Plato’s economic genius, as Weinstein (2009, 439-40) observes, is generally overlooked. There are several reasons for this. Perhaps the most significant is that his most developed ideas are presented concisely (in only three pages) and in informal terms as part of a wandering conversation between Socrates and Adeimantus about why and how cities come into being. It is easy to assume that Plato’s informal style of presentation corresponds to a lack of rigorous analysis. To this is added the fact that, for various reasons, most Plato scholars dismiss the early city Socrates and Adeimantus construct as, at least in Plato’s view, mistaken and inferior to the versions of the city developed later in the Republic9—if Plato did not consider the early city to be a serious political model, then why would one look there for any serious contributions to economic theory? Furthermore, that the later versions of the city exemplify a “rigid stationarity” in which “[a]ll economic and non-economic activity [is] strictly regulated” (Schumpeter 1959, 56, 55; see also Ekelund and Hebert 2007, 11-12) seems to suggest that the early city could not possibly contain any systematic insights about dynamic economic processes. Moreover, even in those cases when a scholar does study the early city in some detail (e.g., McNulty 1975, 373-74; Foley 1974, 228-34; 1975, 379; Greco 2009, 55), its interpretation is usually so conditioned by later versions of the city in the Republic that its economic principles are, as I will show, misrepresented and misun- derstood.10 In this chapter, I aim to assess the economic and ethical principles of the early city on their own merits. This is of both analytical and historical interest in itself; it is also interpretively significant as a precondition for any fair comparisons of the early city to later versions of the city in the Republic.

Among historians of economic thought, three voices have done the most to spread the view that Plato’s works contain no rigorous economic thought. Joseph Schumpeter asserts that “[t]he essential difference [between Plato’s and Aristotle’s approaches to economics] is that an analytic intention, which may be said (in a sense) to be absent from Plato’s mind, was the prime mover of Aristotle’s. This is clear from the logical structure of his arguments” (Schumpeter 1959, 57). Schumpeter defines economic analysis, distinct from mere economic thought or description, as “intellectual efforts . . . to understand economic phenomena” (Schumpeter 1959, 3; see also Lowry 1979, 66-67). The eminent classicist Moses I. Finley concurs: “It is agreed on all sides that only Aristotle offered the rudiments of [economic] analysis”

(Finley 1970, 4). Lionel Robbins, too, thinks that Aristotle “is much more germane to technical analysis than Plato’s remarks on the division of labour” (Robbins 2000, 15), and he adds that we “must not expect too much of Plato,” since he was “backward looking” in (allegedly) preferring the harsh, regimented Spartan regime to Athenian democracy and commerce (Robbins 2000, 11). Unsurprisingly, in light of these three prominent voices, a recent popular reader in the history of economic thought skips over Plato and begins with Aristotle (Medema and Samuels 2013, 2-4). Moreover, Finley’s influential thesis that in the ancient world economic interactions were governed by considerations of status and “embedded” in hierarchical social relationships to such an extent as to make modern economic models of little use for understanding those interactions (Finley [1973] 1999, 35-61) has made it still more unlikely that scholars would look for a systematic economic theory in Plato. Against these voices, I seek to show that Socrates’s casual style masks an analytic intention,11 and that he develops a systematic and far-reaching theory of market exchanges and the division of labor based on the interactions of thinking, decision-making individuals.

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