The Laozi (formerly, Lao Tzu) is one of the great anarchist classics.  No significant philosophical work of either East or West has been more thoroughly pervaded by the anarchistic spirit. None of the Western political thinkers known as major anarchist theorists have possessed a sensibility or expressed a worldview that is as deeply anarchic as those exhibited in this ancient text.
Anarchism is known perhaps above all for its uncompromising critique of all forms of domination. Classical anarchism  made a considerable contribution to this critique through its withering attack on the state and economic exploitation, and through its groundbreaking analysis of bureaucracy and technological domination. More recently, the anarchist critique has expanded considerably. With the growth of feminism has come an awareness of the centrality of patriarchy to the origin and perpetuation of hierarchical society. And the emergence of the ecological perspective has led to a careful examination of human domination of nature. Contemporary anarchist thought deserves recognition for incorporating these advances in a much more comprehensive theoretical analysis. However, an examination of the Laozi reveals that over two millennia ago ancient Daoist thought had already begun exploring rather profoundly all the dimensions of domination that have concerned anarchists over the past century and a half.
While the critique of domination is an important aspect of anarchism, even more essential is the underlying positive worldview that gives direction to the project of social transformation. Classical anarchist theory often presented a rather inspiring view of human possibilities, and questioned certain aspects of the dominant Western worldview. But although it exhibited some awareness of a need to break with atomistic individualism, metaphysical dualism and a mechanism view of nature, none of its major exponents inquired deeply into the ontological and ethical basis for a cooperative, non-dominating society. Contemporary anarchist theory has begun to fill this gap, as it moves toward a more dialectical and holistic anarchism that addresses crucial philosophical questions. Especially in so far as it is inspired by an ecological perspective, recent anarchism has begun to reconsider fundamentally the nature of the self, society and nature. It has begun to develop a dialectical, holistic view of reality in which the whole (whether nature, the earth, society or the person) is looked upon as a unity-in-diversity or unity-in-difference, and in which the development and fulfillment of the part is seen to depend on its complex interrelationship with and unfolding within that larger whole. From such a viewpoint, the good of the natural world as a whole is attained as each of the wholes it encompasses—humanity, other species, biomes, ecosystems, bioregions—attain their respective goods. Moreover, the good of the human community is attained through each person attaining his or her unique good. And further, the person is seen not as an atomized individual, but as a social self, an embodiment of our common human nature in its process of historical development, and also as the most individualized and unique self-expression of reality, the most ultimately creative process.
The following discussion seeks to show that on almost every key point the Laozi is in accord with such a dialectical, holistic ecological anarchism. We discover first that the work teaches that ultimate reality-Dao-is a holistic unity-in-diversity, that it consists of interrelated processes of personal and universal self-realization, and that it is a system of natural order free from domination. Second, we find that the Laozi sees the Daoist virtues of compassion, frugality, and non-assertion as the basis for an anarchistic, non-authoritarian personality and for corresponding non-dominating social relations. And finally, we see that the work’s conception of the ruler-sage is founded on an anarchist politics of the anti-political that rejects the state, law, and coercion.
Perhaps the most pervasive theme of the Laozi is its vision of an organic unity-in-diversity. One of the most powerful metaphors in the work is that of "the Uncarved Block" through which we are called back to a deep, underlying reality, a primordial truth that humanity has largely forgotten. Our customs, our social conditioning, our language, in fact the most fundamental categories by which we interpret the world, lead us to fragment reality, to shatter it violently into a system of disconnected, or, at best, externally related objects and egos. A basic problem is to create an awareness of the oneness that underlies this multiplicity, and to do this without resorting to an illusionism which denies reality by dissolving plurality into nothingness. Daoism in no sense seeks an escape from the diversity and complexity of the world. On the contrary, its unifying vision coexists with an almost Nietzschean affirmation of individuality.
Yet the concreteness of the Daoist vision goes beyond this. The perception of the gap between unity-in-diversity and unreconciled division is firmly rooted in historical reality. It is essential to understand the Laozi as perhaps the most eloquent expression of society’s recollection of its lost integrity, an evocation of the condition of wholeness that preceded the rending of the social fabric by institutions such as the state, private property, and patriarchy. Significantly, the Laozi encompasses a ringing condemnation of all three of these systems, and proposes their replacement by institutions much closer to the socially organic or holistic ones of tribal societies. Just as Stanley Diamond has called for an understanding of Plato which takes into account his relation to these world-historical transformations (that is, as annihilator of the remnants of tribal values), so we should see the place of the Laozi in this conflict (as a re-affirmation of organic society and its values). 
What precisely does the Laozi say about the nature of Dao as unity ?  Often it is said to be the origin of everything, that out of which all arises, that on which all things depend. It is "the ancestor of all things" (Chan, 4) and "the mother of all things." (Chan, 1) These images can be somewhat deceptive if they are taken to imply any separation between Dao and the universe. For there is no division : Dao is all-inclusive and immanent in the Ten Thousand Things. "Analogically, Dao in the world (where everything is embraced by it), may be compared to rivers and streams running into the sea." (Chan, 32) There is thus a unity that underlies the multiplicity of the universe.
This oneness is not, however, a static unity, but rather the unity of the interrelated parts of a creative process. This follows from the assertion that Dao consists of both being and non being. "All things in the world come from being. And being comes from non-being." (Chan, 40) As the opening chapter of the work explains, both being and non-being are aspects of Dao, and a full comprehension of reality requires knowledge of both the multiplicity of existing things and also of the process of generation, the emergence from non-being into being :
’Non-Being’ names this beginning of Heaven and Earth ;’Being’ names the mother of the myriad things.Therefore, some people constantly dwell in ’Non-Being’Because they seek to perceive its mysteries,While some constantly dwell in ’Being’Because they seek to preserve its boundaries.These two [’Non-Being’ and ’Being’] are of the same origin,But have different names. . . . (Young and Ames, 1)
This view of Dao immediately brings to mind many similar concepts in both Eastern and Western thought. Notable examples include the distinction in Vedanta between Nirguna and Saguna Brahman, B”hme’s references to the divine Ungrund and Urgrund, and Eckhart’s evocation of a Gottheit that is more primordial than even Gott. There have been numerous attempts to explain the ubiquity of this coexistence of negative and positive description in mystical and organismic thought of many traditions. One approach is to stress the fact that in view of the inadequacy of our objectifying, delimiting language, reality can only be grasped by contradictory predications. The concept of the ultimate as the totality captures one aspect of reality : the oneness of all things. Yet it is necessary to speak of the ultimate as nothingness or non-being, inasmuch as reality is not a mere collection of all things in the world, but a unity in which our conventional conceptions of "thingness" or individuation are negated. 
This explains part of what is intended in the Laozi. But further, the assertion of the ultimacy of both being and non-being is an assault on all static conceptions of reality. Daoism should not be confused with forms of organicist thought (or pseudo-organicism) that call for "identification" with a timeless, spaceless, motionless One. The whole, like each being, is a process of becoming in which both being and non-being are ever-present moments. No doubt the mystery of birth was a tremendous influence in the shaping of this conception.
Just as gestation and birth are processes through which a being emerges and develops out of the vague and mysterious void, so the universe as being must arise out of nothingness. Yet this is not to be taken in a mere mythological or cosmogonal sense, for the process of generation is asserted to be without beginning. It is thus an explanation of the enduring structure of reality. The process is repeated in the origination and development of each being in the universe :
Man models himself after Earth.Earth models itself after Heaven.Heaven models itself after Dao.And Dao models itself after Nature. (Chan, 25)
There is thus a macrocosm-microcosm relationship between the universal Dao and each being, although this relationship in no way negates the individuality and uniqueness of each. For in both cases development is a process of creative-self realization.
According to the Laozi, each being has its own Dao, in the sense of its own path of self-development and unfolding. While it is true, as David Hall argues, that Daoism rejects "principles as transcendent determining sources of order,"  and as Roger Ames contends, that it negates such "authoritarian determination" as "teleological purpose, divine design, Providence,"  it would be incorrect to conclude that Daoism dispenses with all teleology. In fact, Dao can perhaps be described best as the immanent telos of all beings. It is not surprising that teleology should seem tainted by authoritarianism, given the character of teleological philosophy from Plato and Aristotle to Hegel and Marx. But while "orthodox" forms of teleological explanation have certainly embodied a theoretical will to power and have served to legitimate class domination, nationalism, and human exploitation of nature, there is no necessary connection between teleology and domination. Thus, in the Laozi we find a teleology that recognizes that each being has its own unique processes of self-development that should not be imposed upon or distorted by external will or force :
To know harmony means to be in accord with the eternal.To be in accord with the eternal means to be enlightened.To force the growth of life means ill omen.For the mind to employ the vital force without restraint means violence.After things reach their prime, they begin to grow old,Which means being contrary to Tao.Whatever is contrary to Tao will soon perish. (Chan, 55)
The point is that we should allow each being to follow its own ideal pattern of development, which we cannot "force," but only hinder, through our interference. Given the accompanying conditions for nurturing such growth, a fullness of being will be achieved, after which comes inevitable decline and dissolution. The famous Daoist image of the "Uncarved Block" expresses the idea of wholeness entailed in this self-development. The view of D. C. Lau that it means "a state as yet untouched by the artificial interference of human ingenuity"  partly misses the mark, since it implies that there can somehow be a pure, pristine Self independent of human society, and that there is something necessarily "artificial" about "human ingenuity." It is true that "carving the block" means distorting the self by interfering with its development according to its unique telos, but society does not necessarily have such an effect (and is, in fact, a necessary part of attaining such a development).
All human development takes place within the context of social relationships, and these can be the conditions for either self-realization or self-limitation. Consequently, "human ingenuity" can be just as much a means of preserving the "Uncarved Block" in its uncarved state, as a factor in distorting it. Thus, tribal societies that conceive of social relations primarily in terms of kinship, and that hold a vitalistic or panpsychist view of nature, tend to maintain a high degree of awareness of the social and natural roots of the self. Civilization, in identifying the self with social status (citizenship, class membership, property ownership, functional role, etc.) reduces the organic social self to a narrower individual or abstract ego. The Laozi looks backward to the primordial unfragmented society and its social self, just as it points forward to a restored organic society and a fully social person.
In the concept of the organic self, both Daoism and contemporary anarchism seek to transcend the narrow limits of "the individual." As Roger Ames notes, in a philosophy of organism the person "is understood as a matrix of relationships which can be fully expressed only by reference to the organismic whole," and for this reason "the expression ’individual’ might well be ruled altogether inappropriate in describing a person."  For similar reasons there has been a tendency in recent holistic anarchist thought to explicitly use the term "individual" to refer to that degraded self fabricated over the long history of social domination, and finally perfected in modern capitalist, statist, technobureaucratic society. The term "person" is reserved for the developed social self that can thrive only in an organic community embracing humanity and nature.
Dao is thus both an organic unity-in-diversity and the ideal path of self-development or unfolding inherent in all things. Its third important dimension is in a sense merely the synthesis of these two. Given the organic connectedness of all beings, the totality of all processes of self-realization constitutes a harmonious system. Dao is thus a "natural order" that is manifested in the life of each being and in the functioning of the larger community of beings. As each being strives to reach its own natural perfection, while refraining from the quest to dominate other beings, the greatest possible order results. Thus, the Laozi proclaims the ironic truth that attempts to control lead to disorder, and that as the degree of control becomes more extensive, the world becomes more chaotic.
According to Daoist principles, the order of nature depends on a balance between order and chaos. Just as the collapse of society into excessive disorder results in tyrannically imposed order, the pursuit of excessively rigid order produces disorder beyond the bounds of possible control. Spontaneity and order are not opposites, as is universally held according to political, technical, and economistic rationality, but are rather inseparable aspects of the healthy functioning of an organic whole.
It is on the basis of this analysis that Daoism teaches that if each being is permitted to follow its Dao, the needs of all can be fulfilled without coercion and domination. Note the contrast between the generous and beneficent Dao (the gift-giving Creator Spirit of many cultures) and the power-crazed, demanding patriarchal authoritarian God (Bakunin’s "Monster Divine"), who requires abject subservience from his creatures :
All things depend on it for life, and it does not turn away from them.It accomplishes its task, but does not claim credit for it.It clothes and feeds all things but does not claim to be master over them. (Chan, 34)
The Daoist vision penetrates the illusion of inevitable natural scarcity (an ideology that arose with the technical, political, and economic innovations of civilization), to apprehend the abundance of the outpouring of nature. Every society founded on domination and struggle within society has always perceived the human relation to nature as one of struggle, conflict, and conquest. No matter how vastly production may increase, scarcity persists or even expands. But in the Laozi, as in the consciousness of pre-civilized humanity (the gift economy), nature is understood to be, rather than a collection of scarce resources, an infinite wealth, a plenitude :
Heaven and earth unite to drip sweet dew.Without the command of men, it drips evenly over all. (Chan, 32)
When each follows his or her own Dao, and recognizes and respects the Dao in all other beings, a harmonious system of self-realization will exist in nature. (At this point the Laozi begins to formulate history’s first strongly ecological ethics). There is a kind of natural justice that prevails, so that the needs of each are fulfilled :
The Way of Heaven reduces whatever is excessive and supplements whatever is insufficient.The Way of Man is different.It reduces the insufficient to offer to the excessive. (Chan, 77)
According to Lau, in statements such as the above "heaven is conceived of as taking an active hand in redressing the iniquities of this world," and "this runs counter to the view of the Dao generally to be found in the book as something non-personal and amoral."  But there is no reason to find such an inconsistency, unless one ignores the striking metaphysical consistency of the work, and interprets it as a more or less eclectic anthology of traditional wisdom. For if the Dao is an all-encompassing natural order, a unity-in-diversity in which the immanent telos of each being is in harmony with that of all others and of the whole, then there is no need to posit any sort of personal agency in the universe responsible for rectifying injustice. Order and justice are assured when each being follows its appropriate path of development. All other systems of order are mere social conventions, and to the degree that they deflect us from our natural end, they produce only disorder and injustice :
Therefore, only when Dao is lost does the doctrine of virtue arise.When virtue is lost, only then does the doctrine of humanity arise.When humanity is lost, only then does the doctrine of righteousness arise.When righteousness is lost, only then does the doctrine of propriety arise.Now propriety is a superficial expression of loyalty and faithfulness, and the beginning of disorder. (Chan, 38)
Insofar as morality means social convention, the Laozi advocates a perspective of "amorality." But to the degree that it proposes a way of life founded on universal self-realization unrestricted by domination and instrumental rationality, it constitutes one of the most distinctive and significant moral theories ever propounded. In a sense the moral purpose of the Laozi is its central one, for the emphasis in the work is never on mere description of the nature of things. The inquiry into ultimate reality is always firmly embedded in a search for a way of life, and a true understanding of the work requires that attention be given to the art of living that it describes. Fortunately, the author summarizes the essentials of this art very concisely :
I have three treasures. Guard and keep them :The first is deep love,The second is frugality,And the third is not to dare to be ahead of the world. (Chan, 67)
While the first Daoist virtue is compassion, some passages in the Laozi give the impression that not only is love or compassion not virtuous, but even contrary to nature. For example :
Heaven and Earth are not humane (jen).They regard all things as straw dogs.The sage is not humane.He regards all people as straw dogs. (Chan, 5)
In asserting that the enlightened person regards all people as straw dogs-worthless ritual objects-the author seems to be rejecting both humanism and compassion. But this is only half true. While the Laozi is predicated on a certain kind of anti-humanism (in fact, this is one of its great strengths), this does not imply a denial of the importance of compassion. Rather, it is only through a rejection of "humanism" in the sense of anthropocentrism that the greatest possible compassion can arise. To act "humanely" means, at worst, merely accepting the conventions of society concerning morality and goodness, and implies, at best, remaining within the biased perspective of species self-interest. To transcend this "humane" outlook means, as Chan says, to be "impartial, to have no favorites,"  but not in the sense of complete detachment. Rather, it is the im-partiality that results from identification with the whole, an impartiality that allows one to respect all beings and value their various goods.  For this reason it is possible to assert that "the Sage has no fixed (personal) ideas. He regards the people’s ideas as his own," (Chan, 49) and that "he has no personal interests." (Chan, 7)
The person who comprehends Dao is able to take the perspective of the other, and to overcome the egoism which treats the good of each as antagonistic to that of the other. This is one the implication of the famous passage stating that :
[H]e who values the world as his body may be entrusted with the empire.He who loves the world as his body may be entrusted with the empire. (Chan, 13)
Some commentators have stressed the implicit approval of a kind of selfishness in the concept of concern for one’s body.  There is an element of truth in this view, for unless one fully affirms his or her own existence and process of self-realization, there is no possibility of truly valuing other beings or of affirming reality. But a further important implication of the passage is that one should identify with the whole. Realizing one’s own Dao is identical with participation in the universal Dao. Thus, all self-realization—one’s own and that of all others—is valued by one who understands Dao. Compassion arises from a "self love" that has nothing to do with egoism.
The way of life advocated in the Laozi is thus based on love, respect, and compassion for all beings. If such a life is to be lived, one must understand the bounds of one’s own Dao : what is essential to one’s own self-realization, what is unnecessary, and what undermines it and that of others. The Laozi expresses this idea in its teaching that one should seek simplicity and frugality, and avoid luxury, extravagance, and excess.
Some interpretations of the Laozi hold that it advocates "asceticism." If this term is defined as a kind of self-denial or self-sacrifice for the sake of some higher Good, then the truth is just the contrary. And even if it is construed as a kind of "renunciation" (as it has sometimes unfortunately been translated) for the sake of one’s own spiritual growth, this misses the point somewhat. The life of "simplicity" is in no way the impoverished life of one who seeks escape from the corrupt world and its temptations. Rather it is something much more affirmative : it is the consummate existence of one who has rejected whatever would stunt or distort growth and personal fulfillment.
Simplicity is not, however, a quality with implications for personal life alone. It refers also to social institutions which will promote rather than hinder self-realization. A society based on social status, or one glorifying the pursuit of material wealth and permitting economic domination, is inevitably destructive, producing conflict, disorder, envy, and crime :
Do not exalt the worthy, so that the people will not compete.Do not value rare treasures, so that the people shall not steal.Do not display objects of desire,so that the people’s hearts shall not be disturbed. (Chan, 3)
Rather, we should "discard profit." (Chan, 19) But in doing so, we are losing nothing, for the pursuit of wealth and social status only distracts one from the essential task of following one’s authentic way. Just as the New Testament asks "what would anyone gain by winning the whole world but losing his own life," (Matt. 16:26, Mk. 8:36) so the Laozi places in question the value of wealth and prestige :
Which does one love more, fame or one’s own life ?Which is more valuable, one’s own life or wealth ? . . . .He who hoards most will lose heavily. (Chan, 44)
But wealth and luxury are not condemned only because of their spiritually debilitating quality. There is also a recognition that they are unjust and contrary to the order of nature. The Laozi attacks the institutions of civilization on the grounds that whereas nature "reduces whatever is excessive and supplements what is insufficient," human society "reduces the insufficient to offer to the excessive." (Chan, 77) The criticism of political and economic institutions is sometimes made quite explicit :
The courts are exceedingly splendid,While the fields are exceedingly weedy,And the granaries are exceedingly empty.Elegant clothes are worn,Sharp weapons are carried,Foods and drinks are enjoyed beyond limit,And wealth and treasures are accumulated in excess.This is robbery and extravagance.This is indeed not Tao (the way). (Chan, 53)
While this attack on economic and social inequity  seems fully in accord with the anti-hierarchical Daoist outlook, it might seem strange to some that the Laozi would go so far as to launch an attack on knowledge and wisdom in the name of simplicity.  Why would a work which itself attempts to transmit wisdom about life, and which has traditionally been attributed to an "Old Sage," counsel one to "abandon sageliness and discard wisdom ?" (Chan, 19) The truth conveyed is not as obscure as it might appear initially. In an organic society, knowledge (like art, religion, and politics) is integrated into the life of the community, rather than reified as a possession of the privileged members of a hierarchical institution. The Laozi is attacking knowledge as the property of an elite intelligentsia or a class of literati. Just as material wealth sets one against another and seduces people away from their natural good, so knowledge will do likewise if it is reduced to a means of amassing power :
True wisdom is different from much learning ;Much learning means little wisdom.The sage has no need to hoard ;When his own last scrap has been used up on behalf of others,Lo, he has more than before ! (Waley, 81)
A final important implication of the concept of simplicity is that certain forms of technology should be rejected and that technical efficiency must not be accepted uncritically as a justification for social change. The Laozi exhibits an awareness that technological development, which has always been justified as fulfilling human needs, may in fact be destructive of human self-realization and of the social institutions most conducive to it. It expresses a well-founded fear that dangerous artificial wants and desires may be created, and that complex, hierarchical social institutions, accompanied by egoism, inequality, and disorder may arise. Consequently, the community should reject such technology and preserve its simplicity :
Given a small country with few inhabitants, he could bring it about that though there should be among the people contrivances requiring ten times, a hundred times less labor, he would not use them. (Waley, 80)
There is nothing in the Daoist view that implies that new non-dominating forms of technology should be rejected. But given the fact that actual technical innovation in the epoch of the Laozi in fact served the purposes of power and control (as it does in our own day), it is not surprising that the work should emphasize the need for a more critical approach to technological change.
Another important theme that runs throughout the Laozi is the necessity of avoiding competition and other forms of self-assertive and aggressive action. What is proposed instead is "non-action" or "actionless action"(wu-wei), activity which is in accord with one’s own Dao and with those of all others. Since one achieves the good life by following one’s own unique path, there is no point in striving to place oneself "above" others. In fact, to do so is self-destructive, since in competing we subordinate ourselves to some external standard of goodness, virtue, or success. Even if we "win," we are defeated, since we have conformed to the alien values of those whom we have vanquished. Competition conflicts with Daoism’s "polycentric" viewpoint, as David Hall calls it. Such a viewpoint emphasizes individuality and the uniqueness of each being, and excludes individualism, which is necessarily a comparative and competitive mentality. The Daoist sage will therefore "succeed" through eschewing the quest for power and prestige :
He does not show himself ; therefore he is luminous.He does not justify himself ; therefore he becomes prominent.He does not boast of himself ; therefore he is given credit.He does not brag ; therefore he can endure for long.It is precisely because he does not competethat the world cannot compete with him. (Chan, 22)
In describing such a non-aggressive, non-dominating personality, the Laozi continually resorts to images of the female and the child. Roger Ames correctly notes that the Daoist advocates a form of androgyny in which "the masculine and feminine gender traits are integrated in some harmonious and balanced relationship."  This is the clear implication of the statement that :
He who knows the male (active force) and keeps to the female (the passive force or receptive element)Becomes the ravine of the world. (Chan, 28)
The concept of rigidly defined sex roles is totally alien to the Daoist sensibility, since this implies subordinating the unique person to social convention, and denying the diversity of human nature. It is another example of cutting the "Uncarved Block," or interfering brutally with Dao.
But there is a good reason why, in spite of its androgynism, the Laozi should stress heavily the importance of the female. For it is launching a direct (if non-aggressive !) attack on one of history’s most entrenched and enduring systems of domination : patriarchy. Under a patriarchal system there is little need to emphasize the value of "masculine" qualities. What is required is a vehement defense of the "feminine." Furthermore, while it is true that "masculine" qualities are recognized in the Laozi to be of value, those usually stereotyped by most societies as "feminine" seem in fact to be the more essential ones to the Daoist perspective. In a revealing passage, creativity and love (in the non-possessive "maternal" sense) are identified as "feminine" :
Can you understand all and penetrate all without taking any action ?To produce things and to rear them,To produce, but not to take possession of them,To act, but not to rely on one’s own ability,To lead them, but not to master them-This is called profound and secret virtue (hsuan-te). (Chan, 10)
In a Daoist community, people are permitted to develop according to their own Dao, so that to the extent that "masculinity" and "femininity" exist (as contrasting, but not opposed qualities), they are spontaneous and natural. An infinite variety in combinations of qualities might occur. Without imposed sex roles, an anarchistic, non-prescriptive androgyny is the ideal. However, if we limit our consideration to the strictly opposed sex roles of patriarchal society, no reconciliation of the antagonistic roles is possible, and the "feminine" must be selected as being closer to the ideal.
For similar reasons Daoism often presents the child as the model of virtue. This is also heretical from the perspective of patriarchal societies. Since virtuousness is conventionally identified with the power and status of the adult male, the recommendation that adults emulate infants appears ludicrous at best. Yet for anti-patriarchal Daoism, the child has two essential qualities in abundance : non-aggressiveness and spontaneity. While in a society based on hierarchical power, strength is valued greatly as a personal characteristic, in the Daoist society founded on "natural order" and unity-in-difference one should seek "the highest degree of weakness like an infant." (Chan, 10) The infant is not ruled by inordinate desires, such as the longing for power, wealth, status, or luxury. Instead, all actions are natural and spontaneous. As the Laozi states in an irrefutable argument :
He may cry all day without becoming hoarse,This means that his (natural) harmony is perfect. (Chan, 55)
Just as in nature the softest and weakest thing, water, can overcome the hardest obstacle, so softness and weakness are the most effective qualities in personal development. Softness characterizes the organic, while hardness is typical of the in organic and mechanistic. Rigidity, both mental and physical, is an attribute of the authoritarian. Rigid muscles and rigid categories are two closely related armaments in the futile battle to stop the flow of reality. As Wilhelm Reich explains, "character armor" is the means by which the authoritarian personality seeks to avoid the threat of feeling and experiencing too much.  The Laozi states the same point :
When a man is born, he is tender and weak.At death he is stiff and hard.All things, the grass as well as trees, are tender and supple while alive.When dead, they are withered and dried.Therefore the stiff and the hard are companions of death.The tender and weak are companions of life. (Chan, 76)
What then can be said of a society obsessed with economic and political power, a society riddled with bureaucratic and technocratic organization, a society convinced that "security" comes from military strength (in short, of civilization in its most advanced state) ? From the Daoist viewpoint such a society is striving to reduce people to a condition of living death. Our society, even more than the one existing in the era of the Laozi, possesses all the qualities that are the target of the work’s devastating attack. It illustrates well how a holistic, organicist philosophy implies an anarchist critique of both the institutions of an inorganic society based on power relations and of the character structures that prevail in such a society
In view of this critique, it is true, as Roger Ames argues, that Daoism should not be judged "quietistic," as it often is when its discussion of the feminine, the childlike, weakness, and softness are not analyzed carefully.  When power is combatted by means of its own methods ("strength"), power inevitably prevails, no matter which side is victorious. But despite its rejection of aggressiveness, Daoism does not propose a quietistic withdrawal from the world. Rather, it contends that the foundations of power can be undermined by "rivers and streams flowing to the sea." (Chan, 32) By this is meant the liberation of other powers—the powers of self-realization—of both humanity and nature.
In spite of all its anti-authoritarianism, one might conclude that what the Laozi advocates is at best quasi-anarchistic, in view of the fact that the work is explicitly addressed to the ruler, and because the existence of the state is accepted. While Roger Ames argues for the coherence of the idea of Daoist anarchism, he contends that the Laozi does not fully adopt this position, since it "sees the state as a natural institution, analogous perhaps to the family.  Frederic Bender goes even further, concluding that the work is "hardly anarchistic in the Western sense, since it retains, albeit in improved form, ruler, rule, and the means of rule (the state)." 
But in fact the Laozi dispenses with all of these, if they are taken in their political sense. Its major divergence from classical Western anarchism is that, given its more thorough rejection of patriarchy, technological domination, and domination of nature, and given the greater coherence of its metaphysical foundations, the Laozi is more consistently anarchistic. In fact the Laozi expresses an entirely negative view of government. It is true that occasionally it sounds as if only the excesses of political control are condemned :
The people starve because the ruler eats too much tax grain. . . .They are difficult to rule because their ruler does too many things. (Chan, 75)
Such a passage might be taken to mean that good rulers would tax less and control people less. But in the context of the work’s overall perspective "good rule" can only mean "no rule," that is, ruling without such measures as taxation and control. The idea of governmental "abuse" is absurd from the standpoint of the Laozi, in view of the fundamental and absolute nature of its critique of government. As the ego is to the organic self, so is political society to the organic community. In both cases the Laozi uses the image of the carving of the block :
Without law or compulsion, men would dwell in harmony.Once the block is carved, there will be names. (Waley, 32)
"Naming" refers to reifying dynamic processes, destroying natural unity, and reducing the organic to the inorganic. And this is indeed the transformation that took place with the rise of the state. The organic, holistic community was divided or "cut up" into a society of classes, of rulers and ruled, of rich and poor, of elites and masses, and, finally, of individuals contending for power, or, at worst, mere "survival." The Laozi shows an acute awareness of the contrast between previous organic society and existing political society, an awareness that must have been heightened by the intense degree of strife prevailing in its time. Yet the central objection to government is metaphysical : it is a distortion of reality, a destruction of the natural order of society, the replacement of Daoist "non-action" by control and domination.
Government, ruling, and domination are the sources of disorder. This is the political message of the Laozi :
The people are difficult to keep in order because those above them interfere. This is the only reason why they are so difficult to keep in order. (Waley, 75)
What is strange is not this seemingly paradoxical statement, but rather the fact that after over two thousand years of evidence to support it, it still seems paradoxical. If the Laozi is correct, then the more laws there are, the more disorganized society will be ; the more prisons are built, the more crime will increase ; the more bureaucracy proliferates and experts are trained, the more social problems are aggravated ; the more military power expands, the more conflicts occur and the more the threat of destruction looms larger. (Consequences such as these are predicted in Chapters 57 and 58 of the Laozi.) And these have in fact been precisely the results of the political organization of society. Every expansion of political domination for the sake of maintaining order has only further destroyed the organic structure of society, thus advancing social disintegration and producing more deeply rooted disorder.
But can the proposed alternative to political society, a non-authoritarian, cooperative society, possibly exist ? Frederic Bender thinks that it cannot, although it is not entirely clear what it is that he considers impossible (a non-coercive social system, a society "lacking entirely in institutionalized authority," a "social organism" without "someone exercising authority," or a society practicing "unanimous direct democracy").  He argues that the fact that such societies never existed is evidence that they are not possible. However, there have indeed been societies without "institutional authority" in the sense of a separate, permanent stratum of officials holding coercive power. Bender cites the existence of the authority of "elders, chiefs, shamans, and the like" as evidence for "systems of authority" in all societies.  But to really understand the relevance of these phenomena to anarchism, it is necessary to analyze carefully the meaning of "authority" in each case and the sense in which it constitutes a "system."
Anthropology presents us with abundant evidence that "authority" in tribal society differs radically from that of political society. To give just one example, while the "chief" is often assumed by the European mind to be a political ruler, in fact, he (or sometimes she) has often been primarily a ritual figure, or one with carefully delineated, non-coercive functions dealing with specific areas of group life. Discussions of societies without states or authoritarian political structures have been discussed at length in works such as  Clastres’ conclusions based on the study of many Amerindian tribes are especially striking :
One is confronted, then, by a vast constellation of societies in which the holders of what elsewhere would be called power are actually without power ; where the political is determined as a domain beyond coercion and violence, beyond hierarchical subordination ; where, in a word, no relation of command-obedience is in force. 
To say that such societies have existed is certainly not to say that they fully embody the anti-authoritarian ideal of anarchism. Yet an exploration of the nature of organic societies of the past serves to show what was lost with the rise of civilization, and what might be regained in a more self-conscious form in the future. It also helps us understand that there are many kinds of authority, and that some imply neither membership in a special office-holding group possessing coercive power, nor even "authoritarianism" in any sense.
The Daoist ruler-sage is an example of one who exercises such non-dominating authority. This authority is, however, much closer to the anarchist ideal than is that of the tribal chief or elder. For whereas these figures often have no personal power at all, they may serve as vehicles through whom the restrictive force of tradition is transmitted. The Daoist ruler, on the other hand, imposes nothing on others, and refuses to legitimate his or her authority through the external supports of either law or tradition.
The Laozi teaches that people should not (and, in fact, cannot) be coerced into doing "the right thing." This follows from the internal-development, immanent-good teleology of Daoism (which is opposed to the hierarchical-good teleology of Aristotle, the external-good teleology of utilitarianism, and the transcendent-good teleology of many Western religious views, for example). The sage does not attempt to legislate or require the good :
I take no action and the people of themselves are transformed.I love tranquillity and the people of themselves become correct.I engage in no activity and the people of themselves become prosperous.I have no desires and the people of themselves become simple. (Chan, 57)
In view of this conception of the true ruler as one who does not interfere with the development of others, there is no reason to think that the sage is what is called in political terminology a "ruler." As Lau notes, "the sage is first and foremost a man who understands the Tao, and if he happens also to be a ruler he can apply his understanding of the Tao to government."  To this it must be added, first, that the anti-patriarchal Laozi never implies that only men can be sages, and, secondly, that its application of "understanding of Dao" to government means not governing. Attempts to interpret the Laozi as a manual of strategy in the "art of governing" inevitably fail. They require a rather extreme literal-mindedness, in which "ruling" must always mean holding political office, and "weapons" must always mean military, rather than spiritual arms.  The meaning attributed to rulership in the Laozi is clear : it is the "nobility" that comes from identification with Dao, and with successfully following one’s path of self-realization :
To know the eternal is called enlightenment.Not to know the eternal is to act blindly and to result in disaster.He who knows the eternal is all-embracing.Being all-embracing, he is impartial.Being impartial, he is kingly (universal). (Chan, 16)
The power of the ruler is thus not political ; it comes from the force of example alone. It is for this reason that the Laozi can assert that "the best (rulers) are those whose existence is (merely) known by the people.’’ (Chan, 17) In fact, in several versions of the text the best rulers are "not" known by the people.  Presumably, they are not known as rulers or leaders in the ordinary sense, although they are known as models of personal development. In either case a subtle, non-coercive authority is attributed to the ruler. There is nothing in this kind of authority that is contrary to anarchism. It is neither imposed on anyone nor used to manipulate. On the contrary, it is the result of the most non-aggressive activity, and can only exist if "the people," seeing the sage following the path of non-dominating self-realization, freely choose to do likewise.
Thus, the Laozi does not propose the continuation of traditional political authority, but instead its replacement by natural authority. The "empire" that is ruled by the sage is not the political state, but rather the natural order that is attained by the affirmation of ones own Dao and that of all other beings.
The Laozi proclaims implicitly what is stated explicitly in the Huai Nan Tzu : "Possessing the empire" means "self-realization."