1. Governing a great state is like cooking small fish.
2. Let the kingdom be governed according to the Dao, and the manes of the departed will not manifest their spiritual energy. It is not that those manes have not that spiritual energy, but it will not be employed to hurt men. It is not that it could not hurt men, but neither does the ruling sage hurt them.
3. When these two do not injuriously affect each other, their good influences converge in the virtue (of the Dao).
居位, 'Occupying the Throne;' occupying it, that is, according to the Dao, noiselessly and purposelessly, so that the people enjoy their lives, free from all molestation seen and unseen.
The more one thinks and reads about the rest of the chapter, the more does he agree with the words of Julien:—'It presents the frequent recurrence of the same characters and appears as insignificant as it is unintelligible, if we give to the Chinese characters their ordinary meaning.'—The reader will observe that we have here the second mention of spirits (the manes; Chalmers, 'the ghosts;' Julien, les démons). See ch. 39.
Whatever Laozi meant to teach in par. 2, he laid in it a foundation for the superstition of the later and present Daoism about the spirits of the dead;—such as appeared a few years ago in the 'tail-cutting' scare.