This chapter discusses which problem of modern philosophy Hegel and F.W.J. Schelling claim to have solved with their formula "the identity of identity and non-identity". It also discusses the stages through which Schelling's thinking, and following him that of Hegel, progressed, until he eventually reached his mature position, and which of the insights of his predecessors he incorporated into that position. It connects all the strands to bring out clearly the basic structure of Schelling's mature Philosophy of Identity. The chapter describes the reasons that eventually made Schelling unwilling to associate himself with the interpretation of his position his friend Hegel proposed. Plato's discussion of the world-soul and Immanuel Kant's concept of an organism were equally influential models for Schelling's theory of absolute spirit. Schelling didn't yet realize that Kant really took "being-at-the-same-time-cause-and-effect of itself" to be an idea, not a category.