A History of Greek Economic Thought. Albert Augustus Trever
Plato, however, is probably nearer the truth, since the very reason for mutual interdependence is diversity of nature.[160]
The advantages of specialization, according to Plato,[161] are four, as stated above. It enables one to accomplish more work with greater ease, more skilfully, and at the proper season. The second and fourth of these are not mentioned by Adam Smith, but he notes the resulting increase in opulence for all the people, and the development of inventive genius. He also observes that the division of labor causes the growth of capital, and that this in turn increases specialization.[162] Of course Plato could not appreciate the important fact of the influence of the division of labor on the development of inventive genius, since he lived before the age of machinery.
Plato is also a forerunner of Adam Smith in his recognition of the fact that the division of labor depends for its advance upon a great increase in the size and complexity of the state.[163] It means a multiplication of trades, a development of industry,[164] the entrance of the retail trader (κάπηλος),[165] and the invention of money as a means of exchange.[166] The necessity of the division of labor between states is also recognized. It is impossible to establish a city where it will not be in need of imports (ἐπεισαγωγίμων). International trade therefore arises, and with it are born the merchant (ἔμπορος) and the sailor class, together with all those who are engaged in the labor of the carrying trade.[167] Thus Plato, the idealist, and reputed enemy of trade and industry, develops them directly out of the basal principle of his Republic. He appreciates the necessity of a full-fledged industry and commerce to the existence even of a primitive state, and his hostility to them is actually directed only against what he terms their unnatural use.[168] Moreover, in his opinion, one function of the division of labor should be to limit them to the performance of their proper tasks, and keep them from degenerating into mere money-making devices. It should also result in limiting such vocations to the less capable classes since the rulers should be artisans of freedom.[169]
It would take us too far afield to discuss the diverse ways in which Plato uses his principle. We may observe in passing, however, that he applies it to war, in his interesting criticism of the citizen-soldier;[170] to the finer arts, even when they are quite similar to each other;[171] to politics, as noted above; to justice and the moral life in general;[172] and to the intellectual life, in his unsparing criticism of the superficial versatility and dilettantism of the contemporary Athenian democracy, which trusts the government to any incompetent, professes to be able to imitate everything, and makes the many-sided Sophist (πολλαπλοῦς) the man of the hour.[173] Though he begins with the development of the principle as an economic fact, his primary interest in it is as a moral and intellectual maxim. The fact that the cobbler sticks to his last is only a symbol (εἴδωλον) of justice.[174] Nevertheless Plato does appreciate to a remarkable degree the economic bearings of the law, and his discussion of it is notably scientific and complete.[175] He sometimes pushes its application to an extreme, though such instances are perhaps meant in a playful Socratic vein.[176] At least, like Ruskin, he understands that extreme specialization must produce narrow and one-sided men, and that progress revolts against its too rigid application.[177] He is aware too that the division of labor breaks down in the case of the poor unemployed of the state, since they have no special work.[178]
SLAVERY
Plato is not blind to the ethical aspects of the problem of slavery. In his first healthy state (ὑγιείνη), slavery and war are conspicuously absent, and it is the natural inference that the author believed these to be necessary evils of the more complex state.[179] He appreciates the dangers of absolute power, even in private life, and believes that few men can stand the strain.[180] He conceives human nature as a unity that defies absolute division into separate classes.[181] Though he does not renounce slavery in the Republic, he would limit, it to the barbarians and to those who seem unfit for the higher life.[182] It plays a remarkably small part in his first state, and it would seem that his idealism is here struggling against what he feels to be an economic necessity. In the Laws, he frankly accepts the necessity, and puts even agriculture, as well as the other industries, into the hands of slaves.[183] However, they are not to be treated as animals, but as rational men, in whom a proper usage may develop a certain degree of morality and ambition for good work.[184] To be sure, his purpose is economic rather than ethical—to make the slaves satisfied with their lot, and thus better producers.[185] He makes no mention of freedom as a reward for good behavior, though he elsewhere provides for the existence of freedmen in the state, and stipulates that they shall not become richer than their former masters.[186]
MONEY
As Plato was the first of extant Greek thinkers to grasp the principle of the division of labor, so he was the first to give any hint as to the origin of money. He states that it came into use by reason of the growth of necessary exchange, which in turn resulted from increased division of labor.[187]
The function of money he defines somewhat indefinitely by the term “token of exchange,”[188] an expression suggestive of Ruskin’s definition “a ticket or token of right to goods.”[189] It seems to imply that money is not itself a commodity to be trafficked in. In the Laws, he specifies more clearly the functions of this symbol. It acts as a medium of exchange and as a measure of value.[190] The latter office is performed by reason of the fact that money is a common denominator of value, changing products from incommensurable (ἀσύμμετρον) and uneven (ἀνώμαλον) to commensurable and even.[191]
Since Plato did not consider money to be a commodity to be bought and sold, and since he did not appreciate its productive function as representative capital, his theory of interest was superficial. His attitude toward it was somewhat similar to that of many people today toward speculation in futures in the stock market, as a practice contrary to public interest and policy. The application of the term τόκος to interest by Plato[192] and Aristotle, as though interest were the direct child of money, is probably only a punning etymology, and not intended seriously. It can therefore hardly be used, as it often is, to prove the superficiality of the theory of the Socratics. Plato, however, would have no money-making by usury,[193] nor indeed any loaning or credit at all, except as an act of friendship.[194] Such contracts should be made at the loaner’s own risk,[195] and held legal only as a punishment for breaking other contracts.[196] He calls the usurer a bee that inserts his sting, money, into his victims, thereby beggaring them and enriching himself.[197]
Such strictures against interest were common in mediaeval Europe, reappeared in Ruskin,[198] and are implied in the present opposition, in some quarters, to so-called “unearned income.”[199] The motive in mediaeval times, however, was distinctively religious, and was also partly due to the absence of a developed capitalism. With Ruskin and modern theorists, on the other hand, the objection is, at bottom, socialistic. The motive of the Socratics was essentially moral and political.
Plato’s other error concerning money, as above observed, was that it need possess no intrinsic value for domestic use. He looked upon gold and silver as causes of degeneration in state and individual,[200] and would therefore have put a ban on them for use within the state.[201] To his mind, a mere state fiat was sufficient to give currency and value.[202] This doctrine has also often recurred in the history of economic thought, as in Ruskin and the Greenback party of a generation ago.[203] The error, however, was not so grave in Plato’s case, for he, at least, recognized the need of the precious metals for international purposes.[204] Moreover,