Ibn Khaldun and the Labour Theory of Value – thealieconomy

‘Demand creates supply’ or ‘Supply creates demand?’ do either of these statement have weight in todays climate?

Ibn Khaldun is often recognised as the founding father of modern sociology. He sought after philosophical sciences where he also commented on other works such as the likes of Aristotle. His famous book namely known as the ‘moqademah of ibn khaldun’ textually reveal many of his ideas and beliefs particularly his concepts on the ‘rise and fall’ of dynasties and overt studies of civilisations over time. He has also a fair share of contribution in economics and governance. For this particular case, one will focus on his main thoughts pertaining to the Labour Theory of Value.

The Labour Theory of Value or (LTV) is a economic concept often ascribed closely with Marxian Economics and Classical Economics like Ricardo and Smith. Ibn Khaldun, often not recognised, discovered the importance of labour as the main source of value almost 400 years prior to Ricardo and Smith. Ibn Khaldun differs much from Smith, where he argues natural wage rate is dependent upon expenditure rather than price as what classical economists agree with.

Kasb and Rizq

One of the first differences Ibn Khaldun emphasises is between Kasb (earnings) and Rizq (sustenance). Income is regarded as Kasb when it is directly associated with the value of labour that one has administered. The fruits from the labour is acknowledged as an earning rather than a sustenance. Therefore, the individual may satisfy needs and necessities. Ibn Khaldun demonstrated this through the lens of agriculture rather an industry which was the scope perceived by classical economists. Hence, he highlights the idea that real value is conceived from what initially was carried out to create the commodity.


However, he also understands that there is a level of uncertainty regarding the accuracy and the measurements of value. Ibn Khaldun insists that sectors such as foodstuff has ambiguity because of the results of agriculture is naturally dependent on soil, weather, fertilisation etc. Which initiates his notion that if the demand for the commodity increases, the wage rate also increases which has a trickle down effect on behavioural aspects such as one’s tendency to hoard that particular good in response to lower supply and taxation.

Dependency of expenditure

Adam Smith states that wage rate is a value of labour and Marx states that it is dependent on the price of necessary substances used to create the commodity whereas, Ibn Khaldun stresses upon the arising expenditure to be a main component of wage rate. But, synonymously, the wage could be higher for professions that are less sought after if, 1) There is an increase in the demand for labour as ‘ competition among employees cause them to pay higher wages’ and 2) If there is abundant food. and the reason for this is, if the country is wealthier then workers tend to get paid much higher wages.

‘Demand creates its own supply’

The growth theory of Ibn Khaldun is based on population growth thus, the greater the population the greater the labour market. In comparison to Say’s Law, Ibn Khaldun believes that demand actually creates its own supply where he attempted to demonstrate this by explaining that if there is a particular craft which produces a commodity that may not be sought after, then the supply is adjusted accordingly. Therefore, for each level of demand, the supply changes respectively rather than supply adjusting with demand — a modern economic concept widely accepted today.

So, with Ibn Khaldun’s economic ideas, how far can they sustain credibility in a world that is rapidly adjusting to technology and labour fluidity?

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