Wisdom is a State of the Soul

In the subsequent tradition, there was disagreement about whether the wisdom the lover of wisdom pursues is sufficient for living the good life. Further, in late antiquity, there was disagreement about whether the method the lover of wisdom uses is the only way for a human being to acquire the wisdom involved in living the good life.

εὐδαίμων means "happy, blessed with good fortune." The opposite is κακοδαίμων, "ill-fated, ill-starred, miserable."
Socrates was interested in the wisdom necessary and sufficient to live a certain way, and he thought that the "love of wisdom" (φιλοσοφία) is the way to acquire this wisdom. The way of living is the one in which the person is "happy" (εὐδαίμων). This life is "the good life."

ψυχή transliterates as psychē and is a root of the word 'psychology,' and although now it is commonplace to explain why human beings do what they do in terms of their beliefs, desires, and other psychological states, this explanation is not taken to imply that there is a ψυχή that is in these states.
Socrates characterized this life in terms of "wisdom and truth and the best state of [the] soul (ψυχή)." This characterization part of an ancient conception of what human beings are.

The Soul from Homer to Socrates

How the ancient understood the "soul" (ψυχή) changed significantly over time.

In the opening of Homer's Iliad, the wrath of Achilles is said to send the souls of heroes to Hades but to leave them, the heroes themselves, on the battlefield as food for scavenging birds and dogs. (Similarly, in Homer's Odyssey 11.74, the ψυχή of an unburied hero asks Odysseus to bury "him," where "him" refers to his corpse.) Achilles does not think that the souls he sends to Hades are the people he kills. Nor does he think the soul is something one could improve or make worse, especially in terms of the "love of wisdom," as Socrates supposed.

The soul in Homer was thought to be necessary for life. A human being dies when the soul departs from his body, but thinking and feeling in the living was not thought to be a function of this soul. Feeling was thought to depend on the blood around the heart. Homer's "souls" are shades or shadows. They are portrayed as witless and feeble images of the living.

This is not to deny that the Greeks in Homer's time thought of human beings and their actions in terms of what we would call "psychological" states and processes. They did think of human beings in this way, but they did not think of beliefs and desires in terms of the soul.

What happened so that the Greeks came to understand beliefs and desires in terms of the ψυχή is not entirely clear, but it appears that the influence of the religious cults associated with Orpheus made it possible to think of human beings after death not as having the existence of witless shades but in more optimistic terms. As this happened, the word of ψυχή continued to refer to human existence after death. Further, as this new existence was one in which more of the self survived, it became natural to think that the ψυχή underlies thinking and feeling in the living.

Aristophanes makes fun of Socrates

Aristophanes (middle of the 5th century to the early decades of the 4th century BCE) was an Athenian comic playwright. His Clouds is a caricature of Socrates and of the new education that had come to 5th century Athens. Anaxagoras introduced the inquiry into nature to Athens. It quickly became an object of suspicion, and Socrates was caught up in the reaction.

When Pheidippides asks who dwells in the "think-tank," Strepsiades says he does "not know the name accurately" but that they are "those who are anxious with respect to thinking (μεριμνοφροντισταὶ = μεριμνάω + φροντιστής)...." (101). This language suggests that φιλόσοφος was not yet the common way to describe Socrates. In the Clouds, Aristophanes makes fun of Socrates. Strepsiades refer to the denizens of the think-tank that Socrates heads as "ψυχῶν σοφῶν" ("wise souls") who "in speaking of the heavens persuade people that it is an oven, and that it encompasses us, and that we are the embers" and who "teach, if one gives them money, to conquer in speaking, right or wrong" (94-99).

This shows that the historical Socrates talked about wisdom as a state of the soul as early as 423 BCE, when the Clouds was performed in the annual Dionysian festival.

Aristophanes is making fun of Socrates, but the meaning of the joke is no longer obvious. He might mean that Socrates and his followers in the think-tank are absurd because the control they exercise over their actions through the care of their souls has turned them into complete fools, not wise men, contrary to what they themselves believe and advertise. This understanding of the joke presupposes that the audience conceived of human beings as psychological beings, beings whose actions are caused by the states and processes in their soul. As such, a human being exerts control over the direction his life takes by exerting control over the beliefs and other states in his soul. Socrates and his followers, however, go about this in a comical way. Aristophanes represents them as devotees of the new scientific/sophistical education, and he shows how this has turned them into fools, pale-faced bare-footed characters who live absurd and laughable lives.

There is something right about this interpretation, but it may also be that the joke turns on the fact that members of the audience did not think that wisdom was a function of the soul at all. To such an audience, Socrates would be someone who spoke strangely about the soul if he thought the soul was somehow associated with wisdom. It is not that the care for the soul that Socrates urges has turned him and his followers into fools, as opposed to wise men. Many in the audience would have thought that Socrates and his fellow denizens in the think-tank are fools, but this was not the real point of the joke. Rather, Socrates and his followers are comical figures because it was laughable to think that the soul underlies any specifically intellectual cognition in human beings.

How Plato understood Socrates

Plato understood Socrates to think that human beings do what they do in terms of their "soul" (ψυχή) and the soul needs a certain kind of care. As "psychological" beings, human beings do what they do because of the states and processes in their souls. If the soul lacks wisdom, the person lacks competency in how to live. He makes himself and his life miserable. If the soul has wisdom, he knows how to live. He makes choices that make him and his life happy.

This shows why Socrates thinks he is doing something so important in his questioning. He helps his interlocutors improve their souls by helping them eliminate their false beliefs. In the absence of these beliefs, they would arrange things in their lives so that they are happy because they would live in terms of "wisdom and truth and the best state of [their] soul[s]."

Perseus Digital Library:

Aristophanes, Clouds
Strepsiades is burdened with debt because of his aristocratic wife and the expensive tastes she encourages in their son, Pheidippides.
To solve his problems, Strepsiades tries to enroll his son in the "think-tank" to learn how to make the weaker argument appear stronger.
Strepsiades hopes to relieve himself from his debts by having Strepsiades the family's creditors in court.
Do you see this little door and little house?
I see it. What then, pray, is this, father?
This is a think-tank (φροντιστήριον) of wise souls (ψυχῶν σοφῶν). There dwell men who in speaking of the heavens persuade people that it is an oven,
and that it encompasses us, and that we are the embers. These men teach, if one give them money, to conquer in speaking, right or wrong.
Who are they?
I do not know the name accurately. They are those who are anxious with respect to thinking (μεριμνοφροντισταὶ), noble and excellent.
Bah! They are rogues; I know them. You mean the quacks, the pale-faced wretches, the bare-footed fellows, of whose numbers are the miserable Socrates and Chaerephon.

Henry George Liddell, Robert Scott, A Greek-English Lexicon:
εὐδαιμονία, eudaimonia, "happiness,"
εὐδαίμων, (εὐ +‎ δαίμων), eudaimōn, adjective, "happy,"
κακοδαίμων, (κᾰκός +‎ δαίμων), adjective, kakodaimōn, "unhappiness"
μεριμνοφροντιστής (μεριμνάω + φροντιστής), merimnophrontistēs, noun, "one who is anxious with respect to thinking,"
φροντιστήριον, phrontistērion, noun, "place for meditation, thinking-shop"

"[H]istorically the decisive step was taken by Socrates in conceiving of human beings as being run by a mind or reason. And the evidence strongly suggests that Socrates did not take a notion of reason which had been there all along and assume, more or less plausibly, that reason as thus conceived, or as somewhat differently conceived, could fulfill the role he envisaged for it, but that he postulated an entity whose precise nature and function was then a matter of considerable philosophical debate.... [W]hat Socrates actually did was take a substantial notion of the soul and then try to understand the soul thus substantially conceived of as a mind or reason. ... By 'a substantial notion of the soul' I [mean]... a notion according to which the soul accounts not only for a human being's being alive, but for its doing whatever it does.... This was not a common conception, it seems, even in Socrates' time, but it was widespread and familiar enough under the influence of nontraditional religious beliefs, reflected, for instance, in Pythagoreanism. And it seems to have been such a substantial notion of the soul which Socrates took and interpreted as consisting in a mind or reason." (Michael Frede, "Introduction," 19. Rationality in Greek Thought, edited by Micheal Frede and Gisela Striker (Oxford University Press, 1996), 1-28).

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