The uncut block is the book's standing figure for what has not yet been specialised, and this chapter is where it is given its clearest treatment. When the block is cut it becomes implements, and the sage who uses them becomes chief of officials, for the greatest cutting does not divide.
The Chinese word is pu, a piece of wood in its natural state before a carpenter has decided what it is for. Its ordinary sense in the language is plainness or simplicity, and the book uses it in both senses at once, which is why the same word can describe a person in chapter fifteen and a political condition in chapter thirty-seven.
The move made here is the interesting one. Cutting is not condemned. Implements are what a block becomes and they are useful, and the sage does not refuse to use them; he becomes the person who administers them. What the chapter says instead is that the greatest cutting does not divide, which is a paradox with a practical content: the best organisation of people into roles is the one that does not sever them from what they were before they had roles.
That is an argument about administration, and it is aimed at a real Warring States problem. Bureaucratic states worked by defining offices and slotting people into them, and the productivity of that arrangement was obvious. The chapter concedes the productivity and warns about the residue: an implement can do one thing and a block can still become anything, and a state made entirely of implements has spent something it cannot recover.