He says that there are actually three states of man . The first is the natural state where there is no inclination towards God and also no feeling of condemnation. Life just ticks along, trying to be good, accumulating knowledge, friends and wealth, without any thought of a greater purpose or any worry of sin.
I.5. From the same ignorance of himself and God, there may sometimes arise, in the natural man, a kind of joy, in congratulating himself upon his own wisdom and goodness: And what the world calls joy, he may often possess. He may have pleasure in various kinds; either in gratifying the desires of the flesh, or the desire of the eye, or the pride of life; particularly if he has large possessions; if he enjoy an affluent fortune; then he may “clothe” himself “in purple and fine linen, and fare sumptuously every day.” And so long as he thus doeth well unto himself, men will doubtless speak good of him. They will say, “He is a happy man.” For, indeed, this is the sum of worldly happiness; to dress, and visit, and talk, and eat, and drink, and rise up to play.
6. It in not surprising, if one in such circumstances as these, dosed with the opiates of flattery and sin, should imagine, among his other waking dreams, that he walks in great liberty. How easily may he persuade himself, that he is at liberty from all vulgar errors, and from the prejudice of education; judging exactly right, and keeping clear of all extremes. “I am free,” may he say, “from all the enthusiasm of weak and narrow souls; from superstition, the disease of fools and cowards, always righteous over much; and from bigotry, continually incident to those who have not a free and generous way of thinking.” And too sure it is, that he is altogether free from the “wisdom which cometh from above,” from holiness, from the religion of the heart, from the whole mind which was in Christ.
The second state is the legal state where the person has become aware of sin within them and has the desire to change, but can’t actually do anything about it. This, Wesley says, is the person who is described in Romans 7
II.9. I now see both the spiritual nature of the law; and my own carnal, devilish heart “sold under sin,” totally enslaved: (Like slave bought with money, who were absolutely at their master’s disposal:) “For that which I do, I allow not; for what I would, I do not, but what I hate, that I do:” (Verse 15) Such is the bondage under which I groan; such the tyranny of my hard master. “To will is present with me, but how to perform that which is good I find not. For the good that I would, I do not; but the evil which I would not, that I do:” (Verses 18, 19) “I find a law,” an inward constraining power, “that when I would do good, evil is present with me. For I delight in” or consent to “the law of God, after the inward man:” (Verses 21, 22)
And the third Wesley describes as evangelical, although I guess adopted would also be apt. Recgnising the humble need for the mercy and saving grace of God, the person is adopted into God’s family, free from fear of God and from the condemnation which comes in the legal state, and awakened to yearn for the wonderful fulfillment of creation and the transforming of God’s Spirit.
III.4. Here end both the guilt and power of sin. He can now say, “I am crucified with Christ: Nevertheless I live; yet not I but Christ liveth in me: And the life which I now live in the flesh,” (even in this mortal body,) “I live by faith in the Son of God, who loved me, and gave himself for me.” Here end remorse, and sorrow of heart, and the anguish of a wounded spirit. “God turneth his heaviness into joy.” He made sore, and now his hands bind up. Here ends also that bondage unto fear; for “his heart standeth fast, believing in the Lord.” He cannot fear any longer the wrath of God; for he knows it is now turned away from him, and looks upon Him no more as an angry Judge, but as a loving Father. He cannot fear the devil, knowing he has “no power, except it be given him from above.” He fears not hell; being an heir of the kingdom of heaven: Consequently, he has no fear of death; by reason whereof he was in time past, for so many years, “subject to bondage.” Rather, knowing that “if the earthly house of this tabernacle be dissolved, he hath a building of God, a house not made with hands, eternal in the heavens; he groaneth earnestly, desiring to be clothed upon with that house which is from heaven.” He groans to shake off this house of earth, that “mortality” may be “swallowed up of life;” knowing that God “hath wrought him for the self-same thing; who hath also given him the earnest of his Spirit.”
The whole thing is worth reading.