Translation
To govern a great kingdom, (one must) imitate (him who) cooks a small fish.
When the prince rules the empire by the Tao, demons do not display their power.
It is not that demons lack power, but that demons do not harm people.
It is not that demons cannot harm people, but that the Sage himself does not harm people.
Neither the Sage nor the demons harm them; that is why they blend their virtues together.
Notes
A: When cooking a small fish, one removes neither its entrails nor its scales; one dares not handle it roughly for fear of crushing it. Similarly (B), when governing a great kingdom, one must not be overly active, nor establish a multitude of laws and regulations, for fear of tormenting the subordinates and inciting disorder.
The rest of the chapter offers frequent repetitions of the same words, and seems as insignificant as it is unintelligible if one takes the Chinese words in their ordinary sense.
I will limit myself to quoting largely the commentator B, who like all the others, has taken here the ancient gloss of 河上公 (A) as the basis for his developments.
The Sage employs emptiness and light (that is, he strips himself of his passions and dispels their darkness) to nourish his nature, moderation and frugality to provide for his body's needs, purity and the most severe attention to strengthen his will, calm and tranquility to rule his kingdom.
When ruling the 天下 by the 道 , the 鬼 do not dare (A) display their power, because a Sage is seated on the throne. If the 鬼 do not dare to display their power to harm people, it is not that they lack power, but solely because perversity cannot overcome righteousness. This is why it is recognized that if the 鬼 do not dare to attack people, it is because they fear and respect the righteous and wise man who is on the throne. If the Sage does not dare to harm the people, it is because he loves them as if he were their father. If, among them, there are blind men who give in to evil, the Sage refrains from punishing them immediately for the evil they have done. He saves them by his goodness, consoles them by his benefits, and brings them back to goodness. The Sage does not harm the people, and then the 鬼 convert. This shows the greatness of his 德 . On their side, the 鬼 do not harm people; this also proves the excellence of their 德 .
The entire 天下 attributes the merit to the Sage; but he sees no merit in his works, and he attributes this merit to the 鬼 . Thus, they blend their 德 together.
All editions have 神 'spirits' instead of 鬼 'demons'. I believed it necessary to adopt the reading 鬼 to restore the parallelism that seems to exist between these two sentences and those that precede.
E explains the word 鬼 'demons' by 鬼神 'spirits' in general. However, the misfortunes he cites below, such as plagues, premature deaths, pestilences, etc., show that the word 鬼 must be taken in a bad sense and rendered as 'demons'.
The word 神 means 'being endowed with supernatural power'.
E: The 鬼 and the Sage do not harm people.
This is the meaning of C: 'The 圣人 and the 鬼 blend their 德 '. There is a great difference between this gloss, which is supported by several commentators, and that of E: 'Thus, the merits of the 道 and the 德 gather together in the present world'.
