Economics — labor, division of labor, taxation, value: is the *Muqaddima* a precursor of modern economics?

Ibn Khaldun, answered from the texts and cited to the page.

The position in brief

The economic chapters of the Muqaddima set out a doctrine of livelihood within the science of 'umran. Profit is the value of realized human labor: what a craft or trade yields is what human effort has worked into the raw materials. The division of labor is the productive basis of civilization — no single household provides for its own needs; the multiplication of crafts and the exchange among them is what makes the city possible and what raises the standard of life in hadara above that of badawa.¹

On taxation: in the early years of a dynasty, with 'asabiyya strong and the rulers self-restrained, tax rates are low and revenues are large because the productive activity flourishes; as the dynasty ages and the rulers acquire luxury and expand the bureaucracy, the rates rise, productive activity contracts, and revenues fall — at the height of senescence, high rates produce less than the early low rates would have produced.²

The doctrine of luxury is that as hadara multiplies the wants of the population beyond necessities, the cost of life rises, the surplus available for political and military purposes contracts, and dynastic strength deteriorates. These doctrines are stated as elements of the science of 'umran; they explain the economic conditions of dynastic rise and decay.

Sources

1. All these (things) involve activities that require their price [?]," and skillful people must be chosen to do them and be in charge of them. As a consequence, industry and the crafts thrive. The income and the expenditure of the city increase. Affluence comes to those who work and produce these things by their labor. When civilization (population) increases, the (available) labor again increases.

   The Muqaddimah, Vol 2, pp. 300–302

2. Therefore, they have few needs, since luxury and the habits that go with it do not (yet) exist. Expenses and expenditures are small. At that time, revenue from taxes pays for much more than the necessary expenditures, and there is a large surplus. The dynasty, then, soon starts to adopt the luxury and luxury customs of sedentary culture, and follows the course that had been taken by previous dynasties.

   The Muqaddimah, Vol 2, pp. 116–117

Where the argument is made

• The Muqaddima Ch. V in its entirety on the means of earning a livelihood
• particularly §§ 1-7 on the nature of profit and value (profit as the value of human labor)
• §§ 8-18 on the various crafts and trades
• Ch. III §§ 39-40 on taxation, where the doctrine appears that lower tax rates produce greater long-term revenue and higher rates strangle the activity they tax (the so-called 'Laffer curve' precursor)
• Ch. IV on the role of luxury, the multiplication of urban needs, and the consequences for dynastic strength

How the argument was received

The modern economists who read the Muqaddima and find in it labor theory of value, division of labor, and the taxation curve are reading correctly that these doctrines are there. They are reading incorrectly what the doctrines are doing in the work. They are not the seeds of a science of economics independent of the larger science of 'umran; they are elements of 'umran itself, the economic conditions of civilization-formation and dynastic life. To detach them and call them proto-Smith, proto-Marx, proto-Schumpeter, proto- Laffer, is to read the parts as if the whole were something other than what it is.