Shiva Kumar Srinivasan has a Ph.D. in English Literature and Psychoanalysis from the University of Wales at Cardiff. This review essay on Sigmund Freud's 'Group Psychology and the Analysis of the Ego' describes how an understanding of psychoanalysis can further the reader's ability to situate and intervene in the context of group dynamics. It lists the differences between individual and group psychology before describing the dangers of crowds and the contagion effect before setting out the structure and forms of identification between members in groups. The main argument in the essay is that groups should guard against regression to more primitive forms of organizational life that Freud characterized as crowds and herds that are subject to the contagion effect. In instances of such regression, groups will be able to repair themselves more effectively if they are psychoanalytically informed. That is why this review essay on Freudian psychoanalysis is aimed at not only analysts but to an audience of bankers, economists, and social scientists.

1. 1
REVIEW ESSAY
ON FREUDIAN PSYCHOANALYSIS AND GROUP PSYCHOLOGY
Sigmund Freud (1921, 1991). ‘Group Psychology and the Analysis of the Ego,’
Civilization, Society and Religion, translated by James Strachey, edited by Albert
Dickson (London: Penguin Books), Vol. 12, Penguin Freud Library, pp. 91-178.
INTRODUCTION
What is group psychology? Why should Sigmund Freud engage with the theory of
group psychology when psychoanalysts deal mainly with individual patients? What
furthermore are the differences between ‘individual psychology’ and ‘group
psychology?’ These are the important questions that Freud takes up in his study of
‘group psychology and the analysis of the ego.’ This text was first written in 1921and
appeared in Freud’s Collected Works in German in 1940. It was translated in 1922 and
was included in the Standard Edition in English in 1955. This is by no means the only
Freudian text on social entities that will be of interest to social theorists.1 Freud spent
considerable effort to situate individual psychology within, as the title of this
volume from the Penguin Freud Library puts it, on ‘civilization, society and
religion.’ The application of psychoanalysis in areas like anthropology, history, law,
religion, sociology, and the human sciences are drawn from texts like those collected
in this volume. What most of these areas lack is not only a theory of ‘agency,’ but
also a theory of the human subject. It is Freud’s endeavour therefore to provide a theory
of the subject for not only clinical work, but also for the human sciences as a whole.
It should be possible then to incorporate this text on group psychology within the
management curriculum given that theorists of organisational behaviour and human
resources are faced with the difficult task of relating ‘individual behaviour’ within
the context of ‘group dynamics.’ It is not surprising then that Freud starts by
1 For a detailed study of the relationship between psychoanalysis and social theory, see
Anthony Elliott (1992). Social Theory and Psychoanalysis in Transition: Self and Society from
Freud to Kristeva (Oxford: Blackwell). See also Herbert Marcuse (1970). Five Lectures:
Psychoanalysis, Politics, and Utopia, translated by Jeremy J. Shapiro and Shierry M. Weber
(London: The Penguin Press).

2. 2
differentiating between individual psychology and group psychology before
analysing the role played by the ego in mediating between individuals and groups.
INDIVIDUAL PSYCHOLOGY & GROUP PSYCHOLOGY
The first point that Freud makes is that individual psychology should not be
misunderstood as the behaviour of individuals in isolation. That is because the individual
is always accompanied by others who take on the roles of a model, a helper, an
opponent, and so on. This is not unlike the roles played by the different characters in
narratives that help the protagonist attain his goals in a literary text. Each of these
roles then represents a textual or narrative function. The inter-dependence between the
individual and those around him makes it difficult to define individual psychology as
the study of ‘isolated individuals.’ It is therefore important for Freud to ‘deconstruct’
the opposition between individual psychology and group psychology. When Freud
does this, the reader begins to realize that some of the attributes of group
psychology are internal to individual psychology (though that may not be apparent
in the beginning). The analytic distinction then between individual psychology and
group psychology is subject to the linguistic law of différance.2 Likewise, it is only
possible to define group psychology by invoking the psychology of the individual
by way of contrast. Freud therefore defines group psychology in this text as
‘concerned with the individual man as a member of a race, of a nation, of a caste, of a
profession, of an institution, or as a component part of a crowd of people who have
been organized into a group at some particular time for some definite purpose.’ For
psychoanalysts like Charles Rycroft, the main differences in contention in this
context are those between group psychology, group analysis, and group therapy.
The emphasis on group therapy is missing in Freud’s text because this is a clinical
innovation that is mainly associated with post-Freudian analysts and not with Freud
himself (given that group therapy will have more than two patients in a clinical
session whereas Freud only saw one patient at a time). Furthermore, an important
aspect of groups is the role played by the leader; the sense of mutual identification
amongst the members; the membership criteria that determine who is inside or
outside a group; and the imaginary function of the enemy in keeping the group
united.3
2 For a theoretical justification of such moves, see Jacques Derrida (1986). ‘Différance,’
Margins of Philosophy, translated by Alan Bass (Brighton: The Harvester Press), pp. 1-27.
3 See also Charles Rycroft (1968, 1995). ‘Group,’ A Critical Dictionary of Psychoanalysis
(London: Penguin Books), p. 66.

3. 3
CROWDS AND ‘THE CONTAGION EFFECT’
Before articulating his theory of groups, however, Freud looks into primitive models
like crowds and mobs to see if they have something to teach him about group
dynamics. He does this by reviewing the work of Gustav Le Bon, W. McDougall,
and W. Trotter. The three questions that Freud aims to address are the following:
What is a group? How does it affect individuals? How does it change individuals?
Freud begins with the analogy that individuals are like cells and the group is like a
body. While the body may be composed of cells, it is a holistic entity that is not
reducible to any particular cell. So, just as cells lose their individual identity in the
body, so do individuals within a group. Group behaviour is mostly determined then
by the unconscious of the collective, or the ‘group mind,’ rather than through the
deliberate conscious action of specific individuals. This makes individuals shed their
inhibitions and feel more powerful in a group. They begin to feel that they can
accomplish things which they would not be able to on their own. Members of a
group also begin to respond to the promptings of the collective mind without a
conscious awareness that they are doing so. A crowd or a mob is however not the
same as a well-organized group, but more akin to a spontaneous coming together of
individuals united by a common cause, complaint, or grievance. These spontaneous
groups are subject to the ‘contagion effect,’ as central bankers, like to point out. A
good instance of such a contagion is rumours that lead to a ‘run on a bank’ or a
financial institution. The task of the banking authorities in such cases is to ‘calm the
panic’ and restore normality lest the contagion effect lead to a collapse of the
banking system.4 During a contagion, affects and emotions flow freely from one
suggestible individual to another as though those present were in a state of
hypnosis. The members in a crowd will be less responsive to reasoned arguments in
favour of stability and become highly suggestible instead. The insights generated
through the study of how crowds and mobs behave during periods of contagion can
help us to build better groups from an organizational or institutional point of view
(lest they also become vulnerable to the contagion effect in a moment of regression).
That is why this Freudian text will be of interest to even professionals outside the
community of psychoanalysts be they bankers, managers, or experts on
organizational behaviour and human resources.
4 See, for instance, R. W. Hafer (2005). ‘Panic of 1907,’ The Federal Reserve System: An
Encyclopaedia (Westport, CT: Greenwood Press), pp. 293-295 and Gary B. Gorton (2012). ‘The
Panic of 2007-08,’ Misunderstanding Financial Crises:Why We Don’t See Them Coming (Oxford:
Oxford University Press), pp. 182-199. A recent accountof the attempt to ‘calm’ stakeholders
during a ‘financial panic’ is Ben S. Bernanke (2013). The Federal Reserve and the Financial
Crisis: Lectures by Ben S. Bernanke (Princeton and Oxford: Princeton University Press).

4. 4
STRUCTURE OF GROUPS
The examples of groups that Freud invokes in his text are the Church and the army;
he considers these to be ‘artificial groups.’ Groups are united either by an ideal or by
a leader. Not all groups have leaders. Freud also distinguishes between those which
have and those which do not have a leader. The libidinal ties between a leader and
the followers in a group are a consequence of identification. The study of groups
therefore gives Freud an opportunity to formulate a theory of identification. This theory
of identification is then applied in the context of the Church and the army. Though a
text like this might be of interest to a business school audience, it is important to
remember that Freud did not say anything about corporate groups at all. The reader can
however explore whether any of Freud’s insights will be useful to group formations
other than those that he explicitly mentions. The main reason for uniting a group
around an ideal or a leader is that it helps to reduce the number or intensity of
differences between members. It also helps to lower the levels of ambivalence that
characterise all human relationships. The presence of an ideal or a leader can increase
the stability of a group since it will then focus on what the members have in common
rather than focus on their internal disagreements. In the absence of a unifying ideal
or effective leadership, there will be an increase in the centrifugal forces that the
members of the group will be subject to. Such an increase in centrifugal forces will
not only induce some measure of instability in the group but also drive the members
apart. It is the mutual identification of members with each other and with the ideals
or the leadership that will determine whether a group can exist with a high level of
stability and pursue success in whatever realms it aspires to.
IDENTIFICATION IN GROUPS
The Freudian theory of identification is the best part of this text.5 Freud starts by
explaining the function of identification within the Oedipus complex before exploring the
libidinal ties that constitute the group dynamics for ‘artificial groups’ like the
Church and the army. The main point that Freud makes is that identification has
fundamental consequences for the ego of the subject; the ego is often transformed in the
act of identification. Likewise, the members of a group are transformed by identifying
with each other and with the ideals of the group. What the members of a group
share, then in common, is an ‘ego-ideal.’ Since all the members cannot know each
other in person, it is simply easier to identify with the ego-ideal; which, for all
practical purposes, is the same as the ‘group ideal.’ In the Church, for instance, the
group ideal is Christ and his teachings. In the army, it could be patriotism, or the
5 See Jean Laplanche and Jean-Bertrand Pontalis (1973, 1988). ‘Identification,’ TheLanguage of
Psychoanalysis, translated by Donald Nicholson-Smith, introduction by Daniel Lagache
(London: Karnac Books), pp. 205-208. See also Dylan Evans (1996, 1997). ‘Identification,’ An
Introductory Dictionary of Lacanian Psychoanalysis (London: Routledge), pp. 80-82.

5. 5
need to defend against or destroy the enemy. The task of the ego then is to identify
with the ego ideal; the failure to do so amongst members will lead to feelings of
guilt. Socializing new members into the ways of the group is tantamount then to
selling the group ideal. If the identification with the group ideal is intense, then the
artificial group is cohesive; if the identification is weak, then, the group will become
weak under stress and regress into primitive (i.e. ‘natural’ forms) like crowds, mobs,
herds, and hordes. Freud uses the term ‘artificial groups’ in the positive sense. A
artificial group is that which can resist the temptation to regress under stress to more
‘primitive, natural, and spontaneous’ forms that are subject to the ‘herd instinct and
the contagion effect’ (that characterize the stock markets and the banking sector
during financial crises) requiring intervention by stabilizers like Mark Carney.6
CONCLUSION
The Freudian theory of group formation then is articulated with an awareness of the
constant sense of danger that ‘regression’ to an earlier organizational form poses to
the success and durability of a group. Freud is also interested in the forms of
libidinal ties that constitute the libidinal economy of the group. That is why the question
of whether women are included in groups like the Church and the army is of interest
to the problem of group formation. Freud also analyses whether sexual relations are
permissible within groups and why celibacy is still important in the Catholic
Church. Freud also differentiates between heterosexual and homosexual ties within
groups. The main takeaway is that groups should only permit those forms of sexual
relations which will increase the cohesiveness of groups and discourage those that
will endanger it. And, finally, the invocation of a group ideal is not merely to keep
the group together. It also has consequences for the forms of behaviour that will be
deemed acceptable in a group. So, for instance, Christ is not just a group ideal; all
Christians are expected to be Christ-like in their conduct. When a group ideal fails to
hold a group together, then, there is a danger that the group will dissolve or fade
away. That is why a formal understanding of group dynamics that is informed by
Freudian psychoanalysis will make it possible to diagnose and repair, when
required, the structure of groups in order to make them function more effectively.
SHIVA KUMAR SRINIVASAN
6 See Robert J. Shiller (2012). ‘Policy Makers in Charge of Stabilizing the Economy,’ Finance
and the Good Society (Princeton and Oxford: Princeton University Press), pp. 111-118.