On October 1, 1981, President Ronald Reagan was holding a press conference highlighting his “Program for Economic Recovery” when a reporter asked him about tax policy. Pressed about the wisdom of his tax-cuts proposal, Reagan said, “There is a difference between reducing rates and reducing tax revenues.” Where did the president get this distinction? He added:
That kind of a tax cut brings us back … to a principle that goes back at least, I know, as far as the fourteenth century, when a Moslem philosopher named Ibn Khaldun said, “In the beginning of the dynasty, great tax revenues were gained from small assessments. At the end of the dynasty, small tax revenues were gained from large assessments.”
To the millions of Americans who heard the president’s words live on television and radio, it was quite an unfamiliar reference. Hence the New York Times decided to dig in, publishing a story the next day titled, “Reagan Cites Islamic Scholar” and describing Ibn Khaldun as “the greatest Arab historian to emerge from the highly developed Arabic culture of the Middle Ages.” Regan would keep referring to Ibn Khaldun during his presidency, such as during a White House meeting with high schoolers in November 1988—a rare clip of the meeting is available on YouTube—and in a 1993 New York Times opinion piece titled “There They Go Again,” where he criticized the tax increases introduced by President Bill Clinton.
So, who was Ibn Khaldun and how did his ideas make their way to the Reagan White House?
Abd al-Rahman ibn Khaldun was an Arab Muslim polymath who was born in Tunisia in 1332. He lived in Algeria, Morocco, and Muslim Spain before ultimately settling in Egypt, where he died in 1406. His writings, not all of which survived, include religious texts, but he is primarily known for his historical magnum opus, the seven-volume Kitab-ul Ibar, or “Book of Lessons.” Its very first and most interesting volume, Muqaddimah, or “Introduction,” took a life on its own, with its remarkably insightful observations on the rise and decline of societies, which have fascinated many modern scholars. Among them was the British historian Arnold Toynbee, who described the Muqaddimah as “undoubtedly the greatest work of its kind that has ever yet been created by any mind in any time or place.”
The book covers many themes relating to ilm al-umran, or “science of civilization,” the origin of what we today call “social sciences.” A famous one among them is how asabiyya, or “group solidarity,” can help nomads conquer a civilization, only to turn into what they conquered and become prey to new nomads, creating a cyclical pattern of history.
The book also includes economic insights that resemble Adam Smith’s, though preceding the Scottish thinker by hundreds of years. These insights include the benefits of the division of labor, the law of supply and demand, and the harms of state involvement in trade and production. They also describe the fundamental prerequisite of classical liberal economics, which is property rights. In one striking passage, Ibn Khaldun explained how “civilization” collapses when these rights are not protected:
It should be known that attacks on people’s property remove the incentive to acquire and gain property. People, then, become of the opinion that the purpose and ultimate destiny of (acquiring property) is to have it taken away from them. When the incentive to acquire and obtain property is gone, people no longer make efforts to acquire any … When people no longer do business in order to make a living, and when they cease all gainful activity, the business of civilization slumps, and everything decays.
This was the basis of the observation that Ronald Reagan would introduce to the American public: Lower taxes help the economy because they incentivize people to do business. Here again, Ibn Khaldun explained, “When tax assessments and imposts upon the subjects are low, the latter have the energy and desire to do things.” Under these circumstances, “cultural enterprises grow,” whereas higher taxes—imposed to finance opulent palaces or large armies—had the opposite effect. When entrepreneurs “compare expenditures and taxes with their income and gain and see the little profit they make, they lose all hope,” refrain from business, and thereby decrease the total tax revenue.
Some 600 years later, an American economist named Arthur Laffer brought new life to these observations. His “Laffer Curve,” famously drawn on a napkin during a 1974 bar meeting with Republican officials, underpinned a generation of Republican economic policymaking. Yet Laffer himself frankly acknowledged, “The Laffer Curve … was not invented by me.” Who was he clearly inspired by? None other than Ibn Khaldun.
It seems that such conversations among Republicans in the ’70s led to Khaldun’s increased notoriety, and they probably account for Ronald Reagan’s public references. In the ’80s, Reagan’s administration put these ideas into practice with major tax cuts, which boosted job creation, incomes, and productivity.
Today, people may reasonably disagree on the legacy of Reaganomics. But there are lessons to be drawn, for various walks of life, from this unexpected connection between a 14th-century Muslim scholar and a 20th-century American president.
For my fellow Muslims, this connection is a reminder of the big contributions our civilization had to the rest of humanity. Our golden age, from the 700s to the 1400s roughly, produced many inventors, scientists, and philosophers whose works fascinated Europeans and helped induce their unprecedented progress. But the very same fact is also a call for self-criticism: Why did we lose that golden age and produce only little universal knowledge afterward? Why did ideas like Ibn Khaldun’s find little interest among us for centuries, as I discussed in my book, Reopening Muslim Minds: A Return to Reason, Freedom and Tolerance?
For American conservatives, many of whom admire Reagan and honor his legacy these days, this small glimpse of a foreign contribution to their Western heritage is another reminder. Western civilization and its accomplishments are not as insular as some may think. Other civilizations, especially Islam, not only made many contributions to the West but also bear common values that call for mutual respect and might facilitate dialogue.
And for American leftists, many of whom have been all too drawn into identity politics and a caricature of capitalism as a scheme of “greedy white men,” the Ibn Khaldun-Reagan connection offers another lesson. It shows that there are universal truths about human nature, as well as dynamics of society and economics, which can be empirically studied by all minds, regardless of race, culture, and religion. And it just seems to be an empirical fact that free markets generate wealth—and when they are suffocated, as Ibn Khaldun warned, “civilization slumps, and everything decays.”
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