Rules?

When the Tao is lost in a person or land one must resort to righteousness to rule society.
When righteousness is lost one has to use morality.
When morality has been abandoned there is only ritual to conduct society.
But ritual is only the outer clothing of true belief; this is nearing chaos.

—Tao te Ching, from Ch. 38, trans. Unknown

Depending on the translation, this can be a difficult passage to figure out. In the original translation that I read, it was far from clear what it meant. This translation is much better. The idea is that when people are at one with Tao, there is no need for rules, or morals, or righteousness, or power. Those only become necessary when people have already fallen away from Tao. Next is righteousness (sometimes translated 'virtue' or 'power'). So long as people keep to righteousness, they do not need any of the lower forms of rule. Then comes morality, and then empty ritual. There is a similar passage in the Analects of Confucious; however its emphasis is different. It says that it is best for people to do what is right without thinking (being at one with Tao), and next best is to do what is right because it is right, and so on... The Taoist emphasis seems (to me) to be that anything less than completion, union with the Tao, is worth very little. All the rest is mere facade.

Note: Taoism and Confucianism have a history of conflict, and a lot of Taoist material is an attempt to make Confucianists look ridiculous. Example: Chuang Tzu and Confucius were watching a fish swim in the river. Chuang Tzu remarked "See how the fish enjoys sporting in the water!"
Confucius scoffed. "You are not that fish. How do you know whether it enjoys itself or not?"
Chuang Tzu retorted, "You are not me. How do you know that I do not know whether the fish enjoys itself?"

(Those may not be the original names in the story)