Aristotle's virtue ethics is a helpful lens to view the power dynamic within this story. Virtue is defined as a purpose or reason for being: Alexander is good where he fits his purpose, like how you would judge a tool to use. As a great ruler, he should be able to demonstrate not just his ability to kill and threaten, but positive qualities like providing for his subjects.

When Diogenes asks Alexander to move aside, it demonstrates the limits of this power, and therefore Alexander's virtue as a ruler: someone who doesn't want anything gets exactly as much benefit from this king as from anyone else. If the only thing Alexander can contribute is threats, that would simply make him unvirtuous - and equivalent in power to any armed madman.