Nietzsche opens the second essay by examining the significance of our ability to make promises. To hold to a promise requires both a powerful memory--the will that a certain event should not be forgotten--and a confidence about the future and one's ability to hold to the promise in the future. This confidence demands that, on some level, we must make ourselves calculable or predictable, and for a people to be predictable, they must share a common set of laws or customs that govern their behavior.
Society and morality thus serve the purpose of making us predictable, which in turn serves the purpose of allowing us to make promises. This complicated process has as its end the "sovereign individual" who is able to make promises, not because he is bound by social mores but because he is master of his own free will. The sovereign individual is then faced with the tremendous responsibility of being free to make claims regarding his own future: we call this sense of responsibility a "conscience."
Nietzsche then turns to the concepts of guilt and "bad conscience." He identifies a similarity in the German words for "guilt" and "debt," suggesting that, originally, guilt had nothing to do with accountability or immorality. Punishment was not meted out on the basis of guilt, but simply as a reprisal. If someone failed to fulfill a promise or pay off a loan they were in debt to the person they let down, and that debt could be balanced by submitting to punishment, cruelty, or torture. If a creditor could not have the pleasure of getting his money back, he could have the pleasure of harming his debtor. The memory that is necessary to our ability to make promises was thus "burned in": all sorts of cruelty and punishment ensured that we would not forget our promise the next time.
Nietzsche remarks that making others suffer was considered a great joy--Nietzsche calls it a "festival"--that would balance out an unpaid debt. We find the origins of conscience, guilt, and duty in the festiveness of cruelty: their origins were "like the beginnings of everything great on earth, soaked in blood thoroughly and for a long time."
Nietzsche notes that with the cruelty of older cultures, there was also a great deal more cheerfulness. We have come to see suffering as a great argument against life, though creating suffering was once the greatest celebration of life. Nietzsche suggests that our revulsion against suffering is, on the one hand, a revulsion against all our instincts, and, on the other hand, a revulsion against the senselessness of suffering. For neither the ancients nor the Christians was suffering senseless: there was always joy or justification in suffering. Nietzsche suggests that we invented gods so that there was some all-witnessing presence to insure that no suffering ever went unnoticed.
In Nietzsche's discussion of the origin of guilt and conscience, we find a sharp contrast with the other kind of "origin" that Foucault sees Nietzsche opposing. The concepts of guilt and conscience are so fundamental to our functioning as social beings that we have had a tendency to see their origins in a great instant of divine creation. Nietzsche suggests that, like the origin of humanity itself, there is no point of origin, but just a slow evolution. This point is made particularly clear with Nietzsche's account of the origin of guilt.