diff --git a/Modules/makesetup b/Modules/makesetup
index dcb19b0b16b..b22933d4a00 100755
--- a/Modules/makesetup
+++ b/Modules/makesetup
@@ -65,7 +65,7 @@ done
 
 # Set default libdir and config if not set by command line
 # (Not all systems have dirname)
-case $srcdir in
+case $libdir in
 '')	case $0 in
 	*/*)	libdir=`echo $0 | sed 's,/[^/]*$,,'`;;
 	*)	libdir=.;;