Hegel here decides that things can go no further without some serious attention
to the nature of Spirit itself, from its abstract characteristics to its
fully formed instantiation in the concrete world (he notes that by "world" he
means both mental and physical nature, but says that physical nature merely
"impinges" on history, while Spirit is the actual "substance" of history). This
direct consideration of Spirit will be broken down into three sections (sections
3; 4 and 5; and 6 of this SparkNote, respectively):
I. The abstract characteristics of Spirit.
II. The "means Spirit uses in order to realize its Idea."
III. The shape Spirit takes when fully realized in the world: namely, the State.
Hegel's analysis of Spirit's abstract characteristics begins with a focus on freedom as the very essence of Spirit. If the essence of matter is its dependence on the external force of gravity, the essence of Spirit is its dependence only on its internal principle of freedom: Spirit "has its center in itself." All the other characteristics of Spirit "subsist only by means of freedom," and freedom is both the means and the end of Spirit (in the abstract). In short, "freedom is the only truth of Spirit."
Spirit is also the opposite of matter in terms of unity--matter is always in parts, but Spirit is entirely unified (since it depends on nothing outside of itself). This being-in-itself, this non-dependence, is intimately related to freedom. Since Spirit is entirely self-sufficient by nature, freedom is inherent in it as its central principle. Further, this self-sufficient nature is also a self-consciousness, "the consciousness of self." Hegel defines this briefly as the coincidence of two kinds of consciousness: "that I know" and "what I know." Spirit knows that it knows, thereby uniting itself as a subject with itself as an object. So Spirit is free, self-sufficient, and self-conscious, and all of these characteristics are interdependent nearly to the point of being the same thing.
Hegel takes these characteristics as an "abstract definition" of Spirit. With that in mind, he says again that world history is "the exhibition of Spirit, the working out of what it is potentially." Spirit is like a seed, which takes root in the world and reveals its internal nature externally in history.
The essential freedom of Spirit plays out in history as peoples become increasingly aware of themselves as free. In the ancient Orient, Hegel claims, societies were united under one essentially arbitrary ruler. Since they did not know that they were free, they were not free. The ancient Greeks exhibited the first social consciousness of freedom, but they failed to see freedom as an essentially human characteristic--only some people were free, again by chance through birth. The Germans, Hegel claims, were the first to recognize that the "freedom of spirit comprises our most human nature." This was possible through the tenets of Christianity, which ostensibly recognized all humans as fundamentally free (Hegel notes that religion is often the initial vehicle for this consciousness of freedom).
It took awhile, of course, to make this realization a reality. In fact, Hegel notes, this "application of the principle of freedom to worldly reality...is the long process that makes up history itself." Here Hegel emphasizes the importance of the distinction between the abstract concept of Spirit and its realization in the concrete world--both must be considered, since it is the transition from one to the other that makes up history.
Hegel suggests that no state in any age or any stage of human history can be perfect no matter how high and noble goals it may pursue or achieve. By the time the state achieve those high ideals, human intellect achieves new heights which makes the high goals already achieved by that “next to perfect” state outdated and a quest for achieving the new targets and goals starts, leading human society to its next level, a higher level of development and a new stage in the journey towards perfection.