He begins the discussion by explaining to Cebes that in his youth he was very interested in the natural sciences because he “thought it splendid to know the causes of everything, why it comes to be, why it perishes, and why it exists” (96b). The type of causes to which Socrates refers here is material cause: the reasons behind the physical and material composition of things. However, Socrates admits that this search amounted only to a sort of false start in the search for causality, because “this investigation made me quite blind even to those things which I and others thought that I clearly knew before” (96d). He rejects material causes as sufficient because they lack true explanatory power. He comes up with numerous examples that are not really explained at all by the proposed cause, but merely described by material investigations. His example that most clearly identifies his qualms with material causes is the issue of 1 turning into 2, and back into 1. He wonders at the fact that two seperate objects become 2 objects only when brought together (for when they are separate they are each only 1 object); but the opposite action, that of dividing a single object also causes there to be 2 objects (97b). Socrates is rightly puzzled by this explanation of physical proximity changing an object’s identity, for it really explains nothing at all about why one becomes two and two becomes one; instead it only seems to show when or how such a transformation occurs. Thus Socrates concluded that he “does not any longer persuade [himself] that [he] knows why a unit or anything else comes to be, or perishes or exists by the old method of investigation” (97b). Nevertheless, with the failure of material causal explanations, Socrates actually did make progress in his search for causes. He knows more clearly what sort of cause he does not want. And he discovered a criterion for good causal explanation that was lacking in the material explanation: opposite effects cannot have the same result (as in the example above, division and bringing together were opposite causes of the same effect).
When he discovered the philosophy of Anaxagoras, Socrates made further progress in clarifying his criteria for a good causal definition. Socrates admired Anaxagoras’s philosophy because it professed to identify a different sort of cause: final causes, which explain why it is best for things to be the way they are. Such a cause, once identified, truly would explain the causal necessity of things being the way they are in a way that would offer insight and information. For this reason Socrates says “I was delighted with this cause and it seemed to me good… If then one wished to know the cause of each thing, why it comes to be or perishes or exists, one had to find what was the best way for it to be, or to be acted upon, or to act” (97d). Anaxagoras proposed that Mind was this ideal sort of cause; but Socrates was disappointed again to find that “the man made no use of Mind, nor gave it any responsibility for the management of things, but mentioned as causes air and ether and water and many other strange things” (98d). In other words, Anaxagoras, despite his proposed strategy, reverted back to identifying merely material causes of things.
Frustrated by the search for final causes, “[I] could neither discover it myself nor learn it from another” (99d), Socrates developed his own “second-best” strategy for causal explanation. The basis of this strategy is to proceed a priori, for he fears after so many disappointing encounters that “my soul would be altogether blinded if I looked at things with my eyes and tried to grasp them with each of my senses. So I thought I must take refuge in discussions and investigate the truth of things by means of words” (99e). Thus, he tells Cebes, the starting point for his investigation will be his theory of Forms about which he so often speaks, “I am going to try to show you the kind of cause with which I have concerned myself. I turn back to those oft-mentioned things and proceed from them. I assume the existence of a Beautiful, itself by itself, of a Good and a Great and all the rest” (100b).
With his typical irony, Socrates summarizes his entire opinion of material causes and their deficiencies when he says he “no longer understands or recognizes those other sophisticated [material] causes, and if someone tells me that a thing is beautiful because it has a bright color or shape or any such thing, I ignore these other reasons – for they all confuse me” (100d). Material causal explanations are overly complex, confusing, and non-explanatory. Furthermore, he does not even think that they hold true or accurate, for, as he has said in previous dialogues, brightness can in one case qualify as beauty, but in another case make a thing ugly (many of his other examples in the Phaedo suffer this same problem). Thus we arrive at one of the fundamental problems of material causes: they often fail to preserve co-extension. As we see Socrates develop throughout his dialogues, co-extension is one of the basic requirements of any definition (be it a normative or causal one). Indeed, he implicitly states this requirement when you combine the criteria he established earlier – that opposite causes cannot have the same effect (97a) – and his examples in 101a-d which, to summarize, require that the same cause cannot have opposite effects. These criteria combined suggest that Socrates requires co-extension in his causal definitions: one cause must produce one effect. Material causes too frequently fail to satisfy this requirement.
Having established this fundamental criterion, Socrates now makes clear the superiority of his own method: by hypothesizing the forms as a causal explanation, he can preserve co-extension. After denying the sufficiency of material causal explanations, Socrates explains that, “I… cling to this, that nothing else makes [a thing] beautiful other than the presence of or the sharing in, or however you may describe its relationship to that Beautiful we mentioned… This is the safe answer for me or anyone else to give, namely, that it is through Beauty that beautiful things are made beautiful” (100e). Final causes are undiscoverable, material causes are complicated and fail co-extension, but Formal causes are simple, sufficiently explanatory, and co-extensive.
Socrates does not let his discussion rest at this point. Surprisingly, he seems not to think that his hypothetical theory of the Forms is entirely sufficient when talking about causation in the world. Likely his reservations lie in the very fact that these Forms really are hypothetical. Intuitively this seems a problem or at least a source of skeptical doubt about the explanatory power or usefulness of such a causal definition. Indeed, Socrates only hypothesized the Forms out convenience as an admitted second-rate explanatino after failing to find the more powerful (i.e. more explanatory) final and material causal explanations. Thus, Socrates decides that he can take one further step regarding formal causes and their explanatory power when he says that “beyond that safe answer [i.e. formal causes], which I spoke of first, I see another safe answer… a more sophisticated answer” (105c). With this more sophisticated sort of answer, Socrates has seeks to extend the explanatory power of his theory of formal causes.
What this more sophisticated answer basically amounts to is a combination of formal and material causes. Intuitively, one has a hard time shaking off material causes from our descriptive arsenal (there is a reason why it seems the majority so frequently defaults to material explanation). Therefore Socrates, to in an attempt to amplify the explanatory power of his Forms, and indeed to envelop material causes within this theory, Socrates says: “It is true then about some of these things that not only the Form itself deserves its own name for all time, but that there is something else that is not the Form but has its character whenever it exists” (103e). To make clear what he means, Socrates, as usual, offers a series of examples: “Consider three: do you not think that it must always be called both by its own name and bt that of the Odd, which is not the same as three?... [it is] odd, but it is not the Odd” (104a-b). Similarly, snow entails the form Cold, and fire entails Heat.
Having explained the basics of this more sophisticated theory, Socrates explains its real significance or explanatory power when he says, “Not only do those opposites not admit each other [i.e. opposite Forms like Odd and Even], but this is also true of those things which, while not being opposite to each other [for example: 2 and 3 are not opposite to each other] yet always contain the opposites [i.e. Odd and Even], and it seems that these do not admit that Form which is opposite to that which is in them; when it approaches them, they either perish or give way” (104b-c). Here we can finally see the explanatory clout of this more sophisticated theory of causation. His causal theory of Forms can explain the logical relationships between the Forms themselves. But by locating the Forms within physical entities, he can use the logical causation of the Forms to explain causal relationships between physical objects. This is more clearly shown through his parallel example of snow and fire. Snow entails the form Cold; fire entails the form Heat. Heat and Cold are opposite forms that “do not admit each other,” or, in other words, cannot coexist. Although snow and fire are not themselves opposite to each other, nevertheless they do entail opposite forms; therefore, when the physical objects snow and fire approach one another, their forms reject one another and the physical properties of one must change (either the snow melts and becomes not-Cold; or the fire is extinguished and becomes not-Hot).
What Socrates has really achieved here is to incorporate material causes within the framework of his theory of formal causes. This is a highly significant philosophical move, and it results in a very bold metaphysical commitment. Gregory Vlastos characterizes the significance of this account of causality in his essay, “Reasons and Causes in the Phaedo”: “There is no confusion here, but the expression of his firm conviction that all intelligible necessity, physical no less than mathematical, must be grounded on logical necessity, since it represents the interrelations of eternal Forms, be these articulated in discourse or imagined in the physical world.” This view is by no means a popular or necessary causal requirement, but, as Vlastos identifies, there is no doubt that Socrates maintains it. The content of this metaphysical view says a lot as to why Plato has posited these forms in the first place. Basically, it would appear that he posits the Forms as a way of explaining his own philosophical intuition that all causation is a logical process. This intuition stems perhaps from his previously admitted desire for final causes – for if formal causes are entirely based on logical necessity, then it would seem that once can also use these forms to explain why things are best a certain way, or why they must be the way that they are.
Most importantly, Plato posits the Forms through Socrates because this hypothetical supposition is the only way of explaining causal occurrences that satisfies his own strict criteria for a good definition which must (i) preserve co-extension, (ii) explain what is being defined, and (iii) isolate the same form or feature in every case. Once he determines that no material explanation can cover all of these requisites, he moves to the a priori realm and hypothesizes his formal definitions.
 Vlastos, Gregory. "Reasons and Causes in the Phaedo." The Philosophical Review 78.3 (1969): 291-325.