political fragmentation and cultural diversity 277may lead to the destruction of the economy and the disintegration
of the ruling class. When the farmer and merchants cannot make their
capital grow through agriculture and commerce, as a result of shrink-
ing profits, the capital will decrease and eventually disappear as a
result of using it in covering expenditure. This will ruin the economy.
Another form of the abuse of power for economic benefits, which
is damaging to the economy, is when the ruler buys the goods from
farmers and merchants at a price determined by the rules in order
to sell to the public at a higher price. This is even more damaging
and ruinous to the interest of the public. Furthermore, another form
of misuse of power for commercial purposes is when the ruler shares
business interest with merchants. Merchants, who are professional by
the virtue of their occupation, pay the ruler a share of their profit.
They work with him but for their own benefits as they may sell at
increased prices to achieve high profits. They may also manage to
gain exemption from taxes and custom duties for the share of the
profit given to the ruler.
Prosperity to consumption, labour and economic development
From his observation, Ibn-Khaldùn reached an interesting conclu-
sion in relation to propensity to consumption. Consumption may
have a positive effect on economic development and the growth of
towns and cities as trading centres. By inference, lack of consumption
may lead to the opposite effect, the paradox of saving, so to speak.
Taking labour as a starting point in creating wealth and economic
development, he clarified his view by stating that as the combined
labour available in a town or a city produced more than the needs
and necessities of the workers, the surplus labour may be directed
towards providing two things: (a) the conditions and customs of lux-
ury in the city, and (b) the satisfaction of the needs of the inhabi-
tants of other cities. As the demand for these luxury products increased,
and the demand for exported goods to other cities increased, and
as the profit was the realized value of labour, this would lead to the
increase of wealth in the city with the surplus labour. A demand for
skillful workers was therefore created which would be reflected in
the price of their labour. Consequently, industry and crafts thrive,
and “the income and expenditure of this city increases and affluence
comes to those who work and produce these goods by their labour”.
The above cycle would be repeated further when population
increased. The available labour increased, demand for luxury increased