1. the individual soul (what the psyche is derived from)
2. the general feeling of a group (a spirit of contention, team spirit, a spirit of cooperation)
So when Plato wants to talk about how the human mind works, and why it makes sense for an individual to do the right thing rather than just appear to do the right thing, it is natural for him to make an analogy between the mind and the city-state. He says (paraphrasing) "the matter is hard to see. But the same way we can read something written in big letters easier than when the same thing is written in small letters, we can look at a state (which is much larger than an individual person) and see how things work inside it. And then we can assume that the analogy holds and the same thing is happening in the makeup of an indivdual human mind." Plato recognizes that a mind is made up of comprehensible parts and has a structure to it, a complex organization like we see in a society. The entire book The Republic is basically developing this analogy.