Kesey returns from jail, but there is no fanfare at The Warehouse: everybody simply keeps doing whatever they were doing before he arrived. He makes some small adjustment to the stereo, and "now everything is under control and the fine tuning begins." Wolfe sees Kesey greet his wife and children (whom he didn't even know existed), as well as Mountain Girl's young baby. Then he starts talking about what it was like being in jail.
Kesey is decidedly nonchalant about the whole experience. He talks about how he learned the cops' language and their numbering system for specific crimes, and carried on conversations with them because that was what they liked to do. This is the cops' game, according to Kesey. It is meant to make you sympathize with their point of view - that everyone is just playing cops-and-robbers, and that it's nothing personal. He relates the story of how he saw a child fall out of a window and hit the ground, but instead of helping care for the child or alerting a policeman to call an ambulance, Kesey simply walked away because he was afraid he might be recognized and caught. Wolfe suddenly realizes that he himself is sympathizing with Kesey's story, feeling that "that's what the cops-and-robbers game does to you."
Two guys come to visit Kesey, one a newspaper reporter for the Haight-Ashbury newspaper The Oracle. Before the reporter begins the interview, he tries to convince Kesey to refrain from his new message that encourages people to stop taking LSD. The reporter tells Kesey that thousands of new people are beginning to take the drug and "open[ing] doors in their minds." According to the reporter, what is needed is not a new path, but rather a movement to institutionalize these groups into a religion so that drugs like marijuana and LSD can be used as sacraments and protected under the Constitution.
Kesey, however, rejects this line of thinking. He says that it is all well and good for some to help people open these doors in their minds, but that he is a kind of prophet for the movement, trailblazing the next phase. He tells the reporter about an experience that he had in Mexico: after taking LSD and reading the I Ching, he stepped out into a lightning storm and felt that the electricity had formed a suit around him. This was a new state of being, he says, that he feels he must pronounce to people. Wolfe realizes that what is happening in this abandoned warehouse is similar to ancient religious movements and the revelations handed down to the ancient prophets.
Wolfe then begins to recount Kesey's story and how he ended up becoming the leader of the Merry Pranksters. Kesey receives a scholarship to study creative writing at Stanford University and moves into a small artists' commune near the university called Perry Lane. His father was a prosperous farmer in Oregon, and Kesey was an All-American athlete at the University of Oregon before coming to Stanford. In the commune he and his wife become involved in the intellectual scene on the campus, discussing literature and psychology with the group of students who live there.
One student, Vic Lovell, gets Kesey interested in psychology and Freud. He and Kesey decide to volunteer at a local mental health hospital testing drug trials. The drugs they are taking are forms of LSD. The tests are being conducted to try and help war veterans overcome their mental disabilities, and Kesey becomes aware of the mind-altering states created by the drugs. The group at Perry Lane begins to revolve around Kesey and the drugs that he orders from Texas farms. They find new ways to ingest the drug: powders, pills, and even soup.
Kesey takes a job working nights at the mental hospital and begins to write his novel, One Flew Over the Cuckoo's Nest. The novel is about a convict who pretends to be crazy in order to enter a mental hospital and avoid manual labor. The main character, Randle McMurphy, instead instigates the lunatics in the asylum to take action against the "System" and the "Control" of the hospital: a metaphor for the kind of activities that Kesey and the Perry Lane group are participating in. The novel gets rave reviews in the national press and quickly becomes a bestseller, thus validating the group's drug experiments.
After moving back to Oregon to complete his second novel, Sometimes a Great Notion, about an Oregon logging worker who bucks the system of logging unions, Kesey moves back to Perry Lane, where he meets Neil Cassady and begins to attract some of the leading figures of what would soon become the West Coast hippie movement: Larry McMurtry, Richard Alpert, and Jerry Garcia, among others. The group continues to experiment with drugs, and soon moves into a house that Kesey buys in La Honda, California.
These two chapters begin to illuminate the figure of Ken Kesey: who he was, and his plans for the future. During a brief encounter with a local reporter, Kesey elaborates on his plan for the Acid Test, the movement he told the San Francisco police that he was instigating to move people away from drugs. But as he talks to the reporter, we begin to learn that the plan is no mere anti-drug speech. Instead, Kesey's idea for "Acid Graduation," as he calls it, involves moving people beyond drug use into the next phase of enlightenment and illumination. The reporter tries to convince Kesey that this is a bad idea and that people need to keep taking acid, but Kesey wants to keep himself in the mode of a prophet, announcing the next great wave of awakening that will overtake the community. Although the specifics of this Acid Graduation are still vague, Wolfe begins to see that Kesey's mind works on a very different level than the rest of the world.
This altered level of consciousness is illuminated by Wolfe in the next chapter, "What Do You Think of My Buddha?" Wolfe begins to recount Kesey's history from his days as an Oregon farm boy to his role as the leader of a new experimental commune based on drug use and intellectualism. This chapter is unique in the book (up to this point, at least), as Wolfe begins to immerse the reader into Kesey's consciousness, attempting through words to let the reader see the frenzied and chaotic nature of the LSD-addled state that the Merry Pranksters live in. Wolfe's prose is choppy, his sentences often ending and beginning with no apparent rhyme or reason behind their structure.
In one important passage, Wolfe attempts to simulate Kesey's experience of being on LSD. He describes a heightened awareness of everything that is happening, and the realization that multiple levels of reality exist all at once in the ceiling above him. The narration is disorienting and confusing, but for the person under the influence of drugs, a new state of being has opened up. The members of Perry Lane begin to read and discuss some of the works on these mind-altering substances, including Aldous Huxley's The Doors of Perception, which argues that newborn children perceive the world in a heightened state until the conformities of society begin to restrict them. LSD and other such drugs, Huxley says, re-open that world of heightened sensitivity to reality.
In this chapter we begin to see Kesey's plans played out in the larger narrative of his life. Wolfe identifies Kesey as the figurehead of a new American mythology, and Kesey himself identifies this new mythology not in terms of gods or monsters, as the ancient civilizations did, but with comic book superheroes. These, he says, are the true American myths, and the suburbanized America that Kesey grew up in is the American fantasyland. Kesey shows himself to be a true descendant of the Beat Generation: he rejects the narrative of the American dream, the idea of the middle class and prosperity, in order to create a new kind of American myth that combats such notions of conformity. Kesey at first believes that such a goal can be accomplished through art, but even art seems to have its limits - especially when the senior members of the Perry Lane commune push against his drug use. Instead, Kesey overtakes them as the leaders of the commune and begins a new experiment for a new kind of life built on mind-altering drugs.