Ibn Khaldun: The Father Of Economics

If Adam Smith is widely regarded as the father of Economics, Ibn Khaldun should be known as the Grandfather. Khaldun was a believer in the Free market economy and introduced countless ideas that were later discussed by many great economists. Ibn Khaldun laid the foundation of modern economic thinking. And he did so centuries before Adam Smith. Although Western economists pinpoint the value of labor to Adam Smith and David Ricardo, Ibn Khaldun was the first to introduce it. Khaldun believed that labor is the source of value. His contribution led David Hume to write, “Everything in the world is purchased by labour.” in his Political Discourses, published in 1752. The father of economics himself, Adam Smith, even referred to this quote in his

It could be attributed to a variety of different things such as difference in skills, the size of markets, location, craftsmanship, and occupation and even extends to the buyer and their desire for the product. We begin to see the ideas of supply and demand as well as overhead costs. Khaldun therefore planted one of many seeds of modern theories such as one for demand. As a commodity in demand attracts increased consumer spending, both price and quantity sold are increased. If the demand decreases, price and sales fall as well. Khaldun also fathered the idea of what is known today as “Derived Demand.” Demand for a craftsman derives when there is demand for his product. Khaldun also discovered that demand for a commodity also depends on its demand from the state. The state can purchase larger quantities than any single individual; therefore when a state demands a product or service, that product or service will flourish. Besides demand from individual and state entities as well as cost of production, Khaldun introduced factors such as the degree of affluence, prosperity of districts and degree of concentration of wealth. This showed a relationship between income and consumption, which is the foundation of economic ideas from British economist, John Maynard

It is able to increase the people’s satisfaction, merchants’ profits and nations’ wealth. The people would be satisfied with an influx of new products, which may not be native to their regions. Merchant profits can potentially increase with the opportunity to buy a good where it is in surplus and sell it in a region where it is scarce and sell for a larger profit. This however could only be successful if the merchant takes into account the cost of transportation and any other costs that may come from moving goods from one region to another. A nations wealth may increase with the export of goods and resources of which are plentiful. This also allowed nations to import goods they also desired. As we know today, a nation that exports more goods than it imports will have a growing economy. Khaldun was conscious of all of these ideas as well as a key to economics known as “Opportunity cost.” Foreign trade provided incentive to allocate a nation’s labor towards goods and resources that were available to them as opposed to having part of work force working on goods and services that were inefficient for the