In chapter 12 of S.E. Hinton's classic novel The Outsiders, Ponyboy, the novel's narrator, has lost his best friend Johnny as well as his friend Dallas in tragic circumstances. It's a lot for a young man to have to go through in a short period of time. Today, Ponyboy would likely be diagnosed with Post Traumatic Stress Disorder from the fire, the loss of Johnny, the rumble, and the loss of Dally. That doesn't even take into account the murder that Johnny committed while defending Ponyboy!
Chapter 12 opens with a hearing on the matter of Bob's murder. Ponyboy has had a severe illness at this point in the novel and has become delusional. He thinks that he is responsible for killing Bob, not Johnny. At this hearing, Ponyboy is acquitted of any wrongdoing.
After the hearing, Ponyboy continues to suffer symptoms, possibly of a lingering illness, possibly a concussion, or both. His schoolwork begins to slide. This is when Darry gets frustrated with him and gives him the speech:
"You're not going to drop out. Listen, with your brains and grades you could get a scholarship, and we could put you through college. But schoolwork's not the point. You're living in a vacuum, Pony, and you're going to have to cut it out. Johnny and Dallas were our buddies, too, but you don't just stop living because you lose someone. I thought you knew that by now. You don't quit! And anytime you don't like the way I'm running things you can get out."
Darry is trying to get Ponyboy to snap out of the downward spiral he is in. He sees Ponyboy giving up and not caring like he used to. He probably sees Ponyboy drowning in grief over the loss of his friends. He tells Ponyboy that he has to go on living, even though he's hurting. He can't give up on life or his dreams and goals. When he tells Ponyboy that he can't stop living because he lost someone, he adds that he thought Ponyboy knew that by now. He's referring to the loss of their parents with this comment. He knows that Ponyboy is hurting, but he also knows that Ponyboy has survived worse things than this. He wants Ponyboy to reach his full potential.