Barbara Hendrischke, University of New South Wales
    Modern management is meant to achieve success, that is, to reach whatever happens to be the aim of the day in the industry, company or institution in question. Success can also be termed profit.  Using the expression that we find in classical Chinese texts, management is meant to lead to de 得, that is, towards obtaining things and to success, and to avoid loss or failure shi 失.  To know about the causes of gain and loss, of de and of shi, is said to be a sign of understanding and is seen as the responsibility of the person in charge, as the Guanzi puts it, where it is said that gain and loss in the empire as a whole stem from the person of the ruler.
    We know that the Laozi had much advice to give on this topic and that the text distinguished different levels or stages of gain and loss, stressing that their sequence was caused by a man’s attitude towards them: “Therefore the sage … because he does not lay hold of anything loses nothing.”  So the sage knows about gain and loss, whereas others don’t, and for them it holds true that “whoever lays hold of it will lose it” and “in their enterprises the people always ruin them when on the verge of success”.  Concern with the risk of loss is of particular relevance in the Laozi. That the amassing of gains might not result in gain but in its opposite is seen by this text as documenting the need for returning, that is, for moving away from a mature state to the point of origin and beginning. It is said to be a principle of nature that energy is concentrated when growth is strongest and that energy relapses once growth has been achieved. From this principle the Laozi concludes that actions will succeed once they resemble the beginnings of growth. In contemporary terms, this implies flexibility and openness and also vulnerability and weakness, as opposed to a consolidated, clearly defined and, we might add, bureaucratised state that is accompanied by assertiveness and self-confidence.  A.C. Graham has stressed that much of the Laozi deals with the constructive use of fear.  Therefore we can expect to learn from this old text something about the problem of risk taking and how we might cope with it through good risk management.
    This will be one of the topics dealt with in this paper. The other topic, and the one we will deal with first, is the personal qualifications of the manager or entrepreneur as the source of that amount of innovation, creativeness and strategic planning without which modern management cannot thrive.  The Laozi’s main interest lies in fully activating the individual person, shen 身. We know well that, for Daoists of the later daojiao 道教 tradition, not only was invigorating the individual person as a physical and mental entity the field in which they practiced their insights, but also that this person was the material from which these insights were derived.  For the Laozi, however, the scope of human action is much wider than individual fulfilment. Yet, for orientation on how to act in all fields of life the individual is referred back to his own existence between birth and death, health and illness, well-being and decay, and his energy and ongoing creativeness are seen to stem from this.
    This understanding of the Laozi and of Daoist thought in general is supported by the first reader, or at least one of the first known readers, of the Laozi, that is, the philosopher Han Fei. In the following it is assumed that the two Han Feizi chapters entitled Explaining the Laozi 解老 and Illustrating the Laozi 喻老 are actually the work of Han Fei.  Leon Vandermeersch has shown in detail how well Han Fei integrates certain elements of the Laozi’s thought into his own system of political philosophy.  This paper takes a different direction. Han Fei’s hermeneutic results are held up against our own reading of the Laozi and are seen as reflecting a genuine attempt to come to grips with the older text. In other words, this paper is based on the assumption that Han Fei’s achievement as one of ancient China’s first known commentators was remarkable.  That he picked the Laozi for documenting his hermeneutic skills throws light on what we might call the omnipresence of this old text. We know that the Laozi was what men chose to be buried with; Han Fei’s work on the Laozi shows that it was also a text philosophers and political advisors selected for study and inspiration. Han Fei’s thought was influential and has had a decisive impact on shaping the Chinese imperial system as we know it. His interest in managerial strategies cannot be doubted. His focus was the management of a political entity, that is, of a state, in response to historical developments around him and to the discourse he was part of. However, the strategies he devised for the political realm may be applicable to other fields of action.
    The Laozi’s ideal person incorporates innovativeness and strategic thinking
    In his reading of the Laozi, Han Fei reflects ideas expressed in Art of the Heart 心術 and Inner Training 內業, as preserved in the Guanzi, and also Mengzi’s musings on personal success. Han Fei thus appears to be the archetypal intelligent reader, who is aware of the world around him and transforms the text he is reading into part of this world in a critical as well as in a supportive function. His commentary stresses, I would argue, that attention to the individual person was at the root of “Laozi’s” insights. Understanding one’s own person and the ways of success and failure are of interest to both Han Fei and the authors and compilers of the Laozi.
    Explaining the Laozi starts with Laozi section 38. This is exceptional in that, for the rest of Explaining as well as for Illustrating, Han Fei’s text introduces the sections of the Laozi in an order that has nothing in common with the transmitted text or with the Mawangdui and Guodian findings. In interpreting section 38, Han Fei assigns a crucial role to shen “person”. He distinguishes between superior virtue, benevolence and propriety and their inferior version by introducing the term shen quan 身 全 “a person remaining intact”:
    “Highest virtue 德 is not virtue” means that one’s spirit is not perverted by what is outside. When it is not perverted a person remains intact, and this is what we mean by “virtue”. “To keep to virtue” is to lay hold of one’s person.
    Here Han Fei uses Art of the Heart and Interior Training terminology to elucidate the Laozi’s meaning. He goes on to stress that emptiness, in the meaning of aimlessness and inwardness, signifies a person’s intactness, and to this we might add this person’s power, independence and thus creativeness. The difference between those actions that stem from a person himself and other actions that are dictated by routine proceedings and by the expectations of the environment is particularly obvious in the practice of li 禮 “ritual” or “politeness”. According to Han Fei’s understanding, politeness that stems from shen, from a person and what he feels, is the right and also the efficient expression of courtesy, as opposed to a superficial show of polite gestures intended for an audience. Being intended for an audience, these gestures do not really reach the audience.
    Han Fei is impressed with the Laozi’s concept of an intact and thereby powerful person and gives the following explanation of Laozi section 59, in which it is explained how such a person is able to take hold of a country:
    Having accumulated power 德, one’s spirit is tranquil. Once the spirit has become tranquil, [perception] is well balanced. Once [perception] is well balanced, one will plan successfully. When planning is successful, one is able to control everything. One who is able to control everything can easily overcome enemies in warfare. If one can easily overcome enemies in warfare, one’s deliberations are bound to concern the whole world.
    Here Han Fei interpolates the steps of tranquillity, balance and planning to show how someone who has “accumulated power” 積德 reigns over the world. These steps begin with the strengthening of a person’s state of mind and lead to successful and far-reaching activities.
    Explaining ends with Laozi section 54, which in Han Fei’s reading stresses that by observing a person’s energy and power one will know what this person can achieve, just as for a family one needs to watch its wealth and for a country the size of its population. In the context of this paper, this means that managerial skill includes detecting such a skill in others. Han Fei’s commentary is more explicit on the perfection of one’s person than is the received text of the Laozi:
    By amassing vital energy a person creates power (身以積精為德), [just as] a family creates power through material wealth and a country, a state and the empire create power though the people. Now, when a person is well controlled, things from the outside cannot disturb his vital spiritual energy. For this reason the Laozi says: Cultivate it in your person 脩之身 and your power will be genuine.
    This passage is central to the Laozi as a scripture of practical wisdom, and there are other early quotations, as for instance in the Huainanzi, which sees it as proof of the adage: “Self-government is the root of government”.
    For the Laozi, a person gathers vitality by cherishing his own spiritual and physical energy and by safeguarding his independence from outside disturbance. This mental and physical self-reliance will render a person original, powerful and successful. In selecting passages from the old text, Han Fei stresses the social and political potential of such a person. By being in control of himself, such a person reigns over others and defends his rule against contenders:
    If one can easily overcome his enemies in warfare, his influence will extend to the empire as a whole. If his deliberations concern the whole world, the people will follow him. Thus, when going forward, he affects the empire. When turning backward, he is followed by the people. Since his technique is profound, the mass of the people cannot perceive its beginning and ending and therefore no one knows his reach.
    The Daoist person’s managerial skills include innovativeness, spontaneity, strategic thinking and the proper observation of others’ abilities.
     The Laozi’s ideal person reduces the danger involved in risk taking
     The modern entrepreneur does not seek risk but has learned how to manage it when that becomes necessary.  In this way his attitude towards risk resembles that of the Laozi’s ideal person. For the Laozi, amassing personal energy results in increased personal security. This principle can, as the Laozi sees it, be of use in the containment of risk in one’s personal life as well as in regard to more far-reaching aims. Han Fei takes this up in his advice to a ruler on how to secure his position. Han Fei also stresses that there are certain strategies for containing risk.
    For the Laozi, risk is intrinsic to every man’s existence as he enjoys being alive and happy in some awareness that death and misery lurk in close proximity. This risk is often thematised and Han Fei’s Explaining deals with several relevant passages. Laozi section 50 starts with “Going out is life, and coming in is death” and, according to Wang Bi’s understanding, continues by dividing men into three groups who differ in their affiliation with life and with death.  Han Fei does not see this differentiation but thinks that the Laozi talks about men in general:
    The human body has three hundred and sixty joints, four limbs and nine apertures as its important equipment. Four limbs and nine apertures are thirteen in number.  Motion and repose of all these thirteen depend upon someone being alive. … On the whole, people live on and on, and while alive keep moving. If movement is accompanied by exhaustion, losses occur. However, people don’t stop moving and losses don’t stop. Since losses don’t stop, life is exhausted. When life is exhausted, we speak of death.
    Han Fei goes on to warn against exhaustion, a warning that can easily be transferred to the field of political and economic action. Reading section 50, Han Fei continues:
    Therefore, the saintly man takes care of his vital spiritual energy and esteems the status of repose. If he didn’t, conditions would become much worse than the harm that can be done by bison and tiger.
    The saintly man, as the Laozi and with it Han Fei argue, has superhuman qualities. He can risk meeting bison and tiger and even going among soldiers. This brings us back to personal qualities, to the intactness that is the deciding factor in success and failure.
    Moreover, Han Fei stresses the need to look at risk strategically. Again, the starting point is human existence that always includes a state of good fortune as well its opposite, a state of disaster. A man’s every action can be a step towards the one as much as towards the other. As Laozi section 58 puts it:
    Disaster is what good fortune rests upon. Good fortune is what disaster is hidden in.
    Ordinary people are, as Han Fei points out, bewildered by the changeability of fortune, but men who know base their strategy on the close proximity of good and bad fortune and they make good fortune last. When things go well they will be as concerned as if something were wrong, and should things go amiss fear, care and insight will ensure they make decisions that set things right. Since they see the different stages of good and bad fortune as interrelated, they are immune from the shock of facing an unintended outcome. Here Han Fei’s interpretation goes beyond the Laozi. He adds the point that individuals who are empowered by understanding the relationship between good and bad fortune are well advised to hide their insight. Otherwise ordinary men who are caught up in the misery of never achieving their aim might take objection and retaliate by turning violent.
    Risk taking involves danger. As Han Fei reads the Laozi he devises techniques and strategies for survival in circumstances that endanger human existence. Moreover, he gives advice on how to cope with dangerous situations in the realms of politics:
    In general, we may not call having a state and then losing it and having a body and then ruining it being able to stay in possession of the state and being able to maintain the body. Now someone able to retain possession of the state is certainly able to safeguard the Spirits of Soil and Grain and someone able to maintain his body is certainly able to finish the years that heaven has assigned him. Then we can talk of being able to remain in possession of the state and being able to maintain the body. Now someone able to remain in possession of the state and able to maintain the body is certainly also implementing dao.
    From here on, Han Fei’s discussion ignores the body and its maintenance and concentrates on the realms of politics. The Laozi has the passage:
    Who has possession of the state’s mother may last a long time. This is what we call a deep root and firm stem. It is the way 道 of long life and long-lasting vision.
    Han Fei explains that the ‘state’s mother’ is dao, and that the strategies and techniques 術 which help to retain possession of a state are a manifestation of dao. According to him they consist, among other things, of remaining aloof from one’s followers and of retaining one’s vision.
     Conclusion
     Han Fei extracts from the Laozi sections and passages that have an explicitly practical component. His annotation stresses man’s ability to empower himself through invigorating mind and body. Moreover, both the Laozi and Han Fei stress the leadership qualities of a man who has thus transformed himself. For Han Fei, personal vitality and energy are the road to power, to having an impact on others and to success. Clearly, Han Fei thinks that the Laozi is right and that what it says is of practical political consequence. We may conclude that the Laozi’s ideal person has managerial qualities. In his actions this person is not bound by convention and routine but is capable of taking an independent and long-term view of things. He is thus capable of innovative and strategic thinking. Both the Laozi and Han Fei stress in particular the ability of such a person to cope with risk and danger. Han Fei stresses that personal vitality is one way to manage risk. This is a position that can easily be translated into managerial terms, in that risks undertaken by a healthy institution or company involve less danger than if things were otherwise. Han Fei stresses the need to take a long-term view of the outcome of actions, and we might call this approach strategic. Thus, a loss is not seen as an isolated event but is seen in perspective.
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