Original Text
The highest good is like water, which nourishes all things without striving against them. It settles in the lowly places that others disdain, and thus it is closest to the Way. Those of highest good dwell in humble environments, keep their hearts deep and serene, treat others with sincerity and kindness, speak with trustworthiness, govern with order, act with competence, and move with timing. Because they do not contend, they commit no errors and incur no blame.
Guide
The reason sages are able to be "without fault" is because they "do not contend." Their character is like water, dwelling in places that others despise, benefiting all things without taking pride or claiming credit. Their dwelling, thoughts, actions, speech, and philosophy of governing the world all embody this water-like wisdom.
Analysis
In the previous chapter, Laozi extended the way of heaven and earth to the way of humanity, and in this chapter, he uses water from the natural world as a metaphor for people and to teach them.
Laozi first uses the nature of water to metaphorically describe the personality of a virtuous person, believing their character is like water: first, it is soft; second, it dwells in lowly places; third, it nourishes all things without contending. A person with an ideal personality should also possess this mindset, not only doing things beneficial to others without contending, but also willing to go where others are unwilling to go and do what others are unwilling to do. They can endure humiliation and bear heavy burdens, work tirelessly without complaint, and contribute their utmost strength to help others without competing for credit, fame, or gain. This is Laozi's famous thought of "benefiting all things without contending."
"The highest good is like water." The term "highest" refers to the supreme, only the most exalted can be called such; water possesses the highest virtue, for though its composition is simple, it is the source of life in nature. The highest good is like water, literally meaning that a person of great virtue resembles water—Laozi urges people to learn from water's virtue of being soft, weak, and dwelling in lowly places.
So, what is the virtue of water? It is the softest and most benevolent thing, possessing a broad and tolerant heart, with no demands and a willingness to stay below others, silently and quietly wherever it goes.
It is well known that water has form but no fixed shape; no one can clearly describe its shape, as it takes the shape of whatever container holds it. Gentle by nature, like a delicate maiden, it is shy, resilient, and adaptable. Blocked by a dam, it stands still; cut with a sword, it remains unharmed. In the sky, it becomes rain, snow, clouds, and mist; on the ground, it forms rivers, lakes, and seas. Heat turns it to vapor, cold freezes it into ice, wind stirs it into waves, and height makes it cascade—it changes in countless ways. Most importantly, no matter how high and noble its position, it humbly flows downward. In this, it is the opposite of humans, who are drawn to heights, as if only by constant climbing can they realize their value. Everyone strives to rise, so competition is inevitable; with competition comes struggle, and with struggle come gain and loss, success and failure. Water is wiser than humans; it willingly stays low, nourishing all things without claiming credit, acting with serene inaction yet achieving everything.
Water closely resembles the Great Way. Water is soft and yielding, while the Great Way is formless; water benefits all things without contending, and the Great Way nurtures everything without claiming merit. This should be the essential virtue of a sage. Laozi believed that those with the highest virtue are like water, possessing a broad mind, humble character, a spirit of non-contention, and a generous and honest demeanor—these qualities are closest to the essence of the Great Way and are the virtues humans should most emulate. Therefore, one's mind should be as vast and clear as water, flowing with humility and lowliness. Do not compete with others for superiority in everything; choose your place of dwelling wisely. Treat others with warmth and sincerity, be honest and kind, and rather than deceiving others, willingly take the lower position. In dealing with people and matters, value trustworthiness and keep promises, just like the tides that rise and fall with punctuality.
Among all things in nature, Laozi cherished water the most, believing that the virtue of water is close to the Tao. The ideal "sage" embodies the Tao, as his words and deeds resemble the virtue of water. Why is water's virtue considered close to the Tao? Wang Fuzhi explained: "Among the five elements, water is the most subtle. Those who excel at dwelling in the Tao embrace subtlety, not prominence; they stay behind the crowd, yet constantly lead in virtue." To contend through non-contention, to be selfless through selfishness—this is the most distinctive characteristic of water. Water nourishes all things without taking anything from them, and willingly stays in the lowest, dampest places. Laozi lists seven instances of "goodness," all inspired by water. The final conclusion is: the essence of dealing with the world is "non-contention." That is, one would rather dwell where others dislike than compete for gain, so others have no resentment. Once humans possess a character like water, they can help others and find joy, live without strife, and lead a tranquil and natural life, avoiding conflicts and the mental torment of worrying about gain and loss. If one can make their character like water, they will harmonize with the great Tao, free from disputes, pain, and worry, and live freely, easily, and joyfully.