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Economic Ideas: Plato, Aristotle, and the Ancient Greeks, Part 1


The ancient Greeks left a wealth of knowledge through their surviving writings on a wide variety of themes, including science, logic, philosophy, literature, and the arts.

In addition, the city-state of Athens is considered the birthplace of intellectual freedom and democracy – lasting legacies that helped to mold the ideas that have influenced the development of Western Civilization.

But, in comparison, their discussions on economics were often few and almost always relatively unsystematic.  A primary reason for this is due to the fact that for the ancient Greeks questions concerning “economics” were considered subservient to other themes considered far more crucial to human life and society.

For the Greek philosophers and social thinkers, the central themes were questions of “justice,” “virtue,” “the good,” and “the beautiful.” What today we call “economic” questions and problems were relegated to a narrow corner of evaluating how economic institutions and organization could be designed or modified to serve these “higher” ends or goals.

The Greek view of the society over the individual

An extension of this is an appreciation of the general view that the ancient Greeks had concerning the individual in society. Their conception was that the individual was dependent upon the society in which he was born for all that he could or did become as a person. That is, the community nurtured and molded the individual into a “civilized” human being.

The society took precedence, or priority, over the individual. The individual was born, lived, and died. The society and the State, however, they believed, lived on.

The more modern conception of man as free, autonomous agent who chooses his own ends, selects his own means to attain his desired ends, and in general lives for himself was an alien notion to the mind of the ancient Greeks.

One of the leading defenders of individual liberty in the early nineteenth-century Europe was the French social philosopher Benjamin Constant (1767-1830). In 1819, he delivered a famous lecture in Paris entitled, “The Liberty of the Ancients Compared with that of the Moderns.”

He said that among the ancient Greeks, such as in the city-state of Athens, “freedom” was understood to mean the right of the free citizen to participate in the political deliberations of city affairs, including speaking, debating, and voting. But once the deliberations were over and a vote was taken, the individual was a “slave” to the majority decisions of his fellow citizens. Explained Constant:

The aim of the ancients was the sharing of [political] power among the citizens of the fatherland: this is what they called liberty. [But] the citizen, almost always sovereign in public affairs, was a slave in all his private relations.

As a citizen, he decided peace and war, as a private individual, he was constrained, watched and repressed in all his movements; as a member of the collective body, he interrogated, dismissed, condemned, beggared, exiled, or sentenced to death his magistrates and superiors; as a subject of the collective body he could be deprived of his status, stripped of his privileges, banished, put to death, by the discretionary will of the whole to which he belonged….

The ancients, as Condorcet says, had no notion of individual rights. Men were, so to speak, merely machines, whose gears and cog-wheels were regulated by the law…. The individual was in some way lost in the nation, the citizen in the city.

Constant compared this conception of freedom among the ancients with the “moderns” – that is, the conception and ideal of liberty at his own time in the early decades of the nineteenth century.

Now, he said, the idea of freedom was the right of the individual to be left alone. The individual was at liberty to guide his own life, choose his own goals, and pursue any ambitions and career that he might want. He could form any interpersonal associations he chose, or could follow his own way by himself.

Political liberty was an important part of freedom, Benjamin Constant argued, but the essence of liberty for the “moderns” was the right of the individual to live his own life as he desired, with no interference or “dictate” by political minorities or majorities. Constant explained:

….what an Englishman, a Frenchman, and a citizen of the United States of America understand today by the word ‘liberty.’ For each of them it is the right to be subjected to the laws, and to be neither arrested, detained, put to death or maltreated in any way by the arbitrary will of one or more individuals. It is the right of everyone to express their opinion, choose a profession and practice it, to dispose of property, and even to abuse it; to come and go without permission, and without having to account for their motives or undertakings. It is everyone’s right to associate with other individuals, either to discuss their interests, or to profess the religion which they and their associates prefer, or even simply to occupy their days or hours in a way which is most compatible with their inclinations and whims.

Slavery demeaned honest labor and weakened incentives

It is also important to remember that Greek society and the ancient Greek economy was based on slave labor. This resulted in two outcomes:

First, anything involving manual labor, and the common working for a living, as well as the day-to-day dealing in money and the exchanging of goods and services was considered beneath a cultured and free citizen of a Greek city-state. It distracted the Greek citizen from his first and highest duty: participation and interest in the political, philosophical, and artistic affairs of his city-state. This did not make for an intellectual climate conducive to making questions of economic relationships and institutions a respectable field for serious reflection and thought.

Second, the use of slave labor diminished any motives or incentives on the part of the thinking, free citizen to concern himself with questions of how to economize and more efficiently use labor. Since once captured and sold into slavery, slave could not refuse to work or demand higher wages or better work conditions, or search out better employment opportunities, there was little motive for developing ways to more effectively employ labor through better social or market arrangements.

Plato on division of labor and size of the city-state

For Plato (428 B.C. – 348 B.C.), the origin of society is found in the inability of men to be self-sufficient; they lack the ability to serve all their own needs through their own labor.  Each man possesses certain inherent qualities that make him better at some things than at others. By and through specialization of tasks the members of a community can improve their material conditions by producing that commodity at which they are most skilled and trade quantities of it away for the other things that they need from others who are doing the same.

But Plato’s defense of a division of labor is not based only, or primarily, on its productive superiority. Instead, the rationale for such a social arrangement is ethical. Given the diversity of natures and skills among men, Plato argued that each should do what is “natural” for him, and when he does so he is fulfilling that which is “best” in his “nature.” And, thus, he fulfills “the good.”

Man’s primary wants, Plato said, was for food, shelter, and clothing. The city-state must have an internal division of labor large enough to contain a sufficient number of members with the diverse skills and abilities to assure that such basic wants could be satisfied.

But Plato is asked by one of his students, would this not be merely a “city of pigs”?

Plato admits that if the city-state is to satisfy both the necessities of men and the “higher” and more cultured aspects of their potential lives, the city had to expand to a size large enough to include the required population, land, and resources to fulfill their higher and more cultured wants as well.

Other city-states would be in the same situation. Conflicts between city-states would arise as each attempted to expand and take from other city-states what they possessed.  War was inevitable from this. To defend itself from competing city-states and to expand to have the requisite population, land, and resources for this “higher” cultured life, any city-state would need a class of men in the division of labor trained and skilled to protect and conquer territory, resources, and slaves to perform the work to be done.

Plato and the communism of the guardians

The city-state would require a class of “guardians” or “warriors.” But a problem, now, arises, Plato says: What would protect the citizens of the city-state from the guardians who have the capacity to use their warrior skill against those who lives and needs they are supposed to protect? What guards the people against the guardians?

This led Plato to his critique of private property. Where men can own property, Plato declares, there exists the lust for possessiveness and ownership.  Not the “common good” of the city, but the self-interested desires of the individual are motivated when men may acquire and own private property.

For Plato, there exists a hierarchy of values: “The soul,” “the body,” and “wealth” – in that order. A guardian class with the right to own property would be tempted, therefore, to pursue the “lowest” rather than the “highest” of the ends of man – the pursuit of material wealth rather than the quest for “truth” and “virtue.”

Thus, in Plato’s ideal Republic, the guardians would renounce material ownership. The guardians would live together in a common barracks; they would share meals together; their clothes would be modest and similar. Women would be shared in common, and female guardians would have their children taken away shortly after birth to prevent a self-interested bonding with the child. 

Plato’s assumption is that the social environment – the political and economic institutions in which men live and work – determines their behavioral characteristics. Change the social and economic institutions – in this case, from private property to communal ownership and sharing – and you can change people from self-interested beings into other-oriented beings.

Plato’s presumption is that if you deny people the ability and the right to acquire and possession private property and wealth, they will stop being concerned with their own personal interests and desires. Instead, they will only concern themselves and have as their goal the betterment of “all” who share in a common or communal property, and community.

In Plato’s mind, therefore, there is no invariant, or never-changing, or constant “human nature.” Change the social institutions and you can change character and quality of the man

Plato’s ideal republic as the command society

In Plato’s ideal State there are the ruled and the rulers. One of the responsibilities of the guardians would be to assist in selecting the rank and position that each member of society was to hold.

Indeed, every aspect of every individual’s life was to be controlled and directed by the State. At one point, Plato says:

The main principle is that: that nobody, male or female, should be left without control, nor should anyone, whether at work or in play, grow habituated in mind to acting alone and on their own initiative, but he should live always, both in war and peace, with his eyes fixed constantly on his commander and following his lead.

The domestic economy was to be rigidly determined and regulated by the rulers. In Plato’s words:

The law-givers must meet in consultation with experts in every branch of retail trade, and at their meetings they must consider what standard of profits and expenses produces a moderate gain for the trader, and the standards of profits and expenses thus arrived at, they must be prescribed in writing; and this they must insist on – the market stewards, the city stewards, and the rural stewards, each in his own sphere.

All trade, commerce, and manufacturing, both within the city-state and with other city-states would be controlled and regulated by the rulers of the State. There would be no free movement of people from city-state to city-state. Such interaction, Plato said, would threaten a mixing of cultures that could seriously undermine “the good polity under right laws.”

Any people sent abroad to inspect the doings of other peoples and to learn what things might be useful to learn for improving one’s own city-state would only be those over 50 years of age and approved to do so by the State authorities. They must be men of “great merit” and “incorruptible” in terms of being detrimentally influenced by what they saw and heard on their foreign travels. Said Plato:

But if, on the other hand, such an inspector appears to be corrupted on his return, in spite of his pretensions of wisdom, he shall be forbidden to associate with anyone, young or old; wherein, if he obeys the magistrates, he shall live as a private person, but if not, he shall be put to death.

Nothing is outside the control of the State. Not one aspect of personal life is to remain a matter of privacy. This included the duty of the rulers to maintain strict population control to assure a “proper” size of the ideal city-state. This would be a population of 5,040 people – large enough to provide the required division of labor for tasks to be perform, yet small enough for everyone to know each other.

In addition, there would be selective breeding to assure a “strong” citizenry. Any over-population would be sent abroad to form colonies, or the newborn would be put to death.

Plato as the father of the totalitarian state

It is for these reasons that Plato has sometimes been called the intellectual father of political and economic collectivism, and the totalitarian State. In Plato can be found the blueprint for the absolute and comprehensive command and planned economy:

Wage and prices are set by the State; the guardians determine the allocation of the population in the system of division of labor by distributing each person to a particular occupation or task for life from an early age; all domestic and international trade and commerce is controlled and regulated by the State, as determined by the “proper needs” of the city-state; and what people may learn and share about other societies is strictly regulated by the State.

The individual is reduced to being a cog in the wheel of Plato’s ideal State.

The famous philosopher of science, Sir Karl Popper, concluded in The Open Society and Its Enemies (1945):

Never was a man more in earnest in his hostility towards the individual . . . [Plato] hated the individual and his freedom…. In the field of politics, the individual is to Plato the Evil One himself…. He is concerned solely with the collective whole as such, and justice, to him, is nothing but the health, unity, and stability of the collective body.

Plato’s vision and “ideal” ended up serving as an inspiration and standard for much of the twentieth century under the name of the Total State in both its communist and fascist forms.

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    Dr. Richard M. Ebeling is the recently appointed BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel. He was formerly professor of Economics at Northwood University, president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).