What is the origin of heaven, earth, and all things? This is the question that Laozi explores in the first half of Chapter 42 of the Daodejing.
I use the word “explore” on purpose, because he approaches this question in a symbolic rather than a literal sense and gives no explanation of what he means by terms such as the One, the Two, and the Three.
The One probably refers to the universe after the Dao unified it from the void and thus set in motion the creation of heaven and earth. Confusingly, it also may stand for the Dao as well, because nothing came before the Dao and the Dao thus created itself.
The Two represents the vital forces of yin and yang. The constant interactions between these two opposing yet complementary female and male elements are integral to the Dao. Blending the two of them together with a supreme form of life energy (氣/qi) leads to the emergence of a balanced state of harmony, namely the Three, from which all things are created.
The second part of the chapter clearly doesn’t belong with the first one. Its first four lines reprises a theme from Chapter 39 about kings and lords calling themselves “orphans”, “lonely”, and “unworthy” in order to boost their reputation among the masses. Laozi warns that while such false self-flattery may produce positive results at times, it risks ruining their image over the long term because their lack of honesty may come back to haunt them.
Laozi was notably anti-war, which explains the sentiment expressed in the final three lines of the chapter. Although why they are included here is as much a mystery as the origin of heaven, earth, and all things.
The Way produces One;
One produces Two;
Two produces Three;
Three produces to all things.
All things carry yin and embrace yang;
Blending these two vital forces to achieve harmony.
What people hate most is being orphaned, lonely, and unworthy;
But this is what kings and lords call themselves.
Often a gain can come from a loss,
And a loss can come from gain.
What others teach, I also teach:
The violent don’t die a natural death.
I shall make this the central plank of my teaching.