According to Socrates there was an intimate relationship between virtue and happiness. The two coincided. Plato believed that the end man pursued is a virtuous life. Plato expanded on this and said that an object or a person is virtuous if it or he fulfils his own function well. The function that a man had to fulfil in order to be virtuous is the application of his knowledge. Man has intellect which he uses to acquire knowledge. Plato says that in order to be virtuous not only must man have knowledge but also should apply it. Plato, however, says that not every individual is endowed with the same degree of intellect. The total knowledge of the philosophers exceeds the knowledge of the soldier whose total knowledge, in turn, exceeds the knowledge of the artesan. Plato concludes that every person should apply his own knowledge. Virtue consisted, therefore, in application of one's own knowledge. But the proposition that knowledge is virtue implies that there is an objective good to be known and that it can be known by rational and logical investigation rather than by intuition, guess work or luck.

The good or objectively real, whatever everybody thinks about it, ought to be realized not because man wants it but because it is good. The virtuous life is not determined by man himself but is fixed. This "highest good" is the supreme and ultimate purpose of the universe and occupies the central position in the realm of ideas. Man's soul finds itself in that strange intermediary position of being a member of two worlds, i.e. the material world of sense perception and the spiritual world of ideal reality, but the soul is actually supersensible and belongs to the spiritual world of eternal ideals. Plato reasoned that the soul being eternal had a pre-existence in the ideal world where it learned about the eternal ideals. The individual now living in the sensory world, barred from the ideal world, can recollect the great Ideal in faint reminiscences.

A concept fundamental to Aristotle's ethical philosophy states that God and Nature create nothing in vain, that everything in this universe has been created to achieve a purpose and has been designed to perform the given function or type of activity for which it was fashioned. In the case of man the goal of actions is happiness. The function of man's highest nature, his rational soul, is to live a well-ordered life in which every phase of man responds to his rational dictates; in the sense that his lower nature behaves in conforming to reason. This virtue comprises essentially of use of one's ability to act purposefully in conforming to one's intellectual insight. Virtue means application of intelligence to practical situation and concrete action.

Both Plato and Aristotle state that the "purpose of the state should be the moral elevation of the whole of the members of that state." That which corresponds with man's characteristic function is moral. Plato and Aristotle regarded this as the disposition to effectively realize reason as a characteristic function. According to them the purpose of the state is the elevation of his realization or in other words the state exists to assist man in the realization of his characteristic human function. The state should endure that every person is so situated as to afford him an opportunity to effectively realize his characteristic function.

According to Plato, even as an individual's happiness depends upon his virtuous achievement, the good or happiness of society is contingent upon its realization of the state ideal justice. The ideal state is one in which every individual functions in his best capacity according to his natural abilities. The fact that each person contributes his talent to the state by working at tasks for which he is best suited, helps to bring about harmony within society, and such harmony is regarded by Plato as identical with justice.
For Aristotle, the basic function of the state is to extricate man from the crude natural condition in which he finds himself and to guide him into the civilized culture of an ethical and intellectual life and accomplishment wrought through the finer arts. Thus the goal of the state is good living, a life of happiness based upon virtue. Outside of the state, the perfected moral life is an impossibility in as much as man is a political or social animal by nature. In order for man to realize himself, he must activate his social nature, an exercise that requires an existence within some society. As a complement to man's needs, the state also must be considered the instrument whereby man may attain his goal; consequently, the purpose of the state is that of ethical training for the benefit of its citizens. Just as the highest virtue for the individual is intellectual activity, so the highest duty of society is that of achieving and making the proper use of a state of peace. Man's natural condition is not one of belligerency, as the Spartans taught, but one of peace. Aristotle, commenting on the failure of the Spartans which he attributed to its military education and bellicose way of life, said that the Spartans, geared for war and not for peace, in time of peace rusted as sword in a scabbard.

In the realm of ideas, the concept of the ultimate occupied a central position and Plato maintained that knowledge of the ultimate good was necessary in order to become good.
In contrast, Aristotle holds the view that good can be known on the basis of experience of human behavior and desires. In order to discover the good, that man aim at, we have to look at man's daily activities and examine his behavior. We would discover that man has a hierarchy of purpose. He deduces that from these multiple purposes there has to exist a higher good or purpose, which must be self-sufficient, final and attainable by man. The highest good man desires at or aims at is happiness. The question as to what the happiness or highest good man is aiming at, Aristotle's answer is that, that each man is endowed with reason. Man's potential, he maintains, should be realized, for it is in its realization that the man's highest good is found. In other words man's happiness lies not only in possessing knowledge but also in application of it. Aristotle also finds room for secondary elements, i.e. pleasure and presence of certain external items.