Two influential schools of thought developed in Neo-Confucianism:

The School of Reason was based on the Book of Great Learning

• The "investigation of things" would reveal the basic, underlying principles (Li) behind all things. Ultimately there was seen to be one unchanging principle behind all principles ("unified field theory"? Plato’s Form of all forms: "The Good"?).

• Li = form or principle, Ch’i = matter; Li = underlying principle manifest through physical action (e.g. ritual); Li is primary but remains merely untapped potential if not materialized in matter (ch'i) (principles are embodied in material substance - cf. Aristotelian thought). Jen is human Li, human potential. In Neo-Confucianism Li was understood to be the underlying principles behind the actual rites and ritual behaviors encouraged by Confucius.

• Li (principle) is contained in either clear or turbid matter (ch’i) - in turbid matter Li is not expressed clearly and fully; potential remains untapped in turbid matter (e.g., the principle of humanity [Jen] within the uncultivated human being).

• Humanity was seen as innately good (in contrast to Christian view of humanity as innately sinful) although that good potential (principle of Jen) might not always be ideally expressed.

The School of Mind saw the human mind and the universe as identical and sought a mystical identification of the self with the entire universe (cf. Hindu Brahman-Atman identity).

• Later developed the idea of the unity of all things - the universe was seen as one being, one family, resulting in a universal altruism and filial relationship toward everything (not just human to human relationships).

• It was understood that humans had an innate knowledge, an intuitive sense, of right and wrong - the knowledge of heaven in each human mind (since there was seen to be an identity between the human mind and heaven) - again, humanity is seen as inherently good, with a natural potential to be and do good.

The sage establishes oneness with heaven and earth, his mind grasps the underlying unity and structure of all being and this influences his behavioral response to the universe around him.