Nietzsche traces the origins of guilt and conscience to the primitive relationship between buyer and seller, creditor and debtor. We are creatures who measure and evaluate everything: everything has a price, deeds just as much as goods. This relationship exists also between people and the community they live in. The community provides shelter, peace, security, and much else besides, placing people in its debt. People who break the laws of their community are not only not repaying the debt, but they are assaulting their creditor. No wonder such offenders face the harshest of punishments.
Nietzsche also observes that the more powerful the community becomes, the less it needs to punish offenders. If the community is weak, any attack against it is life threatening, and such a threat must be eliminated. A community that is strong enough to resist all sorts of assaults has the luxury of letting offenders go unpunished. Such a society has overcome its demand for strict justice. We give the name "mercy" to the expression of power in letting an offender go.
Nietzsche next turns to the origin of justice, suggesting that the reactive affects of revenge and ressentiment are the last to be touched by justice. Very few can truly be just toward someone who has harmed them. Still, the noble man who lashes out against someone who harms him is far closer to justice than the man of ressentiment, who is poisoned by prejudice and self-deception.
Justice and the institution of law essentially take revenge out of the hands of the offended party. If I am robbed, it is justice, and not myself, that has been harmed, and so justice must claim revenge. Thus, Nietzsche suggests, the concept of justice can only exist in a society that has established laws that can be transgressed: there is no such thing as "justice in itself."
We have seen that origins and utility are worlds apart. Anything that has existed for any length of time has been given all sorts of different interpretations, meanings, and purposes by different powers that master and subdue it. That something has a purpose or utility is only a sign that a "will to power" is acting upon it. Things and concepts have no inherent purpose, but are given purpose by the different forces and wills that act upon them.
The concept of punishment, for instance, has an aspect that is enduring and an aspect that is fluid. Contrary to what we might otherwise assume, Nietzsche suggests that the act of punishing is what endures, and the purpose for which we punish is what is fluid. Punishment has such a long history that it's no longer clear exactly why we punish. Nietzsche provides a long list of different "meanings" that punishment has had over the ages.
Nietzsche suggests that the "slave revolt in morality" begins when ressentiment, or resentment, becomes a creative force. Slave morality is essentially negative and reactive, originating in a denial of everything that is different from it. It looks outward and says "No" to the antagonistic external forces that oppose and oppress it. Master morality, on the other hand, concerns itself very little with what is outside of it. The low, the "bad," is an afterthought and is noticed only as a contrast that brings out more strongly the superiority of the noble ones.
While both slave and master morality can involve distortions of the truth, master morality does so far more lightly. Nietzsche notes that almost all the ancient Greek words denoting the lower orders of society are related to variants on the word for "unhappy." The nobles saw themselves as naturally happy, and any misunderstanding rested on the contempt and distance they held from the lower orders. By contrast, the man of ressentiment distorts what he sees so as to present the noble man in as bad a light as possible, and thereby to gain reassurance.
The noble man is incapable of taking seriously all the things that fester and build in the man of ressentiment: accidents, misfortunes, enemies. In allowing resentment and hatred to grow in him, in having to rely on patience, secrets, and scheming, the man of ressentiment ultimately becomes cleverer than the noble man. This constant brooding and obsession with ones enemies begets the greatest invention of ressentiment: evil. The concept of the "evil enemy" is basic to ressentiment just as "good" is basic to the noble man. And just as the noble man develops the concept of "bad" almost as an afterthought, so is the concept of "good" created as an afterthought by the man of ressentiment to denote himself.
Nietzsche remarks on how different the concepts of "evil" and "bad" are, in spite of both being considered the opposite of "good." He explains this difference by explaining that there are two very different concepts of "good" at work: The noble man's "good" is precisely what the man of ressentiment calls "evil."
Among their own kind, noble men are respectful and subdued, but when they venture out among strangers, they become little more than uncaged beasts-- "blonde beasts," as Nietzsche calls them. "Blonde" here is a reference to lions rather than to hair color, as Nietzsche bestows this name not only on Vikings and Goths, but also on Arab and Japanese nobility. The name "barbarian" is often associated with the violence that occasionally erupts from noble people.
Contemporary wisdom would suggest some sort of progress and refinement from these "blonde beasts" to the humanity of today, but Nietzsche vehemently disagrees. The overthrow of master morality in favor of slave morality is nothing to be proud of. These barbarians may have been fearful, but they were also admirable. Today's world of ressentiment is neither: it is merely mediocre. Nietzsche characterizes the nihilism he detests in contemporary society as a weariness with humanity. We no longer fear humanity, but we also no longer have hopes for, reverence of, or affirmation of humanity. Nietzsche fears that our slave morality has rendered us insipid and dull.