Laozi said: All scholars who are able to understand the distinction between Heaven and man, comprehend the root of order and chaos, purify their minds and preserve this understanding, and see its beginning and end returning to emptiness may be called truly enlightened. The root of governance is benevolence and righteousness; its later stage is law and regulation. What gives rise to a person is the root; what does not give rise to a person is the branch. Root and branch are one entity. To love both equally is human nature. To prioritize the root before the branch is called a gentleman, while to prioritize the branch before the root is called a petty person. Laws and regulations arise in order to support righteousness; to value laws while abandoning righteousness is like valuing the hat and shoes but forgetting the head and feet. To emphasize benevolence and righteousness is to promote them broadly. However, if one does not increase their depth while expanding their breadth, they will be ruined; if one does not widen the foundation while increasing height, it will collapse. Therefore, without a strong central pillar, one cannot bear great weight. Nothing bears heavy burdens better than the central pillar, and nothing governs a nation better than virtue. A ruler's having the people is like a city having its foundation, or a tree having its roots. When the roots are deep, the trunk is firm; when the foundation is thick, the upper structure is secure. Therefore, a matter that does not originate from morality and virtue cannot be considered a classic; words that do not conform to the former kings cannot be called the Way. Expedient arguments that merely pick and choose, claiming one act encompasses all, are not the universal path of the world.

Laozi said: The way of governing people is like Caisu's driving a team of four horses. He unifies them with the reins and bit, aligns their pace by controlling their chests, harmonizes internally within his own mind, and externally conforms to the will of the horses. Thus he can take the right path and go far, with strength to spare; whether advancing, retreating, or turning, everything goes as desired—this is truly mastering the method. Now, power and authority are the chariot of a ruler; high ministers are the four horses of a ruler. One's body cannot be separated from the safety of the chariot, nor can one's hands lose control over the minds of the four horses. Therefore, if the four horses are not in harmony, even Caisu could not take the right path; and if ruler and minister are not harmonious, even a sage could not achieve good governance. Upholding the Dao to govern them allows even mediocre talents to be fully utilized; clarifying distinctions and demonstrating them can stop corruption and wickedness. When things arise, observe their changes; when events come, respond to their transformations. If those nearby are not in disorder, then those far away will be governed well. Without resorting to arbitrary teachings but attaining the natural Dao, one achieves success in all endeavors without failure.

Laozi said: Whoever seeks the Dao should block deviant paths and prevent what has not yet happened. What is valued is not that one considers oneself right, but that one cannot do wrong. Therefore it is said: Do not let people indulge in desires, for there will be no day without seeking; do not let them be open to taking by force, for there will be no day of contention. If this is done, human desires are released and the public Dao prevails. Those who have surplus restrain themselves within limits; those who lack sufficient resources manage their use appropriately. Therefore, the world can be unified. To abandon one's duties and listen to false praise, to disregard merit and favor factionalism, leads to the promotion of odd skills and eternal stagnation in office. When people cling to their posts without advancement, customs become chaotic within the state, and meritorious officials contend in court. Therefore, with the Dao one governs others; without it, one is controlled by others.

Laozi said: Governing the state has its constants, but benefiting the people is fundamental. Administration and instruction have their principles, yet present actions should be guided by ancient wisdom. If something benefits the people, it need not necessarily follow antiquity; if something serves the matter well, it need not necessarily adhere to convention. Therefore, the sage adjusts laws according to changing times and transforms rites in accordance with shifting customs. Clothing, tools, and implements should each be convenient for their use; legal codes and decrees should each suit local conditions. Thus, changing antiquity is not something to be condemned, nor is following convention particularly commendable. Reciting the writings of former kings is not as good as hearing their words; hearing their words is not as good as understanding why they spoke them. To grasp the reason behind their speech, one transcends mere words, for which language cannot fully express. Hence it is said: "The Dao that can be spoken is not the eternal Dao; the name that can be named is not the eternal Name." The path taken by a sage is called the Dao, like gold and stone—it once set cannot be changed. Affairs are like zithers and seps, requiring constant retuning after each performance. Therefore, laws, systems, rites, and music are instruments of governance, but not the essence of governance itself. Hence, narrow-minded scholars cannot be engaged in discussions about the ultimate Dao; they are bound by convention and constrained by education.

Laozi said: How can there possibly be a constant law for the world! If it is appropriate to worldly affairs, conforms to human principles, aligns with Heaven and Earth, and is detailed in relation to spirits and deities, then it can be used for proper governance. In ancient times, the Three Sovereigns had no decrees or commands yet the people followed; the Five Emperors had decrees and commands but no punishments. The Xia Hou clan did not break their words, the Yin people took oaths, and the Zhou people made alliances. In the decline of later ages, people endure disgrace and lightly regard humiliation; they are greedy for gain yet lack shame. Therefore, legal codes and decrees must assess folk customs and regulate according to urgency; tools and implements should be adjusted in accordance with changing times and suited to appropriateness. Those bound by law cannot be entrusted with far-reaching endeavors; those constrained by rites cannot respond to change. One must possess unique insight and exceptional discernment before being able to follow the Dao independently and act accordingly. Those who understand the origin of laws can respond to changing times and adapt accordingly; those who do not grasp the source of governance, even if they follow established practices, will ultimately fall into disorder. Today's scholars merely follow past traditions, hold onto written texts, adhere rigidly to formal rules, and believe this is sufficient for governance. Yet without understanding beyond these, it is like trying to fit a square peg into a round hole—seeking appropriateness and suitability is difficult indeed. Preserving stability in times of danger and governing during chaos cannot be achieved without wisdom. To precede with the Dao by citing antiquity, even a foolish person has enough to manage. Therefore, laws that are no longer applicable, sages do not enforce; words that have not been verified, enlightened rulers do not listen to.

Wenzi asked: From where does law originate?

Laozi said: Law originates from righteousness, and righteousness arises from the needs of the people. When these needs align with human hearts, this is the essential principle of governance. Law does not descend from Heaven nor arise from Earth; it originates among people and, when reflected upon oneself, leads to self-correction. If one truly grasps the root, he will not be confused by the branches; if one knows the essentials, he will not be misled by doubts. If a quality exists within oneself, one does not blame others for lacking it; if a fault is absent in oneself, one does not hold others accountable for it. One who stands among the people should not contradict those above; prohibitions imposed on the populace must not be violated by oneself. Therefore, when a ruler establishes laws, he first uses them as standards for himself. When restraint prevails within oneself, commands will be obeyed by the people. Law is the standard for the world, and the measure of a ruler. To hang up laws means to judge according to law or not. After laws are established, those who conform to them receive rewards; those who fall short face punishment. Even the noble and respected do not receive lighter rewards, nor do the lowly and humble receive harsher punishments. Those who break the law, though virtuous, must be punished; those who abide by it, even if unworthy, are without guilt. Thus public justice prevails and selfish desires are suppressed. In ancient times, officials were appointed to restrain the people and prevent them from acting recklessly. The establishment of a ruler was intended to control these officials so that they could not act arbitrarily. Laws, systems, and principles of governance were established to restrain the ruler himself, preventing him from making unjust decisions. When no one is allowed to act recklessly, the Dao prevails and reason is attained. Therefore, returning to simplicity and non-action does not mean remaining inactive; rather, it means acting in accordance with one's own nature and principles.

Laozi said: One who is good at rewarding spends little but inspires much; one who is good at punishing administers few penalties yet deters corruption. One who gives generously uses little yet gains virtue, and one who takes effectively acquires much without resentment. Therefore, a sage encourages goodness by following what the people love, and restrains evil by acting upon what the people hate. Rewarding one person leads the whole world to emulate him; punishing one person makes all others fear. Thus, the highest form of reward requires no great expense, and the severest punishment is never excessive. A sage governs broadly while adhering to simplicity—this is what it means.

Laozi said: The way of a minister is to deliberate on what is right, take the initiative in matters that should be done, fulfill one's duties and clarify distinctions in order to achieve success. Therefore, when ruler and minister follow different paths, governance is orderly; but if they follow the same path, disorder arises. When each attains their proper role and occupies a suitable position, then superiors and inferiors have grounds upon which to command and be commanded. Therefore, branches must not surpass the trunk in size, nor can the end prevail over the root—this means that lightness and heaviness, smallness and greatness, are all subject to mutual restraint. One who possesses authority and power holds a small position yet shoulders great responsibility, maintains minimal constraints yet controls vast influence. A tree with ten-foot girth supports a house bearing a thousand catties—this is due to its advantageous position. A five-inch lock can control opening and closing—its effectiveness lies in occupying a critical point. Commands that must be obeyed by subordinates bring benefit to those who follow them and misfortune to those who oppose them. No one in the world fails to listen and comply—this is because they are aligned with what is natural. Issuing orders and enforcing prohibitions effectively relies on the power of the masses. Righteousness does not necessarily benefit all the people of the world, but if it benefits one person and the whole world follows, that is sufficient. Tyranny does not necessarily harm everyone within the realm, but if it harms one person and causes the entire world to rebel, then consequences are severe. Therefore, every action, decision, or change must be carefully considered.

Laozi said: To bend an inch in order to straighten a chi, or to endure minor crookedness for the sake of great uprightness—this is what sages do. Yet today, when rulers evaluate their ministers, if they fail to consider their major achievements and instead focus on trivial conduct while demanding small virtues, this is to lose the way of recognizing virtue. Therefore, when a person possesses great virtue, one should not fault them for minor conduct; when a person has a grand reputation, one should not criticize them for small incidents. Human nature is such that no one lacks shortcomings; what matters is the accomplishment of great strategies. Even if there are minor faults, they should not be held against a person. If one fails to achieve significant plans, then even exemplary conduct within the neighborhood is insufficiently commendable. Therefore, those overly cautious in small matters achieve no great success; those who criticize others' conduct cannot tolerate the many. Those with grand physiques have coarser details, and those of great measure gain distant praise—this is the principle for evaluating ministers.

Laozi said: From ancient times to the present, there has been no one who could be completely faultless in conduct. Therefore, a gentleman does not demand perfection from an individual. One may be firm yet not cutting, upright yet not sharp-edged, direct yet not unrestrained, broad and knowledgeable yet not critical. In matters of virtue, morality, literature, and martial prowess, one should not expect others to be perfect through force alone. If one cultivates oneself according to the Dao without demanding perfection from others, it is easy to reward them; if one cultivates oneself in accordance with the Dao, then there will be no problems. The jade of the Xia Hou clan could not be entirely without flaws, and the pearl of the bright moon could not be completely free from impurity. Yet these are treasured by the world because minor blemishes do not hinder their great beauty. Now, if one focuses on a person's shortcomings and forgets their strengths, yet desires to seek virtue throughout the world, it will be difficult indeed. The common people's perception is that of low rank, humble status, degrading and humiliating tasks, yet they do not recognize the grand strategies within. Therefore, in evaluating a person: when one holds high office, observe what he promotes; when wealthy, observe how he distributes his wealth; when poor, observe what he accepts; when lowly, observe what actions he takes. Test him with hardship to see his wisdom and courage, move him with joy and pleasure to observe his steadfastness, entrust him with goods and money to test his benevolence, and confront him with fear to examine his integrity. In this way, human nature can be understood.

Laozi said: Bending is done in order to straighten out, and being bent is for the sake of becoming upright. To bend an inch so as to stretch a chi, or endure minor crookedness to achieve great uprightness—this is how a gentleman acts. Just as all rivers flow together, those that do not pour into the sea are not considered valleys; just as people walk in different directions, those who do not return to goodness are not called gentlemen. Good words are valued for their feasibility; good actions are valued for embodying benevolence and righteousness. A gentleman's mistakes, like eclipses of the sun and moon, do not impair their brightness. Therefore, the wise do not act recklessly, and the brave do not kill without cause. They choose what is right to do and act in accordance with propriety; thus, endeavors succeed and achievements are reliable, one's character is established and reputation worthy of praise. Even if one possesses intelligence and capability, they must take benevolence and righteousness as their foundation before standing firm. When wisdom and ability work together, sages use benevolence and righteousness as the standard measure—those who conform to this standard are called gentlemen; those who do not are called petty persons. A gentleman, though dead, his name does not perish; a petty person, though in power, their crimes do not vanish. With the left hand holding the map of the world and the right hand cutting one's own throat, even a foolish person would not do it—for one's life is more precious than the entire world. Those who die for their ruler or kin in times of peril regard death as returning home—for righteousness outweighs one's own life. Therefore, the entire world is a great advantage, but compared to one's own life it becomes small; and one's own life, when compared to benevolence and righteousness, becomes light. This is what it means to take benevolence and righteousness as standards of measure.

Laozi said: The fullness of virtue and the Dao is like that of the sun and moon; even the Yi, Di, Man, and Mo cannot alter their course. When aspirations and abandonments are the same, praise or blame depends on convention; when intentions and actions are equal, success or failure lies in timing. If affairs are well-arranged within society, achievements will be realized; if endeavors align with the times, a name will be established. Therefore, those who establish achievements and reputation are simple in worldly matters yet cautious about timing. When the right moment arrives, there is no room for hesitation—opportunity passes without breath to spare. Ancient warriors did not go to war for the sake of land or greed for treasures, but in order to preserve what was on the verge of collapse and quell disorder, thus removing harm from the people. Greedy and insatiable individuals, however, ravage the world; they cause unrest among the common people, who find no peace in their dwellings. A sage suddenly arose, to punish the strong and violent, pacify a chaotic age, and remove harm from the world. He transformed turbidity into clarity and danger into peace; thus, such actions could not but interrupt the course of events. The Red Emperor caused a conflagration, so the Yellow Emperor captured him; Gonggong brought water disasters, so Zhuanxu executed him. Teaching people through the Dao and guiding them with virtue, yet if they do not listen, then one must confront them with authority and might. If they still refuse to obey, then military force must be used to control them. To kill innocent people in order to sustain an unjust ruler is the greatest harm; to gather the wealth of the world for the satisfaction of one person's desires brings no deeper calamity. To indulge a single individual's desires and thereby foster suffering throughout the realm goes against the natural order and is unacceptable according to heavenly principles. The reason for establishing a ruler is to prevent violence and disorder. Yet now, by using the strength of ten thousand people, he becomes instead a bandit and tyrant—this is like giving wings to a tiger; how can such a one not be eliminated? One who raises fish must remove otters; one who breeds birds and beasts must eliminate jackals and wolves. How much more so for governing the people! This is why wars and military conflicts arise.

Laozi said: The way of governing a state is for the ruler to issue no harsh decrees, for officials to manage affairs without excessive interference, for scholars to have no false conduct, and for artisans to possess no excessive cunning. Affairs should be entrusted and left undisturbed; tools and instruments should remain intact and unadorned. In times of chaos, this is not the case. Those who act virtuously vie to appear superior; those practicing rites compete in false pretense. Chariots and carriages are excessively carved and adorned; vessels and tools become elaborate through intricate engraving. Merchants strive for rare goods they barely obtain, calling them treasures; scribes pursue complicated procedures, regarding them as urgent matters. Matters are debated with deceptive arguments, lingering unresolved for long periods—these bring no benefit to governance but only contribute to disorder. Artisans create strange and extravagant objects that take years to complete yet serve no practical purpose. Therefore, the laws of Shen Nong said: If a strong and able man does not till the fields, there will be people in the world who suffer from hunger; if a woman of working age does not weave, there will be those in the world who endure cold. Therefore, he himself tilled the fields and his wife wove cloth, setting an example for all under heaven. In guiding the people, he did not value rare goods nor place importance on useless objects. Therefore, if those who till the fields do not work diligently, there will be no means to sustain life; if those who weave do not exert themselves, there will be nothing with which to clothe their bodies. Surplus or deficiency in resources returns directly to each individual. When clothing and food are abundant, corruption and wickedness do not arise; when peace and contentment prevail without trouble, the world remains harmonious. In such a time, the wise have no need to employ strategies, and the brave find no place to display their might.

Laozi said: The way of hegemonic and imperial rule is planned through strategy, mapped out with schemes. It acts under the banner of righteousness—not for the sake of mere survival, but to preserve what is on the verge of destruction. Therefore, when one hears that a ruler of an enemy state is oppressing his people with cruelty, he should raise his army and march to the border, holding him accountable for injustice and censuring his misconduct. When the army reaches the outskirts of the enemy state, the commander is ordered: Do not cut down trees, do not dig up tombs, do not destroy crops, do not burn stored goods, do not capture civilians as prisoners, and do not seize livestock. Then he issues a proclamation: The ruler of this land defies Heaven and Earth, insults spirits and deities; his judgments are unjust, and he kills the innocent without cause. He is condemned by Heaven and hated by the people. Our army has come to abolish injustice and bestow power upon those with virtue. Anyone who dares defy the will of Heaven or commits crimes against the people shall face death and the annihilation of their clan. Those families that obey will be granted official ranks; entire neighborhoods that comply will receive rewards; whole towns that surrender will be bestowed fiefs; and entire counties that submit will have their leaders made marquises over those counties. The victorious army conquers the state but does not oppress its people; it deposes the tyrannical ruler and reforms the administration. It honors outstanding scholars, elevates virtuous officials, supports orphans and widows, shows compassion to the poor, releases prisoners from jail, rewards those who have contributed merit, and thus the common people open their doors to welcome them, store rice in anticipation, and fear only that they may not arrive soon enough. Righteous armies arriving at the border will cease hostilities without fighting; unjust armies, upon arrival, will result in corpses lying prostrate and blood flowing, with battles raging ahead. Therefore, one who fights for territory cannot achieve kingship; one who seeks personal gain cannot establish merit. Those who undertake endeavors for the benefit of others will receive widespread support, while those who act solely for themselves will be abandoned by the people. Where the masses rally behind a cause, even the weak shall become strong; where they withdraw their support, even the mighty shall perish.

Laozi said: The highest form of righteousness is to govern the state and manage within its borders, practicing benevolence and uprightness, spreading virtue and bestowing kindness, establishing just laws, blocking deviant paths. When this occurs, officials become loyal and attached, the people harmonize and unite; superiors and subordinates are united in purpose, and ministers work together with one mind. The feudal lords submit to its authority, and all directions of the world cherish its virtue. Rectitude is cultivated within the ancestral temple, yet conflicts are averted thousands of li away. When commands are issued and decrees carried out, the whole world responds—this represents the highest level of governance. When a state possesses vast territory and numerous people, has a wise ruler and capable generals, enjoys wealth and strong military forces, maintains strict discipline, and issues clear commands, then when two equal armies face each other, the enemy may flee without even engaging in battle—this represents the next level of success. Understanding the suitability of land, being familiar with the advantages of rugged and narrow terrain, knowing how to adapt to harsh policies, and discerning matters of formation and battle—if then swords clash, arrows fly, wounded are carried while others fall dead, blood flows for a thousand li, and corpses litter the fields—this is the lowest form of righteousness. The victory or defeat in warfare depends on governance. When governance prevails over the people and subordinates remain loyal to their superiors, the military becomes strong; when the people prevail over governance and subordinates rebel against their leaders, the military grows weak. Righteousness sufficient to win the hearts of all the people under heaven, achievements and endeavors adequate to meet urgent needs throughout the world, selection and appointment systems capable of securing the loyalty of virtuous men, and strategies and deliberations able to decide matters of great importance—this is the way of supreme righteousness.

Laozi said: A state becomes strong because its people are ready to die for it; they are willing to die because of righteousness. Righteousness is carried out through authority and power. Therefore, governing with civil instruction and unifying with military discipline is called an assured victory. When both authority and righteousness are practiced together, this is called certain strength. When swords clash and arrows and stones fall like rain, yet soldiers strive for glory—it is because rewards are trustworthy and punishments clear. When a superior regards his subordinates as sons, and the subordinates serve their superiors as fathers; when a superior treats them as brothers, and they serve him as an elder brother—when a superior sees his people as children, he will surely rule over all under Heaven; when subjects serve their ruler as a father, order will prevail throughout the world. When a leader regards his people as younger siblings, they will be willing to die for him; when subordinates see their superiors as older brothers, they will not hesitate to sacrifice themselves. Therefore, conflicts among fathers and sons or brothers cannot be fought against. Therefore, a righteous ruler internally cultivates governance to accumulate virtue and externally blocks deviance to clarify authority. He observes the labor and rest of his people to understand their hunger and fullness. When the time for battle arrives, soldiers regard death as returning home—this is the result of kindness bestowed upon them.