Book VII marks Aristotle's attempt to envision an ideal city. He distinguishes between three kinds of goods: external goods (wealth, reputation, etc.); goods of the body (health, sensual pleasure, etc.); and goods of the soul (wisdom, virtue, etc.). Aristotle gives preeminence to goods of the soul, since they are ends in themselves, whereas the other two kinds of goods are merely means to this end. Goods of the soul depend ultimately on each individual's nature, not on luck. A city, like a person, needs internal goodness and wisdom in order to be happy.
Aristotle confronts a dilemma: is the ideal civic life an external life of political action, or an internal life of philosophical speculation? Dismissing the militaristic life as focusing exclusively on what should only be a measure of security, Aristotle compares statesmanship and solitary contemplation. On one hand, governing in a city of freeborn men is a high-minded activity, and an active life of politics is preferable to an inactive life, since happiness is a state of action, not inaction. On the other hand, governing others full-time is not fulfilling, and a life of philosophical contemplation is far from inactivity. One's thoughts are the authors of one's deeds, so thought is intimately linked with action.
Aristotle believes that the population of a city should be neither too large nor too small. Small cities are not self-sufficient, while large cities are difficult to govern. The judicial and electoral functions of the city require that the citizens know one another and be able to judge one another's character. Aristotle thus advises that the population of a city be "the greatest surveyable number required for achieving a life of self-sufficiency."
Similarly, the territory should be large enough to ensure self-sufficiency and leisure but small enough to be surveyable (readily taken in by the eye), for purposes of defense and facilitation of commerce. Aristotle advocates living by the sea and building a seaport, though he warns of the danger of having unwanted aliens crowd the city. Living by the sea allows for easier commerce, though such commerce should be conducted in a spirit of temperance rather than greed. Aristotle also recommends building up a navy, but putting it in the command of farmers and serfs, rather than citizens.
Aristotle believes that Greeks make ideal citizens as they fit a perfect compromise between high spirit and skill and intelligence. He also believes that Europeans to the north are full of spirit but lack the skill and intelligence for political organization, whereas Asians have skill and intelligence but lack spirit and are easily subjected and enslaved.
Concerning social structure, Aristotle makes a sharp distinction between those elements that are necessary parts to the city (such as slaves) and those that are integral parts of the city. Slaves are like property: no city can exist without them, but they themselves are not the city. Aristotle identifies six components of a city: food, crafts, arms, property, worship, and government. The first two must be left to non-citizen farmers and laborers since they require a great deal of work and cannot be combined with the citizen's life of leisure. The citizens themselves should undertake the rest: the young should serve in the military; the middle-aged should govern; and the old should serve in the cult of the gods. The citizens, furthermore, should own all property, some publicly and some privately.
Early in book one, Aristotle states, “for mankind always act in order to obtain that which they think good.” The wording of “they think” in his statement implies that humankind seeks “good” based on their subjective definition of the term. If humankind seeks what they think is good, it naturally falls that individuals will seek what they believe to be good for themselves, which then seems to lead naturally to the accumulation of coin because of its ability to bring material comforts.
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