Although Adam Smith is usually referred to as the "Father of Economics," some feel that Ibn Kahldun (1332–1400), a native of the city of Tunis, is equally, if not more, deserving of the title. He was the first to introduce a number of the basic concepts of that discipline, such...
Although Adam Smith is usually referred to as the "Father of Economics," some feel that Ibn Kahldun (1332–1400), a native of the city of Tunis, is equally, if not more, deserving of the title. He was the first to introduce a number of the basic concepts of that discipline, such as the labor theory of value, that were more systematically elaborated long afterward by European economists. In the following quote from his The Muqaddimah (Prolegomena), he summarizes that theory:
The value of any commodity ... to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labor which we exchange for what ... contains the value of an equal quantity.
This is the gist of the labor theory of value as formulated by David Ricardo, which would also became a fundamental feature of Marxist economics.
Since much of his professional life was involved in politics, Ibn Khaldun had naturally given much thought to the subject of political economy. He saw an important role for government in providing economic stimulus through the large purchases made possible via its monopsony (sole-buyer) power. He formulated the first known tax theory, which sounds close to Smith's doctrine of laissez-faire:
When tax assessments and imports upon the subjects are low, the latter have the energy and desire to do things. Cultural enterprises grow and increase, because the low taxes bring satisfaction.
He opposed government interference in or expropriation of private property, which he believed could result in a loss of incentives, which would thereby weaken the state.
Yet, he also favored a generous program of public welfare and felt that vulnerable people such as the poverty-stricken and the ill and infirm deserved government support, "to safeguard their rights and to preserve them from harm." And, as he points out, moderating his laissez-faire spirit, "This is why we had to have the tax program as well as the budget cuts, because budget cuts, yes, would reduce government spending."
In his analysis of the rise and fall of the dynasties he counseled and observed, economics is but one of the myriad subjects addressed by Ibn Khaldun. Even so, he demonstrated extraordinary originality in his treatment of the relationship of value to labor, the dynamics of supply and demand, and the theory of capital accumulation as the basis for civilization.