Arjuna asks Krishna why he's telling him to wage war even though he's previously said knowledge is greater than action. He wants one path to follow to achieve wisdom. Krishna says there are two paths to achieve wisdom -- jnana yoga, which involves renouncing the material world and pursuing contemplation away from family, job, etc.; and karma yoga, which involves finding wisdom through action in the material world.
Krishna believes that one cannot gain wisdom by avoiding action, since every creature is driven to action. But in performing action, one must be 'selfless,' and see everything in service to the divine as opposed to one's own ego. If one lives only for one's own satisfaction, that person is doomed to spiritual misery. As Krishna says, each being must strive constantly to serve the welfare of the world.
As a result of achieving wisdom, the wise man sets a model for other people. Krishna says he is not driven by any needs himself, but continues to work so others can follow his example. Once a person lives not for himself, but for the divine, 'firmly established in faith,' he is released from karma. The laws of the universe dictate that every man must learn to be selfless, and lose the connection to his own ego.
Arjuna asks Krishna what is the force that makes people selfish, and Krishna names 'rajas,' the appetite for anger, and selfish desire that leads people to be bound to the material world. Selfish desire is a product of the senses and mind, and they must be conquered in order to achieve self-realization.
Arjuna asks Krishna for his own origins, and Krishna remarks that he manifests himself on earth whenever dharma declines and the purpose of life on earth is forgotten. Those who achieve wisdom are united with him, free from fear and anger. All paths must lead to him.
Krishna makes a key distinction between action and inaction. Action, he says, must be done with complete awareness, so that it is free from anxiety about results, or the selfish desires of the material world. True action does not incur physical sin and can be performed freely, in the spirit of service, towards the dissolution of karma. Over time, one achieves the state of Brahman, divinity, the soul and energy at the heart of the universe.
Service is the key to action, for all action must lead towards spiritual wisdom. Says Krishna, once one makes a commitment to spiritual wisdom as his highest goal, life begins to change, and only good things begin to grow. The ignorant, meanwhile, who remain tied to the material world, waste their lives with their lack of faith and indecision.
One of the more surprising elements of the Gita is that it doesn't advocate any form of renunciation of the material world -- and that it doesn't see action as misguided in itself. (Whereas another Indian religion, Zen Buddhism, would see the path of non-effort, or resistance to action, as a key step in finding freedom.) Rather, the Gita encourages action with awareness, or selfless action, designed not to please one's ego or to gain sensual pleasure, but rather in service to a higher power. In that, Hinduism becomes not a religion -- not a prescribed code of obligations to God, dependent on faith -- but rather a way of life, consistent with the design of the material world.
Krishna offers a key tenet of Hinduism in these chapters, arguing that one who makes spiritual wisdom his highest goal will naturally find it, and the inner peace and joy that accompanies this dedication towards achieving wisdom. Action must be pursued within this context, within this quest for finding the intersection between selflessness and action which directs a soul towards nirvana.
Thus the distinction between good action and bad action is its effect on karma. If one acts selfishly, it simply adds to the sins of karma that must be worked out in the next cycle of birth and death. If one acts selflessly, however, then, as a product of consistent selfless action, karma can be dissolved, and samsara can be ended.
Krishna points to the three gunas as another element of the material world ("guna" meaning a basic quality). There is saatva, which is goodness, light, or purity. There is rajas, or passion, activity, energy. And there is tamas, which is darkness, ignorance. Selfish desire comes from rajas, which when imbalanced, causes spikes in anger, and fear, and possessiveness.
The key, then, is awareness of all these forces. By making knowledge the goal of all action, a person can find freedom without renouncing the material world. Indeed, "knowing is the fruit of doing. The goal of all karma yoga or yajna is liberation and spiritual wisdom. The fire of spiritual awareness burns to ashes even a great deal of karma; thus true knowledge is the greatest purifier of the soul" (Easwaran 84).