When all the world recognizes beauty as beauty, this in itself is ugliness.
When all the world recognizes good as good, this in itself is evil.
Indeed, the hidden and the manifest give birth to each other.
Difficult and easy complement each other.
Long and short exhibit each other.
High and low set measure to each other.
Voice and sound harmonize each other.
Back and front follow each other.
Therefore, the Sage manages his affairs without ado,
And spreads his teaching without talking.
He denies nothing to the teeming things.
He rears them, but lays no claim to them.
He does his work, but sets no store by it.
He accomplishes his task, but does not dwell upon it.
And yet it is just because he does not dwell on it
That nobody can ever take it away from him.
(translation: John C. H. Wu)
I see two concepts expressed in this passage. The first half deals with the necessity of opposites in order to maintain a balance in the world. So in the first two lines, the key word is “all.” There is nothing inherently wrong about recognizing beauty or good in the world, the problem occurs when “all the world” sees beauty as beauty and good as good. This creates an imbalance. If all the world only saw and acknowledged the good, that would essentially eradicate all that is not good from the world. But the interesting twist here is that when all recognize the good and seek to not focus on the not-good, it ends up creating an evil, and thereby still maintains the balance. It’s somewhat ironic, similar to the old cliché that the road to hell is paved with good intentions.
The second half of the passage shifts to the contemplative state of the Sage. Here the spiritual seeker is instructed to foster a sense of detachment and to use the concept of the opposite to attain that which the seeker desires. Basically, to be a true seeker, you must stop seeking. As long as you actively search for something, you will not be able to find it. It’s like when you misplace your keys. You search the house, try to retrace your steps, but still you cannot find them. When you finally give up and sit down, the location of the keys becomes clear. This is the same as the wisdom that the Sage hopes to attain. That wisdom will only manifest at the stillest moment, when the searcher stops actively pursuing that which cannot be grasped, but can only be bestowed.