Producing the Good: The Economic Logic of Plato’s First City

Plato [1] does not have a reputation as an economic thinker. [2] Historians of economics who look for the earliest sophisticated treatment of markets, money, and the division of labor tend to start with Xenophon, or reserve enthusiasm for Aristotle. They pass over the Republic with a nod at the “city of pigs” before moving on to what they take to be the dialogue’s real business of defining justice, describing the human soul, and defending the institution of philosopher-kings. [3] The project I worked on at the Center argues that this is a mistake, and a costly one, because the economic ideas that Socrates works out in the early books of the Republic are integral to Plato’s whole political theory. Economic insights are the very principles from which he draws out conclusions about the nature of justice, the soul, and the value of philosophers in politics.

The place to see this most clearly is in the construction of what Socrates calls the city’s “beginning.”

Socrates opens his account of the ideal city with the observation that “none of us is self-sufficient, but we all need many things” (369b). A city, on this conception, is not a fortress and not a government. Nor it is a collection of many families. It is a solution to the problem of material need. He then builds the city role by role—farmer, builder, weaver, cobbler, someone to tend the body, followed by toolmakers and herdsmen, and eventually traders and retailers— and we might be tempted to take this sequence as a piece of speculative anthropology, a guess at which trades historically arose first.

I think that reading gets the passage backward. When Socrates proposes that “we will build the city ἐξ ἀρχῆς,” translators render this “from the beginning.” But he has just finished founding the city explicitly on an ἀρχή, a principle—the principle of need [4] —so it is at least as natural, and I think more illuminating, to hear him proposing that we build the city from this principle. On this understanding, what follows is not a chronology but a rank ordering of what goods and corresponding producers of those goods best meet our materials needs. Food is ranked above shelter, shelter above clothing, and so on down a scale of necessity and urgency.

One of Plato’s greatest observations is the power of specialization in a division of labor. Socrates observes that “more plentiful and better-quality goods are more easily produced if each person does one thing for which he is naturally suited” (370c), and that principle becomes definitive of the organization of Kallipolis as it grows. [5] The growth itself occurs through analysis of the ways that the most necessary specialties are dependent upon others. For example, “a farmer won’t make his own plow, not if it’s to be a good one” (370c–d), and so a toolmaker is added to the city in order to supply the farmer with his implements. The toolmaker’s product serves another’s product, and he is necessary as a subordinate in the division of labor. But it is in the introduction of two kinds of intermediaries that the argument becomes, in my view, genuinely economic rather than merely descriptive.

The first intermediaries introduced are the traders (ἔμποροι) who answer the problem that “it is practically impossible to establish the city in a region where it will not need imports” (370e). The second are the retailers (κάπηλοι), and the problem that they solve is a deep and complex one in economics. Socrates asks what a farmer should do if he brings his goods to market but no one wanting them happens to be there at the same time. Must he “sit idly in the marketplace, away from his own work” (371c)? This is the double coincidence of wants, the standard obstacle to barter that economists usually credit to much later theorists. Plato’s solution is the retailer, who sits in the market absorbing the timing problem so that sellers need not wait for their exact counterpart to appear. And this solution, he recognizes, requires two further inventions at once: “a marketplace and a currency for such exchange” (371b). [6] Money and retail trade are not separate additions to the city; they are jointly necessitated by the same problem of exchange under imperfect timing.

This reconstruction matters for more than only restoring Plato’s place in the history of economics. Socrates calls this first city “true” and “healthy” (372e), and it is Glaucon’s rejection of it as fit only for pigs—his demand for relishes and luxury—that sets the rest of the dialogue in motion. The city’s expansion beyond necessity generates its need for more land, and therefore for war, and therefore for the guardian class whose education and rule occupy the remainder of the work. The turn from the healthy city to the feverish one is an economic turn before it is anything else, and justice itself, once it is defined in Book 4, turns out to be a specific application of the principle of specialization that organized the first city’s economy.

It follows that the producer class of Kallipolis, though it receives far less attention from commentators than the guardians and philosopher-kings, [7] remains the economic base on which the whole structure depends. Without it, even the ideal city fails to meet the need that justified its founding in the first place. My book project, Producing the Good, tries to take this seriously as a claim about Plato’s political theory rather than a footnote to it. The ideas he develops about what makes a producer productive, what a farmer needs, and how goods reach the people who want them are the principles from which his institutional preferences are derived, not mere illustrations of human activities.