On IBN Khaldun's Critique of the Market Economy with Some Lessons to the Arab World

By Mouhammed, Adil H. | Journal of Third World Studies, Fall 2008 | Go to article overview

On IBN Khaldun's Critique of the Market Economy with Some Lessons to the Arab World


Mouhammed, Adil H., Journal of Third World Studies


INTRODUCTION

The economics of the free market was actually developed by the Arab historian Abd al-Rahman Ibn Muhammad Ibn Khaldun al-Hadrami who was born in Tunis in 1332 and died in Cairo, Egypt in 1406. Ibn Khaldun wrote the Muqaddimah (the Prolegomena or An Introduction to History), a great book aiming at making history a science. The methodology of the Prolegomena is to utilize scientific investigation in the analysis of social, phenomena by gathering historical facts and then discovering the laws determining the evolutionary trend of these phenomena. This was extremely important for him, because he was trying to discover the cause(s) behind the rise and fall of dynasties, causes that are interrelated with their own effects, forming an unending sequence of cumulative change. His scientific analysis led to a conclusion that the foundations for a rising dynasty were solidarity (strong group feeling, or social cohesion, or assabiyyah) and the availability of money, which is obtained by stimulating the growth of the business economy through deregulation of economic activity, government support of capitalists, and optimal tax rates.

The business economy generates a large amount of tax revenues, which can be allocated by the government (ruler) to increase the size of the army and to enhance its fighting ability for achieving the dynastic goal of dominance of the global affairs, a goal called the royal authority: "superiority and the power to rule by force" (Ibn Khaldun 1969: 108). (1) If the dynasty cannot expand its army and the number of its supporters due to a shortage of money resulting from higher taxes and regulation of economic activity as well as luxuries and extravagant expenditures (or economic waste), the dynasty will fall: "When the tax revenues must go to pay for recently increased allowance ... the militia decreases in number .... Eventually, 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". (2)

The remaining sections are devoted to the basic goal of this paper which is to analyze Ibn Khaldun's critique of the business (or market) economy in order to fill a fundamental gap in the exiting literature. This task provides the justification for writing this paper and reflects its value added to the literature. His critique of the market economy is decomposed into various parts, each of which analyzes a specific problem generated by the market economy. Section 2 is devoted to the most important literature, and Sections 3-5 analyzes the problems of business slump, pollution, corruption, special interest groups, and income inequality and poverty, respectively. Section 6 brings some empirical facts generated by the adoption of the market economy and some lessons for the Arab World. Section seven will provide specific policy prescriptions based on a proposed socio-economic model of democracy and a new strategy of development for the Arab World. The last section presents a summary and conclusions of this study.

LITERATURE REVIEW

Flint writes about Ibn Khaldun that "Plato, Aristotle, and Augustine were not his peers, and all others were unworthy of being mentioned along with him". (3) Toynbee considers Ibn Khaldun's philosophy of history, which is stated in the Prolegomena (the Muqaddimah), as "undoubtedly the greatest work of its kind that has yet been created by any mind in any time or place". (4) Issawi points out, "If [Ibn Khaldun] had no predecessors he certainly had no successors in the world of Islam". (5) Boulakia provides an excellent analysis of Ibn Khaldun's economic conclusions regarding production, prices, distribution, population, and public finance cycle, but does not explain his critique of the market economy (model). He concludes, "Ibn Khaldun is ... an accident of history and has had no consequences on the evolution of economic thought". (6)

Haddad, whose work has been overlooked, provides a magnificent analysis of Ibn Khaldun's theory of growth and development as well as his dynamic methodology that includes the role of economic and non-economic factors in the dynastic evolution. …

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