Deep-Referencing Ibn Khaldun for a Richer Economics

Arif Abuhayja

Abstract:

This essay examines the enduring relevance of Ibn Khaldun’s fourteenth-century insights on taxation, statecraft, and the cycles of civilization, tracing their unexpected echo in Arthur Laffer’s modern “Laffer Curve” and in the rhetoric of U.S. policymakers, including President Ronald Reagan. Drawing on recent scholarship that reimagines work and capital through Ibn Khaldun’s civilizational lens, it argues for the value of deep-referencing in economic thought—anchoring contemporary debates in the wider, cross-cultural history of ideas. Far from being an antiquarian exercise, this approach expands the intellectual toolkit of policymakers and economists, offering historically tested frameworks for balancing prosperity, justice, and state stability.

Economic ideas rarely spring from nothing. They are usually rediscoveries, reformulations, or refinements of much older insights. The famous “Laffer Curve,” sketched on a napkin in 1974 to explain the limits of taxation to senior U.S. officials, was presented as an elegant revelation of supply-side logic: tax rates that are too high erode the very revenues they are meant to raise. Yet Arthur Laffer himself admitted he had not invented it. He had drawn it, in spirit and substance, from a fourteenth-century North African scholar—Ibn Khaldun, whose name means “son of Khaldun,” and whose work is best understood as part of a long tradition of Islamic economic thought.

In the Muqaddimah, Ibn Khaldun argued that a just government should, in accordance with Islamic law, impose low taxes. Low taxes stimulate commerce and industry, expand wealth, and thereby enlarge the tax base; high taxes, by contrast, dampen activity, shrink the base, and can bring about state decline. His insight went further than modern supply-side reasoning: Ibn Khaldun saw this fiscal dynamic as part of a broader cycle of civilization, in which states begin withRonald Reagan and light, just administration, accumulate wealth, grow complacent, raise taxes to feed expanding bureaucracy, and eventually collapse under their own weight. His theory was rooted in a civilizational view of economics, not a narrow question of rates and revenues.

The influence of Ibn Khaldun’s thinking has surfaced not only in academic circles but also in U.S. political discourse. President Ronald Reagan himself cited the medieval scholar in a 1981 speech, referring to Ibn Khaldun as a “famous economist” of the past and quoting his observation: “In the beginning of the empire, tax rates were low and the revenue was high. At the end of the empire, tax rates were high and the revenue was low.” Reagan used this centuries-old insight to underscore his own case for tax cuts, showing that even at the highest levels of modern governance, policymakers have turned to Ibn Khaldun’s civilizational wisdom to frame contemporary fiscal debates.

That broader frame comes into sharper relief in recent scholarship, such as The Bridge of Becoming in Islam Today Journal, which reimagines work and capital through both Ibn Khaldun and Western economic thought. Here, labor is not merely one factor of production among capital and land; it is the structuring principle of civilization itself, shaping value, morality, and social cohesion. Whereas much of modern Western economic theory isolates capital accumulation from the lived realities of labor, Ibn Khaldun’s framework refuses such separation. Economic policy, in his view, was inseparable from the moral and social health of a community.

The Islamic Golden Age, which produced Ibn Khaldun’s thought, had already nurtured a remarkably sophisticated economic tradition. Writers like Al-Mawardi cautioned that public borrowing should be a last resort; Abu Yusuf, in the eighth century, subjected public works to what we now call cost-benefit analysis, arguing that projects whose benefits served only a small group should be privately funded. These principles of fiscal restraint, targeted public expenditure, and the defense of private property were not fringe positions but mainstream governance norms. They coexisted with an acceptance of markets, a respect for entrepreneurship, and a recognition that the prosperity of the many was the foundation for the stability of the state.

To recover these ideas is not an exercise in antiquarian curiosity; it is a reminder that the global intellectual heritage of economics is far richer and more plural than modern textbooks suggest. Deep-referencing—anchoring contemporary debates in their deep historical and cross-cultural roots—does more than correct the record. It broadens the range of possible solutions by showing that many of our most pressing questions have been asked, and often wisely answered, before. The so-called libertarian ideals of limited taxation, lean government, and targeted public spending are not uniquely modern, nor exclusively Western; they are part of a centuries-old conversation across civilizations.

When Laffer gestured to Ibn Khaldun, and when Reagan quoted him to the American public, both bridged centuries of economic thought. Today, drawing such lines of continuity is not just about giving credit. It is about enriching our own capacity to think. Economic policy, stripped of its historical depth, risks becoming a set of technical adjustments in search of legitimacy. Reconnected to the long arc of human inquiry—from the markets of medieval Tunis to the boardrooms of Washington—it becomes something more ambitious: an effort to align fiscal structures with the enduring rhythms of work, wealth, justice, and the rise and fall of states.

In this sense, the value of deep-referencing lies in its power to remind us that we are not starting from zero. Every contemporary argument about tax policy, public debt, or the relationship between labor and capital is part of a conversation that has been unfolding for centuries. By listening closely to the voices of that past, we may find not only warnings against familiar mistakes but also frameworks capacious enough to help us imagine a more balanced and enduring economic order.