In "By the Waters of Babylon", what does John mean when he says, "it is better to lose one's life than one's spirit"?

John considers his spirit the essential part of him. It is a combination of his beliefs, values, and conscience. John is saying that it would be better to die than be untrue to your values and act against your beliefs. So, in order to obey what his spirit is telling him, he violates the laws of his people and visits the Place of the Gods. Even though this action is physically dangerous because of the Forest People and the fact that there may be something physically harmful in the place of the Gods, he believes he must obey his spirit which is telling him to go.