Before Keynes, Marx, and Smith, there was Khaldun

Written by Claire Arp

Note: The Muqaddimah was written in 14th century Arabic and was not available in a European language until it was translated into French in the 18th century. Quotations used in this article are from a modern translation that attempts to preserve the exact meaning of the original text.

As long as there are societies there will be economies, and as long as there are economies there will be people who seek to understand how they function. The modern field of economics may have originated with the Enlightenment, but that does not mean that the world prior to the 16th century was left in the dark. Based on how the history of the field is often presented, one could be forgiven for assuming that economics was invented in 1776 with Adam Smith’s Wealth of Nations. But long before Smith, there was one great mind who arguably has just as strong a claim to the title of “Father of Economics”: Ibn Khaldun.

Khaldun was an Arabic historian who lived during the tail end of the Islamic golden age. In the 1370s, Khaldun set about writing a comprehensive history of the Arab and Berber peoples. That history in and of itself is fascinating, but it is the introduction to it that changed the course of history. The Muqaddimah (Arabic for ‘prologue’) is a wildly ambitious work that attempts to present a universal theory of social sciences to serve as a foundation for the rest of Khaldun’s histories. This text is often cited as a foundational work in the field of sociology and historiography, and more broadly as a watershed moment in the history of the social sciences as a whole. Every corner of the social sciences is touched on at some point. This includes economics, and while many of Khaldun’s theories would be familiar to a modern economist, his unique and insightful understanding of everything from the most basic of economic concepts (ex: supply and demand and economic motive) to theories that are still hotly debated by academics today (ex: the Laffer curve and the labor theory of value) was lost somewhere along the way. Surely we can learn something by hearing how the man who Paul Krugman once said “basically invented what we would now call the social sciences” thought about economic analysis? To find out what, one need only to turn to chapter 5 of the Muqaddimah, titled “on the various aspects of making a living”.

One of Khaldun’s most shocking ideas is also the very first one he presents in his chapter on economics. Subsection 1 of the chapter is entitled “The real meaning and explanation of sustenance and profit. Profit is the value realized from human labor.” For those unfamiliar, this is a pretty clear statement of something called the labor theory of value, or LTV for short. The LTV is most often associated with the work of Karl Marx, who made his law of value a centerpiece of his critiques of capitalism. Before Marx, the first western economists to discuss the LTV were Adam Smith and David Ricardo (although it is more associated with Ricardo than Smith). On the most basic level, Khaldun’s LTV is equivalent to Marx’s (“that which determines the magnitude of the value of any article is the amount of labour socially necessary . . . for its production”) and Ricardo’s (“The value of a commodity . . . depends on the relative quantity of labour which is necessary for its production”). All three men are saying that economic value is derived entirely or at least mostly from human labor.

One should not make the mistake, however, that Khaldun believes value to be intrinsic. Khaldun demonstrates a robust understanding of the subjectivity of value many times throughout the Muqaddimah; however, he stops short of our modern demand-oriented definition of value. Khaldun recognizes that most every good is created out of some material, but to him, profit comes from useful things. Profit is something that can be turned into ‘sustenance’, which is a term that roughly maps onto our idea of consumption. Essentially, some of the value of a good does come from sources other than labor, but labor is still required to access that value and make it usable. Therefore, all profit is derived from human labor.

This way of thinking about value is not too common today. It does not sound unreasonable to say that a full field of crops or a large untapped mineral deposit has value. In fact, a modern economist would not have to struggle much to define these things as having value. But Khaldun would say that without human labor to harvest the fields and dig the mine, these unexploited resources are worthless.

Motive is a key part of Khaldun’s philosophy. He sees the economy through a very human-centric lens. We must remember this is long before the era of quantitative economics and mathematical modeling we’re used to. Modern economic analysis is almost entirely based on the profit motive and maximizing a utility function. Khaldun doesn’t think so mathematically. Instead, he identifies the fundamental economic motive as simply the innate human desire for sustenance. In other words, he doesn’t base his analysis around profit but instead around consumption. 

This framework can still come to many of the same conclusions, and it does exactly that when Khaldun goes through supply and demand, the division of labor between industries, and capital accumulation, but it has profound implications for how an economist approaches issues. For instance, the most common measure of the overall strength of an economy is GDP, the gross domestic product, a summation of all things produced and sold within an economy. If we look at GDP from Khaldun’s perspective, however, some glaring flaws emerge. Khaldun would be more concerned with how much sustenance is being acquired by individuals in the economy. GDP does not serve this function very well. Modern economics draws the line between consumption and capital/savings when a good is bought, but Khaldun draws that line when a good is consumed. If someone buys an apple and that apple is then thrown out, GDP remains unchanged, but Khaldun would see that apple as having never provided any real value. This isn’t just theoretical, either; it is well known that overconsumption, hoarding, and food waste are major issues in the American economy.

You may find yourself nodding your head along with Khaldun’s unique approach to economics. It’s equally likely that you are scoffing at how naive a rudimentary analysis is. It’s true, Khaldun’s theory is filled with obvious oversights to us today. For one thing, he uses income and profit interchangeably and has no real concern for things like costs, much less the distinction between marginal and average costs. If you read more, you will find plenty of other headscratchers, like his assertion that all goods are subject to fluctuating value except for gold and silver. But Khaldun would just as easily criticize our economics for believing that people act in rational self interest when that is demonstrably false, for focusing on the math so much we forget our field is still qualitative at its core, and for leaving out moral, ethical, and sociological analysis from our research.

The point is that while the economics of today is incredibly good at a lot of things, it’s very deeply rooted a specific intellectual tradition and is, as all fields as old as ours is, steeped in dogma and rigid ways of thinking. Every once in a while a new economist or school of thought comes along that shakes the field to its very foundations. But events like that are rare, and if we really want to continue the march of progress, sometimes the best move is to look into the past at the economists who have not yet been elevated to the same canon as Smith, Marx, and Keynes.

I recommend you read the Muqaddimah (well, chapter five at least, it’s quite a long book). It might not change your life but it is guaranteed to make you think about some things in a new way and sometimes that’s all we need for a breakthrough.

Ibn Khaldūn – The Muqaddimah: Ibn Khaldūn’s Philosophy of History | Britannica. Accessed 7 Mar. 2023.

Krugman, Paul. “Opinion | The Decline of E-Empires.” The New York Times, 26 Aug. 2013,

Laffer, Arthur. “The Laffer Curve: Past, Present, and Future.” The Heritage Foundation,

 Accessed 7 Mar. 2023.

Marx, Karl, et al. Capital. Volume One: A Critique of Political Economy. Penguin in association with New Left Review, 1990.

“On the Principles of Political Economy and Taxation.” Econlib, Accessed 10 Mar. 2023.

Spengler, Joseph J. “Economic Thought of Islam: Ibn Khaldun.” Comparative Studies in Society and History, vol. 6, no. 3, 1964, pp. 268–306,