Encyclopedia of Money: Plato

Plato (427–347 b.c.)

Plato ranks with Socrates and Aristotle as the most famous of the Greek philosophers during the golden age of Athens. Of the three, Plato was the most idealistic, and even today Plato is probably the most widely read philosopher among college philosophy students. Plato is less well known for being one of the first influential political philosophers to propose a system of token money.

Plato’s vision of the ideal state had no room for democracy, private property, competitive markets, or the institution of marriage. In one of the enduring lines in philosophical literature, Plato shares his secret for reforming society:

Until philosophers are kings, or the kings and princes of this world have the spirit and power of philosophy, and political greatness and wisdom meet in one, and those commoner natures who pursue either to the exclusion of the other are compelled to stand aside, cities will never have rest from their evils.

One of Plato’s ingredients for an idealized society has been realized on a large scale in contemporary society. In the Laws Plato describes the monetary system of his reformed society:

Further, the law enjoins that no private man shall be allowed to possess gold and silver, but, only coin for daily use, which is almost necessary in dealing with artisans, and payment of hirelings, whether slaves or immigrants, by all those persons who require the use of them. Wherefore our citizens, as we say, should have a coin passing current among themselves, but not accepted among the rest of mankind; with a view, however, to expeditions and journeys to other lands—for embassies, or for any other occasion which may arise of sending out a herald, the state must also possess a common Hellenic currency. If a private person is ever obliged to go abroad, let him have the consent of the magistrates and go; and if when he returns he has any foreign money remaining, let him give the surplus back to the treasury, and receive a corresponding sum in the local currency. And if he is discovered to appropriate it, let it be confiscated, and let him who knows and does not inform be subject to curse and dishonor equally with him who brought the money, and also to a fine not less in amount than the foreign money which has been brought back.

Plato’s proposal for monetary reform based upon a token currency may show the influence of Sparta on his thinking. Sparta made use of huge, unwieldy iron discs as money, hoping to elude the vices associated with money—class warfare—corruption, personal debauchery, etc. In the early ages of economic evolution, money was viewed with distrust, a contributor to moral decay. The New Testament says “The love of money is the root of all evil.”

Although Plato’s token money played a positive role in his utopian society, realistically, most token money has appeared in time of war and revolution, when governments were strapped for funds and debased currency as a means of transferring wealth from private citizens to government. Only in the twentieth century have properly managed systems of token fiat money symbolized advanced achievement in economic development, typical of the most prosperous economies in times of peace and stability.