This document summarizes the economic ideas of several ancient Greek philosophers. Plato believed the state originated to satisfy human needs and established classes of rulers and workers. He advocated communism of property but not equality. Aristotle supported private property and saw economics as concerning production and chrematistics as money-making. Hesiod emphasized overcoming scarcity through labor and competition. Xenophon discussed household management and the virtues of specialization. All recognized the importance of agriculture and debated concepts like value, wealth, and exchange that formed early economic thought.

1. Economic Ideas of the Greeks:
1. PLATO (born 428/427 BCE, Athens,
Greece—died 348/347, Athens), ancient
Greek philosopher
- He was born in Athens in an aristocratic
family.
- He was a pupil of Socrates. He taught
mathematics and philosophy in the first
great school of philosophers – the
Academy, founded by him.
- His famous writings, ‘The Republic’ and
‘The Laws’ are the most important sources
of his economic thought.
Economic Ideas of Plato
- He attempted to offer a systematic
exposition of the principles of society and of
the origin of the city state, as well as a plan
for the ideal social structure.
- He regarded economics a branch of ethics
and politics.
ORIGIN OF THE STATE:
 “A state arises out of the needs of mankind.
No one is self-sufficient. All of us have many
wants.” The state in order to supply the
necessary commodities to satisfy human
wants gathered together.
 In Plato’s ideal state there were two classes,
the rulers and the ruled. The rulers were the
king and warriors and the ruled were
artisans and unskilled workers.
 The members of the ruling class must be set
apart from early childhood and they should
be educated in philosophy and the arts of
war because they will have to protect the
state against foreign attack.
 At the age of thirty they will have to pass an
examination. This examination selects the
future philosopher king and those who
cannot pass are concerned with general
administrative duties.
 Plato distinguished five types of
government:
1. Aristocracy – rule by the best.
2. Timocracy – rule by the soldiers.
3. Oligarchy – rule by a few.
4. The rule of the wealthy and
5. Democracy.
DIVISION OF LABOR:
 He simply meant the division of employment
as an aid to social organization.
 According to Plato the essential needs of
mankind are food, clothing and shelter.
Therefore a city state must include a builder,
a weaver, a farmer and a shoe maker or a
representative of some other similar
occupation.
 Every individual should do the work that is
suitable for him. As a consequence all
commodities are produced more plentifully,
easily and of a better quality. Moreover he
did not consider the necessity of a wider
market for the application of the principles.
 Smith’s division of labour is determined by
the market, but Plato’s division of labour
determines the market. To Adam Smith the
advantages of division of labour go to only
the employers, but to Plato it is beneficial to
the entire society. The cost of division of
labour according to Plato is the difference in
skill and talent. But according to Adam
Smith division of labour leads to differences
in skill and talent.
SIZE OF POPULATION:
 The size of population in his state was
assumed on the basis of the best results of
division of labour.
 He provided a careful regulation of
population to maintain stability in the
economy. The right number of population
suggested by Plato for a state was 5040.
 Only such a number provided opportunity for
everyone to be familiar with all the other
persons and help the economy to achieve
self-sufficiency. It also helps to reap
maximum productive efficiency.
 If the number showed a decreasing
tendency, the state should offer prizes to
encourage the growth of population. But if
the number exceeds 5040 new colonies
must be established.
MONEY:
 He did not favour the idea of allowing gold
and silver to be used by the common men.
 He suggested the use of domestic coins for
payment of wages and other transactions.
 He suggested the use of domestic coins for
payment of wages and other transactions.
INTEREST, VALUE, AGRICULTURE
 Plato prohibited interest taking for loans, but
later on he permitted interest taking as a
penalty for delayed payment.
 Plato considered value as an inherent
quality of the commodity. A man should not
attempt to raise the price, but simply ask the
value of the commodity.
 Like the Hebrews, the Greeks too
considered agriculture as the most desirable
occupation.
RICHES AND POVERTY:
 To him great riches and happiness cannot
exist together because the rich people
spend a part of their wealth without any
justice.
 Only farmers and artisans were allowed to
get property while the rulers and the
administrators were not allowed to enjoy the
property rights.
 Plato regarded slavery as a permanent
factor in the civilization of mankind.
 In his city state, the slaves formed about 1 /3
of the population and they performed most
of the economic functions.
COMMUNISM
 In his ideal state the property should be
collectively owned. Plato advocated
communism to eliminate the evils of caste
system. Plato’s ideal state was not a
communist state in the strict sense of the
term.’

2.  Though the aim was to abolish class conflict,
it was not to be achieved on the basis of
equality of opportunities.
 Plato’s communism did not stand for an
absolute mechanical equality, but
recognized authority and class distinctions.
EDUCATION
 Plato stated that both boys and girls should
receive the same kind of education. His idea
on education is more important in the
modern days.
2. ARISTOTLE (384-322 B.C. Greece)
- Ancient Greek philosopher and scientist,
one of the greatest intellectual figures of
Western history.
- Aristotle was the first analytical economist
who laid the foundation of the science of
Economics.
- He was the student of Plato and tutor to
Alexander, the great.
- Even though Aristotle was the student of
Plato he differed from him on important
issues like the origin of the state, private
property, communism etc
- The reasoning of Aristotle is less imaginative
and more logical and scientific than that of
Plato.
IDEA OF STATE:
 According to Aristotle the state originates
out of the needs of mankind. He explains the
origin of the state in terms of household.
 The household is an association formed to
satisfy the wants of the family members. The
village grows out of a number of households
and finally the state comes into existence.
 In Aristotle’s Ideal state, there would be two
classes—the ruler and the ruled. The former
was classified as military class, statesmen,
magistrates and the priest. The ruled were
farmers, craftsmen, and labourers.
 The members of the ruling class would
perform their duties according to their
respective age.
PRIVATE PROPERTY
 Aristotle supported the institution of private
property. He argued that public property
would not be looked after as carefully as
private property.
 Hence, Aristotle said that property should be
private. When there is private property they
will make much progress because everyone
will be attending to his own business.
 Aristotle was against the imposition of
ceiling on private property. Rather he
pleaded for checking the growth of
population. If population is not checked, it
will result in poverty which is the root cause
of revolution and crime
 Aristotle wanted the owners of private
property to accept public responsibility. The
property owners must act as trustees of the
society.
SCOPE OF ECONOMICS
 Aristotle developed the theory of economics
while discussing the elements of household
management.
 There were two elements, namely,
economics and chrematistics, the former,
concerned with the art of consumption of
wealth in the satisfaction of wants and the
later with the art of acquiring wealth either
by making money or by exchange.
 Aristotle speaks two types of exchange—
natural and unnatural. Natural form of
exchange satisfies the human wants. The
un- natural form of exchange aims at
momentary gains.
 Aristotle speaks about two kinds of uses:
The first type of use is economy proper and
the second one is value-in-exchange or
chrematistics.
 Natural chrematistics concern the
satisfaction of natural wants by natural uses
of a commodity while exchange is an
unnatural process of money making
because man goes on undertaking this
activity even after he has reached the point
of satiety.
MONEY
 Aristotle’s theory of money explains “what
money is and what money does”
 Aristotle explained the other functions of
money, namely, store of value and measure
of value.
 Aristotle advocated a non-communist
society. In such a society there would be
barter, then the difficulties of barter would
result in the introduction of money.
 He said that money came to be introduced
to facilitate commercial dealings.
INTEREST
 According to Aristotle interest taking was the
most unnatural of all the methods of getting
wealth.
 Money served only as a medium of
exchange, it cannot be regarded as
productive. As one piece of money could not
produce another, interest was unjust.
SLAVERY
 Aristotle’s views regarding division of labour,
inheritance, population and slavery were
more or less similar to that of Plato.
 He supported the institution of slavery. He
divided slaves into natural slaves and legal
slaves. The natural slaves were inferior to
others, both in body and mind. Those
conquered in war were treated as legal
slaves.
COMMUNISM
 Aristotle had a new idea that property should
be private, but the use of it should be
common. To him ownership of property was
a natural instinct of man.
 He did not accept the extreme individualism
of the Greeks. He wanted more and more
goods under common use without affecting
individual proprietary rights.

3. MONOPOLY
 Defined monopoly as a position in a market
of a single seller & condemned it as unjust.
3. HESIOD (750 and 650 BC, Cyme, Ascra)
- He is known as the “father of Greek didactic
poetry”
- The honor of being the first Greek economic
thinker goes to the poet Hesiod.
- Hesiod lived in the small, self-sufficient
agricultural community of Ascra, which he
himself refers to as a “sorry place … bad in
winter, hard in summer, never good.”
- He was therefore naturally attuned to the
eternal problem of scarcity, of the
niggardliness of resources as contrasted to
the sweep of man’s goals and desires.
- Hesiod’s great poem, Works and Days,
consisted of hundreds of verses designed
for solo recitation with musical
accompaniment.
- Of the 828 verses in the poem, the first 383
centered on the fundamental economic
problem of scarce resources for the pursuit
of numerous and abundant human ends and
desires.
- Because of scarcity, notes Hesiod, labor,
materials and time have to be allocated
efficiently.
PROBLEM OF SCARCITY
 Scarcity, moreover, can only be partially
overcome by an energetic application of
labor and of capital.
 Hesiod analyzes the vital factors which may
induce man to abandon the god-like state of
leisure: The first of these forces is of course
basic material need. Need is reinforced by a
social disapproval of sloth, and by the desire
to emulate the consumption standards of
one’s fellows.
 Emulation (imitation) leads to the healthy
development of a spirit of competition, which
he calls “good conflict,” a vital force in
relieving the basic problem of scarcity.
CONCEPT OF COMPETITION
 To keep competition just and harmonious,
Hesiod vigorously excludes such unjust
methods of acquiring wealth as robbery, and
advocates a rule of law and a respect for
justice to establish order and harmony within
society, and to allow competition to develop-
within a matrix of harmony and justice.
4. XENOPHON (430 - 354 BCE, Athens)
- Xenophon was a historian, but also a
soldier, a mercenary, and a student of
Socrates.
- In his early life, Xenophon was a pupil of
Socrates.
- Xenophon in his economic writing, The
Economist, explores themes such as
household management, the division of
labor, and market value. His economic
writing which are individually-centered,
discuss the fundamental building blocks of a
stable and well-managed economy.
OECONOMICUS
 Xenophon presents a lengthy Socratic
dialogue focused on a single (larger) subject
-- as opposed to the many short examples
he presented in Memorabilia.
 It is one of the earliest written works on
economics and a significant source for the
culture and history of Athens.
 He sticks to the farm, but that was what the
house was for Ancient Greeks. Xenophon
talks greatly about the concept of
“management and leadership”.
 According to this philosopher, the proper
management of a house was essentially
based on the effectiveness of the leader.
And he considered that similar virtues
should prevail in the state as a whole.
 He also talked about the concept of “division
of labor”. This is the same concept you can
find Adam Smith’s books. According to
Xenophon, each person is engaged in tasks
where he is more able and useful in order to
increase efficiency.
 eyond the emphasis on household
economics, the dialogue treats such topics
as the qualities and relationships of men and
women, rural vs. urban life, slavery, religion,
and education.
 The opening framing dialogue is between
Socrates and Critoboulus, the son of Crito.
There, Socrates discusses the meaning of
wealth and identifies it with usefulness and
well-being, not merely possessions.
VALUE
 Insists strongly on utility or serviceableness
as a necessary quality of property.
 He means primarily, not potential utility in
the object, but ability of the owner to use
rightly.
 Exchangeability does not insure value in
anything, unless the seller can use to
advantage that which he receives in return.
 Xenophon makes a positive contribution to
the theory of value. He observes that the
exchange value of goods varies with supply
and demand, and that this law is, in a sense,
self-regulative by the fact that workmen tend
to enter other fields of activity whenever any
industry becomes unprofitable through an
oversupply of its products.
WEALTH
 He values wealth highly, and tries to deduce
practical rules for its increase and
enjoyment.
 He makes derogatory comparisons between
economic and spiritual wealth.
 He defines economic wealth as “the excess
of goods over needs”.
 He calls that man happiest who has best
succeeded in just acquisition, and who uses
his wealth in the best manner.
PRODUCTION
 Xenophon was far more interested than
Plato or Aristotle in the problem of practical
production.

4.  His shrewd discussion of agriculture, and his
urgent appeal to Athens to increase her
revenues by systematic exploitation of the
mines, and by the encouragement of
industry and commerce, reveals a mind
awake to economic advantage.
 He recognizes the importance of labor and
natural resources in production, and in the
Revenues, he sees the necessity of capital.
 Economic production has its definite limits;
that the same ratio of profits cannot be
increased indefinitely by the constant
addition of more labor and capital, but that
these must be proportioned to the greatest
possible return.
 Without doubt, agriculture is, in his opinion,
the supremely honorable occupation.
 Xenophon is considerably more favorable to
labor and the industrial life than are the
other Socratics.
 Xenophon, the practical man of affairs, takes
the institution of slavery for granted,
seemingly unconscious of any ethical or
economic problems involved
MONEY
 In his treatise on the Revenues of Athens,
Xenophon shows some appreciation of the
theory of money.
 He appears to take for granted that money
must have intrinsic value. At least, he
understands that silver is a commodity
whose value is affected by its use as such,
as well as by its employment for currency.
 In any event, he sees that the increase of
silver must be attended by a corresponding
increase in business activity, if its value is
not to depreciate,5 and he cannot be
accused of the error of the mercantilists, that
a country is impoverished by the export of
money.
 He shows also some understanding of the
quantitative theory of the relation between
gold and silver.
EXCHANGE
 Xenophon presents no theory of exchange,
though he is frankly interested in the
advance of commerce and trade.
 In his opinion, the greater their development,
the better it is for the city of Athens
 He is full of practical suggestions to
stimulate commercial activity. So assured is
he of the prime importance of extensive
commerce toa nation, that, in the spirit of
modern commercialism, he insists upon the
necessity of peace for its sake.
 To his mind, increased trade means not only
material advantage, but social and political
as well, in that greater prosperity, more
labor, and a better distribution will mean
greater satisfaction, and hence less danger
of revolution in the state.
POPULATION
 In antithesis to Plato and Aristotle, the
problem of population has no difficulties for
Xenophon.
 He does not deem it advisable to set a limit
on the population of the state.
 On the contrary, he conceives it as one of
the advantages of his plan in the Revenues,
that thereby the city would become very
populous, and thus land about the mines
would soon be as valuable as that in the city
itself.
DISTRIBUTION
 Xenophon is far less concerned about the
problem of distribution than Plato.
 He has no suggestions as to wages, profits,
or prices, no ideal state where an equitable
distribution shall be realized, no yearnings
after equality, or complaints against the evils
of extreme wealth or poverty.
 He would avoid civic discord in the state, but
by the increase of production and exchange
rather than by their limitation.
 He does not definitely reveal his attitude
toward the poorer masses, but it seems
probable that he had little interest in them,
except in so far as their condition might
affect the fortunes of the state.
 He opposes the extreme individualism of the
political and private life of his day.
 However, his economic motive is not interest
in the welfare of the masses, for by his
scheme they would all be slaves. He desires
only to abolish poverty among the citizens.
 He would have the state become
entrepreneur, not merely in one, but in many
branches of industry.
 His thesis is, in a word, that what private
capital can accomplish for the enrichment of
itself alone, state capital can accomplish to
better advantage for the enrichment of the
whole citizenship, a doctrine which strikes a
truly modern socialistic note.