Men are, as I have often said already, conscious of their own actions and appetites, but ignorant of the causes whereby they are determined to any particular desire. Therefore, the common saying that Nature sometimes falls short, or blunders, and produces things which are imperfect, I set down among the glosses treated of in the Appendix to Part I. Perfection and imperfection, then, are in reality merely modes of thinking, or notions which we form from a comparison among one another of individuals of the same species; hence I said above that by reality and perfection I mean the same thing.
As for the terms good and bad, they indicate no positive quality in things regarded in themselves, but are merely notions which we form from the comparison of things one with another. Thus one and the same thing can be at the same time good, bad, and indifferent. For instance, music is good for him that is melancholy, bad for him that mourns; for him that is deaf, it is neither good nor bad.
In what follows, then, I shall mean by, "good" that, which we certainly know to be a means of approaching more nearly to the type of human nature, which we have set before ourselves; by "bad," that which we certainly know to be a hindrance to us in approaching the said type. Again, we shall mean that men are more perfect, or more imperfect, in proportion as they approach more or less nearly to the said type.
Imperfect men, speaking from personal perspectives, do not see that Nature is perfect (or as it has to be) and, consequently, reality is perfect (is as it has to be). Things in Nature are neither good nor bad. Spinoza will call "good" those things which will bring about a certain type of human nature and "bad" those things to oppose it.
What he means by "a type of human nature" has not yet been revealed in the Ethics. We feel that Spinoza wants people to reach for perfection and that increasing one's power of action in the world is the way to do it. He spoke of human character in "On the Improvement of the Intellect;" a pitch of perfection, a character much more stable than one's own, one which has the knowledge of the union existing being the mind and the whole of nature.