaldun, believes that an economic policy based on
free trade and lower taxes would have been less painful to the community than
the German model.
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4
The Importance of Labour
Labour is the basic source of production, profits, properties of nations, and
development of cities and civilisations. When labour produces an output that
exceeds the community’s need, the surplus can be used to satisfy the needs of other
people through international exchange:
If the labor of the inhabitants of a town or city is distributed in
accordance with the necessities and needs of those inhabitants, a
minimum of that labor will suffice. The labor [available] is more than is
needed. Consequently, it is spent to provide the conditions and customs
of luxury and to satisfy the needs of the inhabitants of other cities. They
import [the things they need[ from [people who have a surplus[ through
exchange or purchase. Thus, the [people who have a surplus] get a good
deal of wealth. (Ibn Khaldun 1969, p. 273)
When the surplus is exchanged, the exporting producers will receive either goods to
be sold domestically or precious metal that can be utilised in a variety of ways,
including the purchase of other foreign goods.
Ibn Khaldun believes that profit does not exist without labour: ‘It has thus
become clear that gains and profits, in their entirety or for the most part, are value
realized from human labor … It should be known that when the [available] labor is
all gone or decreased because of a decrease in civilization … profits [are] …
abolished’ (1969, pp. 298-9). Once labour produces the surplus of production,
owners of business enterprises will obtain the monetary value of the output sold,
including profits. Without labour the surplus cannot be materialised, nor will profit
be realised. If the realised profit is higher than what is needed, capital accumulation
will continue. In Ibn Khaldun’s (1969, p. 297) words: ‘Profits will constitute his
[the entrepreneur’s] livelihood, if they correspond to his necessities and needs.
They will be capital accumulation if they are greater than (his need)’. Simply, when
the cost of production and producer’s consumption are subtracted from revenues,
the excess profits will be invested. Capital accumulation continues as long as
profits are realised. Since economic sectors are interdependent, this process of
capital accumulation will affect all sectors of the economy.
Ibn Khaldun believes that regardless of whether profit is generated by a
craft or by other means, the outcome is still the product of labour, as capital must
also be produced by labour. Even if profit ‘results from something other than a
craft, the value of the resulting profit and acquired (capital) must (also) include the
value of the labor by which it was obtained. Without labor, it would not have been
acquired’ (Ibn Khaldun 1969, p. 298). He continues: ‘human labor is necessary for
every profit and capital’. Moreover, ‘the capital a person earns and acquires, if
resulting from a craft, is the value realized from his labor’ (1969, p. 298).
Consequently, for him, even the properties of nations have come from
labour. He states:
it should be known that treasures of gold, silver, precious stones, and
utensils are no different from other minerals and acquired (capital),
from iron, copper, lead, and any other real property or (ordinary)
minerals. It is civilization that causes them to appear, with the help of
human labor, and that makes them increase or decrease. (Ibn Khaldun
1969, p. 302)
The implication of this analysis is that a developed country must have skilled
human labour. It must also stress the importance of education and training as the
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best strategies for obtaining knowledge and skills. Both increase labour
productivity, which in turn increases economic surplus, and the latter enhances
prosperity and development: ‘Civilization and its well-being as well as business
prosperity depend on productivity and people’s efforts’ (Ibn Khaldun 1969, p. 238).
Again in his words:
The great amount of available labor … brings wealth. A great surplus of
products remains after the necessities of the inhabitants have been
satisfied. This provides for a population far beyond the size and extent
of the actual one, and comes back to the people as profits that they can
accumulate. Prosperity, thus, increases, and conditions become
favorable. (1969, p. 279)
Parenthetically, if business prosperity is founded on labour and productivity, it
suggests that either the capitalist’s talent is overlooked by Ibn Khaldun or, what is
perhaps more likely, he demes it to be less important than labour (see also Spengler
1964, pp. 299-303).
Ibn Khaldun realises that labour is the best source for generating rapid
economic development and transformation (Haddad 1977). A larger supply of
labour enables a country (or a city) to produce more goods, services and luxuries:
‘In cities with a large supply of labor, the inhabitants enjoy more favorable
conditions and have more luxuries’ (Ibn Khaldun 1969, p. 299). This process of
development is cumulatively caused, which provides yet another example of Ibn
Khaldun’s dynamic methodology (Haddad 1977; Mouhammed 2004). If a country
has skilled labour that, along with the division of labour, produces a surplus of
output, then this country can export the surplus of product. This export creates more
employment, higher wages, and increased profit and capital accumulation in the
exporting country. The resulting prosperity increases the demand for labour and
generates higher wages for workers. Consequently, the demand for other products
and services will increase, and prices, profits, employment and income of the other
sectors of the economy will also rise. This process will feed itself cumulatively,
creating higher levels of income, profits and development.
In his analysis of labour, Ibn Khaldun also indirectly considers the issue of
the exploitation of workers by investigating the issue of free, as opposed to slave,
labour: ‘When labor is not appreciated and is done for nothing, the hope for …
[wage] vanishes, and no productive work is done’ (1969, p. 119). This means that if
slave workers are forced to work for nothing, then no productive work will be
performed. He also analyses voluntary provision of labour to individuals of rank,
such as jurists, religious scholars, pious persons, politicians and others who
eventually become owners or capitalists. These are the wealthy individuals and
special interest groups with influence and power. Some people approach them with
their free labour voluntarily, seeking protection or to know them. This free labour,
which creates more free income, generates more wealth for individuals of rank.
When free workers voluntarily perform productive work, employers (or people of
rank) do not pay them wages, nor do they feed them, and hence they incur no cost.
Once the output is sold, these early capitalists pocket the revenues, a realisation
process which generates large profits: ‘It is the difference between the value he
realizes from the free labor (products) and the prices he must pay for things he
needs. He thus makes a very great profit. A person of rank receives much free labor
which makes him richer in a very short time’. Again, free labour is unpaid (or
surplus) labour time that creates more free income for people of rank: ‘Without
Ibn Khaldun’s Contribution to Heterodox Political Economy 99
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effort, they [people of rank “who sit at home and do not leave their places”]
accumulate wealth’ (Ibn Khaldun 1969, pp. 304-5).
This argument demonstrates that if labour is uncompensated, employers
generate the highest surplus value (or profits, in Ibn Khaldun’s terminology)
compared to the surplus value generated for employers whose workers are
compensated. It is in the interest of all business employers to make labour as
inexpensive as possible. But as the developmental process continues, this goal
becomes incompatible with workers’ objective of receiving as high wages as
possible. Hence, the capitalist development process tends to create conflicts
between working people and people of rank.
5
The Business Slump
Market competition between producers cuts profits and financial resources:
‘Competition between them already exhausts, or comes close to exhausting, their
financial resources’ (Ibn Khaldun 1969, p. 233). Firms become uncompetitive and
go bankrupt due to the low market demands for their products, high cost of labour
and materials, high taxes, and the like. Ibn Khaldun states that a business slump
arises when this condition becomes general in the market economy. For him, the
price of a product consists of salaries, profits and taxes. If taxes are assumed
constant, the changes in salaries (including wages) and profits generate the business
slump. If wages grow due to a high demand for labour, workers become arrogant
and unproductive: ‘workers, craftsmen, and professional people become arrogant,
their labor becomes expensive, and expenditure of the inhabitants of the city for
these things increases’ (1969, p. 277). Thus, the cost of production will rise and
profits will decline. In contrast, if salaries and wages are low, then the business
slump arises when working people cannot purchase sufficient products, and
business profits will eventually decline.
If, by contrast, profits increase as a result of higher prices, producers
become arrogant and people cannot purchase all of the products produced: ‘[When]
the price of grain rises, [i]ndigent people are unable to buy’ (Ibn Khaldun 1969,
p. 256). But if the price ‘remains cheap, the condition of all farmers and grain
producers … is adversely affected’ (Ibn Khaldun 1969, pp. 311-12). Also, when
‘the prices … remain low and the merchant cannot profit … his profit stops if the
situation goes on for a long period. Business … slumps, no trading is done, and the
merchants lose their capital’ (1969, p. 311).
If taxes are introduced, then heavy taxes on producers reduce business
profits and the incentive to produce. In this instance, the same conclusion follows,
namely the business slump. In contrast, very low taxes encourage producers to
produce and make more profits. But more production will lower prices and profits,
a condition that will create the business slump. This clearly explains why Ibn
Khaldun recommends that the tax rate should neither be high nor low.
For Ibn Khaldun, a bad government also generates business slumps.
Political instability, a situation when government cannot maintain law and order,
weakens producers’ incentives to produce, and they become afraid of losing their
property. In fact, this instability forces many producers to close plants and send
workers home. Capitalists and workers will lose income, and the economy will be
paralysed. Government policies such as confiscation of capitalists’ properties will
also reduce cultural incentives to produce and to accumulate.
100 History of Economics Review
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Moreover, government spending policies inevitably affect the business
cycle. If the government decides to increase spending, many businesses located in
the centre of the dynasty will be positively affected compared to other economic
entities located on the periphery. This is because the ‘government is near them and
pours its money into them, like the water (of a river) that makes green everything
around it, and fertilizes the soil adjacent to it, while in the distance everything
remains dry’ (Ibn Khaldun 1967, 2, p. 287). Clearly, this means that when some
business enterprises receive money from the government, they will prosper and
grow, but the opposite is also true. A reduction in government expenditures will
also create business slumps: ‘When they [the ruler’s entourage] stop spending,
business slumps and commercial profits decline’ (Ibn Khaldun 1969, p. 237).
Generally, if the business of government is in crisis, the economy will be in slump:
‘If government business slumps and the volume of trade is small, the dependent
markets will naturally show the same symptoms’ (Ibn Khaldun 1969, p. 238).
6
Colonialism, Imperialism and Looting
Ibn Khaldun criticises the Bedouin’s acquisitive behaviour, which is similar to the
colonial behaviour used by Western empires in many developing countries during
the twentieth century. On looting by the Bedouins, Ibn Khaldun states:
It is their nature to plunder whatever other people possess … Whenever
their eyes fall upon some property, furnishing, or utensils, they take
them. When they acquire superiority and royal authority, they have
complete power to plunder. (1969, p. 118)
Also, when ‘they have taken possession of a nation, they make it the goal of their
rule to profit (from their position) by taking away the property of the members of
that nation’ (Ibn Khaldun 1969, p. 121). In addition to looting, Bedouins try to
increase their pecuniary advantage through the imposition of fines on people: ‘They
often punish people by fines on property in their desire to increase the tax revenue
and to obtain some pecuniary advantage’ (1969, p. 121). Moreover, Bedouins ‘care
only for property that they might take away from people through looting … [T]hey
have no interest in anything further, as taking care of people, looking for their
interests [and the like]’ (1969, p. 119). When Bedouins are in control of some
areas, these areas are usually in chaos: ‘A nation dominated by the Bedouins is in
state no different from anarchy, where everybody is set against the others. Such a
civilization cannot last and goes quickly to ruin’ (1969, p. 120).
The domination and occupation of other countries by the Bedouins, as
explained by Ibn Kahldun, is one way to explain colonialism and imperialism. Both
phenomena are considered to be a form of looting of a weak country by a powerful
one. Indeed, this idea of looting is comparable to the types of property theft to be
found in the works of Marx, Veblen and Rosa Luxemburg. Marx believed that the
looting of property was the fundamental motive that drives primitive capital
accumulation, which is the starting point of imperialism (Howard and King 2000).
As is well known, Marx believed that the enclosure of the commons was an act of
theft by the landlords, via parliamentary devices, and that this resulted in the
conversion of the people into ‘a body of men who earn their subsistence by
working for others’ (Marx 1967, pp. 679, 681). Marx also believed that the imperial
conquests undertaken by the European nations was mere looting and ‘signalized the
rosy dawn of the era of capitalist production’ (1967, p. 703). To Marx, ‘If money
… “comes into the world with a congenital blood-stain on one cheek”, capital
Ibn Khaldun’s Contribution to Heterodox Political Economy 101
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comes dripping from head to foot, from every pore, with blood and dirt’ (1967, p.
712).
Veblen similarly thinks that imperialism is national graft (Veblen 1923,
p. 442). It always leads to imperialist adventures for the looting of helpless
countries by more powerful ones. He asserts that the ‘democratic nations have been
gradually shifting back to a more truculent attitude and a more crafty and more
rapacious management in all international relations. This aggressive chauvinistic
policy has been called Imperialism’ (1919, p. 131). Luxemburg (1964) also
believes that colonial expansion is actually the looting of natives (1964, p. 370).
She argues that non-capitalist systems are required for the survival of capitalism
because capital ‘needs the means of production and the labor power of the whole
globe for untrammeled accumulation; it cannot manage without the natural
resources and the labor power of all territories’ (1964, p. 365). Ibn Khaldun, in
some small way, may be seen as belonging to this intellectual tradition.
7
Early Capitalist Development and Immorality
Economic development within an early capitalist economy creates the problems of
sedentary culture and the pursuit of luxury: ‘Sedentary culture is the adoption of
diversified luxuries, the cultivation of the things that go with them, and addiction to
the crafts that give elegance to all the various kinds of luxury’ (Ibn Khaldun 1967,
2, p. 292). Such a sedentary culture reaches its zenith during the highest stage of
development and gives rise to waste and immorality (1969, p. 286). Within this
culture the sedentary person ‘cannot take care of his needs personally. He may be
too weak, because of the tranquility he enjoys. Or he may be too proud, because he
was brought up in prosperity and luxury … He also is not able to repel harmful
things, because of luxury … He thus becomes dependent upon a protective force to
defend him’ (1969, p. 288). It follows that when a civilisation grows, the demand for
luxury by the government representatives and the people will increase. Public
spending on luxury, in particular, creates episodes of waste and squandering. This
expenditure includes outlays on pleasure, banquets, wedding nights, music, gala days,
weapons, drink and other wasteful activities. These expenditures not only waste the
accumulated treasures of the dynasty, but also tax revenues. On the other hand,
people spend more on luxury than their income warrants (1969, p. 134). Eventually,
they grow needy and resort to desperate measures to alleviate their needs.
The quest for more luxury also corrupts people: ‘Immorality, wrongdoing,
insincerity, and trickery, for the purpose of making a living … increasing among
[people]’ (Ibn Khaldun 1969, p. 286). To make a living: ‘People are now devoted to
lying, gambling, cheating, fraud, theft, perjury, and usury. Because of the many
desires and pleasures resulting from luxury, they are found to know everything
about the ways and means of immorality’ (1969, p. 286). People ‘also know
everything about fraud and deceit, which they employ to defend themselves against
the possible use of force against them and against the punishment expected for their
evil deeds’ (1969, pp. 286-7). Furthermore, immorality stimulates people to imitate
others who practise immoral behaviour: ‘When the city … teems with low people
of blameworthy character … (people) encounter competition from many members
of the younger generation of the dynasty, whose education has been neglected and
whom the dynasty has neglected to accept. They, therefore, adopt the qualities of
their environment … even though they may be people of noble descent and
102 History of Economics Review
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ancestry’ (1969, pp. 286-7). This spread of such immorality destroys the
civilisation (see Ibraham 1988).
The pursuit of luxury also means that the people often cannot pay their
taxes to defray funds for military spending. In fact, people invariably want the
government to cut their taxes. But when the government decides to raise tax
revenues to finance its functions, revenues do not increase because the tax base is
small and business enterprises have lost incentives to produce. When tax revenues
are inadequate to fund military and luxury spending, all government services are
weakened. The continued expenditure on luxury causes ‘the army is reduced to the
smallest possible size. The result is that the military defense of the dynasty is
weakened and the power of the dynasty declines’ (Ibn Khaldun 1969, p. 135).
Ibn Khaldun also realises that there is more widespread immoral behaviour
within the early capitalist economy. For commerce, he thinks ‘honest traders are
few”’ and ‘most of its practices and methods are tricky and designed to obtain the
profit margin between purchase prices and selling prices. This surplus makes [it]
possible to earn a profit’ (1969, pp. 312 and 300). In other words, dishonesty is a
way to make money, avoid punishment and to exploit others. Accordingly, he
suggests the creation of a government office to manage market supervision. This
office is needed to investigate ‘abuses and applies appropriate punishments and
corrective measures’. The proposed market supervisor should have ‘authority over
every thing related to fraud and deception in connection with food and other things
and in connection with weights and measures’ (1969, p. 178).
Immorality is also practised by individuals of rank. These individuals are
frequently connected to the government officials and are able to form monopolies
to buy products at very low prices and to sell them at higher prices for a
considerable profit. These low prices, which are fixed by monopolies below the
market prices, are determined by force. A similar practice is used against the
working people when some businesses set workers’ wages below the market rate.
Similarly, some interest groups import products without paying custom duties.
Thus, at given market prices, they can secure more profits compared to other
sellers. Moreover, some merchants and other vested interests use manipulative
business techniques in order to make more profits and wealth. However, due to
their connection with individuals of rank and government officials their business
practices are deliberately overlooked by government officials: ‘[T]hose who have
the protection of rank … are thus spared having anything to do personally with
such business manipulation … [T]hey are people who have all of a sudden come
into the possession of a good deal of money’ (Ibn Khaldun 1969, pp. 313-14).
8
Summary and Conclusions
Ibn Khaldun lived in a time when labels such as left and right did not exist. His
intellectual system is, however, relevant to the history of heterodox political
economy because many aspects of his system are compatible with the heterodox
tradition. It is clear that Ibn Khaldun contends that institutions and all aspects of
civilisation are determined according to the mode of production. Civilised people
have developed productive conditions and institutions, while less developed people
have their own institutions and means of production for their own way of living.
Consequently, cultural differences do exist, and cultural values of some people
cannot be altered by force. Indigenous people will always resist such imposition.
Ibn Khaldun’s Contribution to Heterodox Political Economy 103
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Unfortunately, however, this kind of forcible method of change has become the
only way for powerful countries to implement changes in weaker countries.
Ibn Khaldun emphasises two other important methods of change and
transformation. The first concerns the kind of imitation which comes through
contact between different people. People borrow and adapt foreign cultural
institutions such as freedom, products and technology for their cultural
development. This is the most profitable and peaceful way to promote development
across cultural boundaries. The second method is a revolutionary action led by the
indigenous people. Whenever economic and social conditions are conducive, a
country’s excluded social groups can seize the opportunity to change the system in
order to establish a new one that does not exclude some people from participation.
Ibn Khaldun’s explanation of the rise and fall of dynasties is also very
significant for modern heterodox political economy. A rising great power will
combine a cohesive web of solidarity and government finance to build powerful
armies. Under early capitalism, religion and fear were the basic patriotic themes that
unified a nation in way that gave rise to solidarity. Funds were generated by a healthy
business economy that was able to pay taxes, and the dynastic state used these tax
revenues to build strong armies to enlarge an empire. Militarism implemented
expansion schemes for the looting of economic resources of helpless nations. All
these activities required strong patriotic fervour from the people. But once the army
had become exhausted and the business economy was weakened and unable to
generate new tax revenues, group feeling would be weakened too and the empire
would begin to disintegrate.
The process of development, like in the modern economies, was grounded
on labour productivity and business enterprises. For Ibn Khaldun, countries with a
small supply of skilled labour would be underdeveloped because only a small
economic surplus could ever be generated. These countries would also lose their
skilled labour through migration to developed countries. In other words, as with
modern economies, early capitalist economies were generated through uneven
development, and such uneven development gave rise to armed conflict and the
domination of weaker nations.
Ibn Khaldun believes that business slumps occur when high (low) wages
accompany low (high) profits, there is a reduction in government spending, and
there is political instability. He therefore provided an explanation of the business
cycle centuries before Clement Juglar (Schumpeter 1954, p. 742). The business
slump can temporarily be cured by government spending. But at a certain point in
time the business slump may coincide with the decline of the dynasty due to a budget
deficit, the inability of people to pay taxes, weak social cohesion, and an exhausted
army. That is to say, development is a long-run cyclical process, while the business
slump is a short-run cyclical process, and both share the same fate when the dynasty
falls.
Ibn Khaldun further claims that leisure, luxury and wasteful expenditures
are features of development, which creates alienated people who attack each other
for their own interests. Wasteful spending reduces capital accumulation and forces
people into poverty. It also increases taxes and reduces incentives to work within a
capitalist economy. These wasteful expenditures create more needs that many
individuals cannot afford. Hence, many individuals and businesses use immoral
behaviour such as lying and deception in order to survive and to avoid punishment.
In other words, the early capitalist economy is defined by business manipulation
and immorality.
104 History of Economics Review
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Ibn Khaldun, in short, provides valuable insights into the problems of the
modern world.
________________________________
* University of Illinois at Springfield; Springfield, IL 62703, USA. Email:
[email protected]. I appreciate very much the fruitful comments suggested by the
editors and three anonymous referees of the Review.
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