(with thanks to Jonathan Lipman)

Meng-tzu, or Mencius, represents the Confucian stream of thought which held that man is inherently good, possessing a natural inclination to morality. The good ruler, therefore, need not rule by laws or punishments but rather by the overwhelming power of his own moral example. "To rectify the world, I first must rectify myself."

From the Meng-tzu text 

Every many has the sense of compassion. The ancient kings had it, and they adopted and carried out a policy of compassion. When compassion is coupled with a policy inspired by such compassion, the ruler can govern the world with ease. 

What do we mean by the sense of compassion? When a man sees a child about to fall into a well, he is frightened and distressed. When he rushes to save the child he does not mean that by doing so he is going to build up a friendship with the child's parents, or that he is going to receive praise from his neighbors and friends, or that he hates the child's crying and decides to put a stop to it. 

A man who does not have the sense of sympathy is not really a man ... If as an official I wish to bring the best kind of government to the people and yet the people refuse to respond, I shall ask myself whether my intelligence and ability have measured up to the task. If I pay my respect to others and my courtesy is not acknowledged, I shall ask myself if my respect is true. In short, whenever I fail to receive what I have expected to receive, I shall examine myself with the purpose of finding out my own defects... 

[...] The goodness of man's nature is like water's natural inclination to move downward. As water is inevitably moving downward, there is no man in the world who is not good. If you beat water vigorously, it splashes up and can rise higher than your head. If you channel it and push it upward, it might even reach the mountaintops. But is this the nature of water? It acts contrary to its nature because it has no other choice. If a man does bad things he, like water, has been forced to do them and has not been given a better choice. His wrongdoing has nothing to do with his inherent nature, which is good. 

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Hsun-tzu, on the other hand, though a Confucian in his belief in the felicity and efficacy of moral leadership rather than legalistic punishments, felt that man's nature was inherently evil and that both morality and statutes had to exist in society.

From the Hsun-tzu text 

These are the judgments of a king; no man of virtue shall be left unhonored, no man of ability shall be left unemployed, no man of merit shall be left unrewarded, no man of guilt shall be left unpunished. No man by luck alone shall attain a position at court; no man by luck alone shall make his way among the people. The worthy shall be honored, and the able employed; each shall be assigned to his appropriate position without oversight. The violent shall be repressed, the evil restrained, and punishments shall be meted out without error. The common people will then clearly understand that, if they do evil in secret, they will suffer punishments in public. This is what is called having fixed judgments. These are the king's judgments... 

You have said ... that the sage has arrived where he has through the accumulation of good acts. Why is it, then, that everyone is not able to accumulate good acts in the same way? I would reply, everyone is capable of doing so, but not everyone can be made to do so. The petty man is capable of becoming a noble man, yet he is not willing to do so; the noble man is capable of becoming a petty man, yet he is not willing to do so. The Petty man and the noble man are perfectly capable of changing places; the fact that they do not actually do so is what I mean when I say that they are capable of doing so but they cannot be made to do so. Hence it is correct to say that the man in the street is capable of becoming a great sage, but it is not necessarily correct to say that he will in fact find it possible to do so. But though he does not do so does not prove that he is incapable of it. 

[...] A man, no matter how fine his nature or how keen his mind, must seek a worthy teacher to study under and good companions to associate with. If he studies under a worthy teacher, he will be able to hear about the ways of the ancient sages, and if he associates with good companions, he will be able to observe conduct that is loyal and respectful. Then, although he is not aware of it, he will day by day progress in the practice of benevolence and righteousness, for the environment he is subjected to will cause him to progress. But if a man associates with men who are not good, then he will hear only deceit and lies and will see only conduct that is marked by evil ... Then, although he is not aware of it, he will himself soon be in danger of severe punishment, for the environment he is subjected to will cause him to be in danger. An old text says, "If you do not know a man, look at his friends; if you do not know a ruler, look at his attendants." Environment is the important thing: Environment is the important thing: 

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At the extreme wing of political philosophy were the Legalists, led by two of Hsun-tzu's pupils, Li Su and Han Fei-tzu. Their methods were simpler and more direct - rewards and punishments were the only means by which to govern a state. For man's inherently evil nature causes him to do what feels good, and only strict control can keep society in order.

From the Han Fei-tzu text 

A ruler who wishes to establish an orderly government naturally detests chaos, because 'chaos' is the opposite of 'order.' The more he wishes his government to be orderly, the more generous his rewards will be; the more he detests chaos, the more severe his penalties. Those who advocate leniency in punishment neither detest chaos as they should not love good government as they profess. What they advocate is not only theoretically unsound but also physically impractical. 

In fact, generous reward and severe punishment are the two most reliable standards to measure a person's virtue or lack of it, his wisdom or ignorance. Severe punishment is not aimed at the person who has committed a crime; rather, it is a restitutive act aimed at the crime for which he receives the death sentence in accordance with the law as enacted by an enlightened prince ... otherwise, it would not make any sense to kill a person who, already in chains, cannot commit any more crimes. In short, the purpose of punishment is to stop punishment; to make the punishment for one crime so severe that other crimes will not occur. This is the principle of good government. 

Thus, only when the government is willing to impose heavy penalties upon the wrongdoers can it stop all crimes. How can the people be harmed when all crimes case to exist? Severe punishment reduces whatever advantage there is in violating the law and brings great advantage to the government that administers it. Since no man will risk severe punishment for small gain, crime will cease by itself; light punishment, on the other hand, is of great advantage to the violators of the law while bringing little benefit to the government ... The people, seeing the benefit that accompanies the committing of crimes and belittling the small punishment if they were ever caught, will continue to commit crimes...