Acharya Prashant explains the teaching from the Ashtavakra Gita that a person is free if they consider themselves free and bound if they consider themselves bound. He compares this to Kabir Saheb's statement that victory and defeat are mental states. He emphasizes that both liberation and bondage are dualistic concepts existing within the mind. To seek liberation, one must maintain the idea of being in bondage; thus, both are mental identifications. Real freedom lies in transcending this duality entirely, where neither state holds any significance or power over the individual.