"The disguises are accomplished by shifting meanings and using exaggeration and minimization of bits of reality as a nidus for fantasy elaboration. The narcissistic personality is especially vulnerable to regression to damaged or defective self-concepts on the occasions of loss of those who have functioned as self-objects. When the individual is faced with such stress events as criticism, withdrawal of praise, or humiliation, the information involved may be denied, disavowed, negated, or shifted in meaning to prevent a reactive state of rage, depression, or shame."

(Jon Mardi Horowitz - ibid)

"The hazard is not simply guilt because ideals have not been met. Rather, any loss of a good and coherent self-feeling is associated with intensely experienced emotions such as shame and depression, plus an anguished sense of helplessness and disorientation. To prevent this state, the narcissistic personality slides the meanings of events in order to place the self in a better light.

What is good is labeled as being of the self (internalized) Those qualities that are undesirable are excluded from the self by denial of their existence, disavowal of related attitudes, externalization, and negation of recent self-expressions. Persons who function as accessories to the self may also be idealized by exaggeration of their attributes. Those who counter the self are depreciated; ambiguous attributions of blame and a tendency to self-righteous rage states are a conspicuous aspect of this pattern.

Such fluid shifts in meanings permit the narcissistic personality to maintain apparent logical consistency while minimizing evil or weakness and exaggerating innocence or control. As part of these maneuvers, the narcissistic personality may assume attitudes of contemptuous superiority toward others, emotional coldness, or even desperately charming approaches to idealized figures."

(Jon Mardi Horwitz, ibid)

Sigmund Freud (1856-1939) is credited with the promulgation of a first coherent theory of narcissism. He described transitions from subject-directed libido to object-directed libido through the intermediation and agency of the parents. To be healthy and functional, the transitions must be smooth and unperturbed. Neuroses are the results of perturbations.

Freud conceived of each stage as the default (or fallback) of the next one. Thus, if a child reaches out to his objects of desire and fails to attract their love and attention - it regresses to the previous, narcissistic, phase.

The first occurrence of narcissism in life is adaptive. It "trains" the child to love an object - his Self. It ensures gratification through the availability, predictability and permanence of his Self. But regressing, later in life, to "secondary narcissism" is mal-adaptive. It is an indication of failure to direct the libido to the "right" targets (to objects such as the child's parents).

If this pattern of regression persists and prevails, a "narcissistic neurosis" is formed. The narcissist stimulates his self habitually in order to derive pleasure and gratification. He prefers this mode of deriving gratification to others. He is emotionally "lazy" because he takes the "easy" route of resorting to his self and reinvesting his libidinal resources "in-house" rather than making an effort (and risking failure) to seek out libidinal objects other than his self. The narcissist prefers fantasyland to reality, grandiose self-conception to realistic appraisal, masturbation and sexual fantasies to mature adult sex, and daydreaming to real life achievements.

Carl Gustav Jung (1875-1961) had a mental picture of the psyche as a giant warehouse of archetypes (the conscious representations of adaptive behaviours). Fantasies are just a way of accessing these archetypes and releasing them. Almost ex definitio, Jungian psychology has no concept of regression.

Any reversion to earlier phases of mental life, to earlier coping strategies, to earlier choices - in other words, any default behaviour - is interpreted as simply the psyche's way of using yet another, hitherto untapped, adaptation strategy. Regressions are compensatory processes intended to enhance adaptation and not methods of obtaining or securing a steady flow of gratification.

Actually, there is little difference between Freud and his disciple turned-heretic, Jung. Their disagreement is over semantics. When libido investment in objects (esp. the Primary Object) fails to produce gratification, maladaptation results. This is dangerous. A default behaviour - secondary narcissism - is activated. This default is functional and adaptive and triggers adaptive behaviours. As a by-product, it secures gratification.

We are gratified when we are at peace with our environment. We are at peace when we exert reasonable control over our environment, i.e., when our behaviours are adaptive. The compensatory process has two results: enhanced adaptation and the inevitable gratification that follows enhanced adaptation.

Perhaps the more serious disagreement between Freud and Jung is with regards to introversion. Freud regards introversion as an instrument in the service of a pathology (introversion is indispensable to narcissism, as opposed to extroversion which is a necessary condition for libidinal object-orientation).