So much for historical accounts of the soul: let us dismiss them and make a fresh start. ‘Substance’ refers to (a) matter, as in potentiality, (b) form or essence, as in actuality, (c) that which is compounded of both matter and form. Among substances are bodies and especially natural bodies. Of natural bodies, some have life in them, others not, and every natural body that has life is necessarily a substance in the sense of being a composite. However, the body is the subject or matter, not that which is attributed to it. Hence, the soul must be a substance in the sense of the form of a natural body having life potentially within it. As substance is actuality, soul is the actuality (entelecheia) of a body, that in virtue of which it is the kind of the body that it is. There are two kinds or grades of actuality, one that is akin to the possession of knowledge, and another to the exercise of knowledge. The first grade of actuality is thus a capacity to engage in the activity which is the corresponding second grade of actuality, and soul can be thought of as such a capacity, namely, a capacity to engage in the sorts of activity that are characteristic of the natural body of which it is the form, for instance, self-nourishment, growth, decay, movement and rest, perception, and intellect. Thus, the soul can be described as the first grade of actuality of a natural organised body.
That is why we can wholly dismiss as unnecessary the question whether the soul and the body are one: it is as meaningless as to ask whether the wax and the shape given to it by the stamp are one, or generally the matter of a thing and that of which it is the matter. Unity has many senses (as many as ‘is’ has), but the most proper and fundamental sense of both is the relation of an actuality to that of which it is the actuality … [The soul] is a substance in the sense which corresponds to the definitive formula of a thing’s essence.