Discussions of free will are of course linked to the idea of determinism, but I think general consensus is that free will and determinism are not linked. Most incompatbilists simply think free will is impossible whether or not we have determinism. Most compatibilists think free will is possible and determinism is true - some think we have free will either way. But free will doesn't have much to do with good and evil in Spinoza, which is what the OP asked about. Spinoza's framework is clearly 100% rational and deterministic, so discussions of determinism and free will belong in another thread.
In Part III Prop XXXIX of Spinoza's http://en.wikisource.org/wiki/Ethics_%28Spinoza%29" there is the note:
Note.—By good I here mean every kind of pleasure, and all that conduces thereto, especially that which satisfies our longings, whatsoever they may be. By evil, I mean every kind of pain, especially that which frustrates our longings. For I have shown (III. ix. note) that we in no case desire a thing because we deem it good, but, contrariwise, we deem a thing good because we desire it : consequently we deem evil that which we shrink from ; everyone, therefore, according to his particular emotions, judges or estimates what is good, what is bad, what is better, what is worse, lastly, what is best, and what is worst.
This doesn't really answer the question, but it does reinforce the statement that humans are are inclined to pursue good and avoid evil. This may actually be all that there are to the concepts.
There is more insight in the preface to Part IV (note that Spinoza earlier states good and evil are synonymous with perfection and imperfection in a way):
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 (II. Def. vi.), 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 modes of thinking, or 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.
And in the definitions to Part IV:
Definitions
I. By good I mean that which we certainly know to be useful to us.
II. By evil I mean that which we certainly know to be a hindrance to us in the attainment of any good.
(Concerning these terms see the foregoing preface towards the end.)
Perhaps even more importantly we get the following, also in Part IV:
Prop. LXVIII. If men were born free, they would, so long as they remained free, form no conception of good and evil.
Proof.—I call free him who is led solely by reason ; he, therefore, who is born free, and who remains free, has only adequate ideas ; therefore (IV. lxiv. Coroll.) he has no conception of evil, or consequently (good and evil being correlative) of good. Q.E.D.
What I get from all of this, and other sections, is that your original question, Nusc, isn't answered by Spinoza
. He doesn't need to answer it. He simply defines good and evil as what people do search for or avoid, and not what they
should strive for. Good and evil are, as you mentioned, arbitrary human modes of thinking. There is no such thing as a true final cause, or a
why, for Spinoza. Final causes are mental constructions by imperfectly rational humans. God or Nature (Deus sive Natura) has no use for
why.
What Spinoza thinks we
should strive for is
freedom, or perfectly rational reasoned thought. Perfect reason is what defines God. By aiming for this perfection we bring ourselves closer to God or Nature. One criticism of Spinoza is that he doesn't really show
why we should prefer perfect rationality to irrational emotions such as love, for example. I don't think that he really explains this point. In Part V he does go on to explain [STRIKE]
how to search for freedom, but not
why.[/STRIKE] Edit: I lied. He talks about reason as a means to control and power, particularly in minimizing ones own emotions and becoming more godly, as God has no emotions. This still doesn't address the final cause issue of why one should want to be more godly. He does say that wanting to be godly is the only rational thing to do, and you can't do otherwise.
It has been suggested that Spinoza's personal life - his lack of a love life, his excommunication by his community and faith - heavily influenced his philosophy and drove him to idealize rationality over emotion. The lack of final causes in his philosophy, however, make it hard for him to show why we should prefer perfection over imperfection.
