Socrates, Plato and Aristotle on the ‘wealth of nations’

Bilyaminu asked:

What have Socrates, Plato and Aristotle contributed to the idea of a nation’s wealth creation?

Answer by Graham Hackett

I am not sure that this question would have made much sense to the three philosophers mentioned, in the way in which you have expressed it. Adam Smith and any of the 18th century physiocrats would have understood exactly what was meant by the idea of a “nation” and “national wealth”. At the time Adam Smith was writing, the reality of, and conception of the national state was well understood, and therefore, the associated matter of national wealth would be thought of as a key policy pursuit for those in government. At the time Plato and Aristotle were writing, the city state was thought of as the natural unit of government, and the main concern of politicians was to compete with other states similar to theirs. Of course, resources were important if a city state was to be healthy, but it was a secondary requirement to stability.

No Athenian citizen participating in the voting and running of their state would regard economic activity as a fitting concern for a good citizen. Freedom from such activity would be regarded as necessary for a proper citizen. Trade was a concern for the lower classes, and foreign trade was left to metics (foreigners) who were without full citizen rights. Economics and national wealth were not thought of as central concerns for Athenian citizens.

Of course, you can always delve into a good history of economic thought. Eric Roll’s History of Economic Thought is a good (though dated) read. It was originally subtitled “From Moses to Marx”. You will always find, in such texts, an account of how Plato made a penetrating analysis of division of labour, and Aristotle provided a fairly clear — for its time — analysis of the nature and importance of a currency as a means of exchange. However, Plato’s analysis of the division of labour was undertaken for completely different reasons to those demonstrated by Adam Smith. For the latter, division of labour was a central development in economic life which fully explained how growth and national wealth could be pursued. For Plato, division of labour, though undoubtedly an efficient way to get things done, was primarily of value because it allowed people to pursue those activities for which they were naturally fitted, and which enabled them to be happy, balanced individuals. Division of labour was an excellent metaphor for how the soul was divided, and for how city activities could be best pursued. For Plato, there was a strong ethical content to division of labour.

However, although Plato Aristotle and Socrates did not regard economic issues as of central importance, they certainly did have important ideas about the contribution that a happy and balanced individual could make to a strong and balanced polity, and therefore create a solid foundation for a healthy economy. For Plato, a happy and balanced person would first have to reconcile the conflicts in their own souls. A polity would need to reconcile the conflicts between the three parts of the state. This would create balance and harmony, without which, Plato would regard economic activity as impossible. Aristotle was more pragmatic about political organisation, but his key insight was that any government contained elements of democratic, aristocratic and monarchic practices, where the problem was how to keep these elements in balance.

I hope you do not find my views on the contribution of these philosophers to economics disappointing. However, if you consider their views on harmony and balance irrelevant to economics, then just consider how often phrases like “economic confidence” are used in modern accounts of business activities. Think about those endless discussions about how preparation for Brexit in Britain has caused problems for this so-called “business confidence”.

Finally, when Keynes wrote his own penetrating analysis of economic wealth, and how it was created, although he gave central importance to such factors as the multiplying effect of investment, he fell back on the necessity of providing stability and business confidence.

Perhaps Socrates Plato and Aristotle had something after all.

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