Abū al-Faḍl Jaʻfar ibn ʻAlī al-Dimashqī. Translated by Adi Setia

Abū al-Faḍl Jaʻfar ibn ʻAlī al-Dimashqī (Arabic: أبو الفضل جعفر بن علي الدمشقي) was a prosperous Muslim merchant from Damascus. He is best known for being the author of Kitab al-Isharah ila Mahasin at-Tijarah.

He explained the problem of double coincidence of wants in the barter trade. He wrote that even if the wants coincide, there may be disagreement on the counter values in exchange. Without divisibility of the good, the barter economy runs into barriers to trade. 

He also wrote on prudence in economic management. He emphasized the need for proactive procurement and infrastructure investments to ensure smooth supply chain, production process and market stability. He favoured procurement from the original nearby source to avoid intermediation mark-up and make purchases when the market has adequate supply and availability so as to avoid cost-push inflation.

In consumption, he highlighted the need for precautionary saving in cash and in kind to ensure smooth consumption and to avoid shortage and paying higher prices later on. He recommended planned consumption so that winter clothing is purchased in summertime and summer clothing in wintertime. Even to the merchants, he favoured having enough liquidity to withstand crisis and to capitalize on investment opportunities when they appear. Overspending than the normal level of profits can be problematic when the inventory has to be sold out cheaply to cover expenses in low-profit business periods subsequently.

He recognized the existence of business cycles, especially in agriculture based economy. That is why, he recommended that the merchant should not spend the same amount as that which he earns, but rather he should spend a little less than what he earns so that he has some money left over in reserve as a precautionary measure against loss due to an untrustworthy agent or unforeseen calamities. It is important as a safety deposit against sluggish sales during which he may have to sell off everything at a considerable loss or as a precaution against disasters befalling his crops, and the fruits of his vineyards and orchards, and similar unforeseen circumstances.

He wrote that good management involves recognizing the various acts of goodness and inclining towards them; and the various acts of necessary righteousness and not violating them; and restraining from indulgence in pleasures; not living beyond one’s circumstance and station; and understanding the parameters of what is needed in each context and expending in it only to the extent that is due to it, thereby avoiding overspending in one context to the extent of underspending in another.

He suggested to recognize the times of need for each thing such that it is not prematurely acquired and is thus spoiled or wasted before the time for its actual utilization; and not procrastinating in acquiring something that is needed until the time is nigh for its use and thereby one is compelled to acquire it hurriedly with great trouble; or until the time for its use has lapsed, thus rendering its acquirement in vain, or difficult and hard to obtain except at a very high price.

In inventory management, he advised that the merchant shall be quick in selling his merchandise, but unhurried in selling his landed property even though there is little profit in selling merchandise but great profit in selling property. Acquiring merchandise or producing it again will not require much time and great variation in cost from the previous production cycle. However, the same cannot be expected with certainty in the case of landed property.

Therefore, for investment management, he cautioned against acting on price signals alone. Rather, the nature of investment and the ability and flexibility to repeat the investment cycle in each asset class needs to be given due consideration. He also suggested not to invest in risky ventures with low or unstable demand and ventures about which one lacks enough information and required competence. 

He recognized the importance of division of labour and specialization to achieve efficiency. He wrote that the builder is in need of the carpenter, and the carpenter is in need of the ironsmith, and the workers of iron are in need of the craft of the workers of mines, and all these crafts, in turn, are in need of the builder. He also wrote that interdependence can be best managed, organized and served in cities with market infrastructures and demand. He wrote that people need to found cities and to congregate in them, so that they can assist one another with regard to mutually fulfilling their need for one another.

On bi-metallic standard, he provided a positive explanation of why it became a suitable monetary system. He wrote that gold and silver are readily suited for casting, forging, combining, separating and shaping into any form required. Gold and silver also have a beautiful lustre, with no unpleasant smell or taste, and they endure when buried. They are both also receptive to being marked with marks that preserve them; and the permanence of their features protects them from debasement and counterfeiting.

He explained that these are the factors due to which the ancients minted coins from gold and silver, and by these coins they priced all things. They saw that gold was greater in value with respect to its beautiful lustre, the compactness of its parts, its durability when buried for a long period of time, and its conduciveness to repeated castings in fire. They then determined each piece of gold as being equivalent to several pieces of silver, and they made both the price for all other things.