Arab Thought Islam Economic Thought

Arab Thought Foundation, islamic Economic Thought

Historians of economic thought have for a number of years been pondering one of the great mysteries of early preclassical economic thought: why are there apparently no important contributions to preclassical thought between the Greeks, particularly Aristotle, and the scholastics, particularly St. Thomas Aquinas? Recent scholarship has indicated this is part of a larger problem, the failure of Western thinkers to fully recognize that the Arab-Islamic scholars were much more than mere translators of Greek thought. It was well known that Greek ideas were translated into Latin for use by the scholastics from the Arabic language, not the Greek. It is now being recognized that in many disciplines the Arabs made important contributions of their own.

Arab-Islamic writers, like the scholastics who followed them, wrote within a framework quite different from ours today. Modern economists abstract eco­nomic activities from the totality of human life, which may be appropriate in the twenty-first century in dealing with the complex economies of developed countries, where economic activities are extremely important. Arab-Islamic writers, however, considered all aspects of human activity and, in particular, the consequences of this activity—of which economic activity was a small part—for one's salvation. There was no separate formal economic analysis as there is today; rather, the medieval Islamic scholars examined economic issues in the broader context of their religious views.

Since all human activities were seen as interrelated and under the governance of Divine Law, articulation of an analytical economic framework was difficult. Progress in understanding the economy occurred only when scholars determined to examine not the ideal Muslim world, with its many constraints on economic activity, but the actual Muslim world of their time. One of the early focal points of these attempts to study economic activity was taxation.

It has been estimated that some thirty Arab-Islamic writers wrote extensively on economic activity during the medieval period. Since research into the contributions of these writers is relatively new in the Western world, beginning only about fifty years ago, our understanding of the nature and significance of their contributions is tentative and incomplete. We do know, however, that among the more significant Arab-Islamic writers addressing economic issues were Abu Hamid al-Ghazali and Ibn Khaldun.

Abu Hamid al-Ghazali

Al-Ghazali (1058-1111), like other Arab scholars, wrote within a framework that integrated the philosophical, ethical, sociological, and economic facets of society into the overriding religious beliefs of his time and place. He was among the most significant intellectuals of medieval Islam, and his writings are known to have influenced St. Thomas Aquinas. His description of the evolution of markets through voluntary exchange is remarkably perceptive for one writing in the eleventh century, as was his insight into how markets link and coordinate economic activities with the evolution of specialization and division of labor. In earlier times, a loaf of bread may have resulted from the activities of one family, who planted, harvested, and ground the grain, then prepared and baked the bread. Al-Ghazali observed that in his time, a loaf of bread might be the product of a thousand workers or more. Realizing that increasing specialization and division of labor result in economic exchange, al-Ghazali was able to point to the difficulties of barter and the consequent need for a currency to facilitate these exchanges. He also examined a host of other economic topics: public expendi­tures, taxation, and borrowing; coinage and the debasement of coins; interest and usury; and how best to levy taxes to appropriately spread the tax burden on society.

Like his contemporaries and those who followed for nearly five hundred years, al-Ghazali did not abstract economic from other activities. His insights and descriptions were always made in the broader context of his strongly held religious views, which constrained, and in some cases, proscribed, economic activity.

Ibn Khaldun

Ibn Khaldun (1332-1406), likewise, was not interested in purely economic questions. His examination of economic topics was always tangential and in the context of broader concerns. Possibly his most interesting insight into economic issues arises in his broad, sweeping examination of how his society appeared to have what we would today call a developmental cycle, moving from rural desert-life society with low income, low craft skills, and small economic surplus to a nonnomadic society in which agriculture predominated, with higher labor productivity and incomes, economic surpluses, and population growth. From today's vantage point, one can see many "economic" topics being examined by Ibn Khaldun: population, profits, supply, demand, price, luxury, aggregate surpluses, and capital formation.

It has been said that Ibn Khaldun represents the beginning of Islamic econom­ics—although some would argue that this distinction belongs to al-Ghazali— though this does not denote the start of significant analysis of market economies. Like their predecessors, Aristotle and Plato, whose thought had prevailed for a millennium before them, these Arab philosophers in the course of examining issues of more fundamental importance than the economy, achieved some interesting early insights into economic activity. In so doing, they added steps to the ladder of economic understanding on which, when economic activity became a more important social activity, the mercantilist writers would be able to stand.