I do not think I am going astray if I see the real value of the libido theory in the energic conception, and not in its sexual definition. Thanks to the former, we are in possession of a most valuable heuristic principle. We owe to the energic conception the possibility of dynamic ideas and relationships, which are of inestimable value for us in the chaos of the psychic world. The Freudians would be wrong not to listen to the voice of criticism, which reproaches our conception of libido with mysticism and inaccessibility. We deceived ourselves in believing that we could ever make the libido sexualis the bearer of the energic conception of the psychical life, and if many of Freud’s school still believe they possess a well-defined and almost complete conception of libido, they are not aware that this conception has been put to use far beyond the bounds of its sexual definition. The critics are right when they object to our theory of libido as explaining things which cannot belong to its sphere. It must be admitted that Freud’s school makes use of a conception of libido which passes beyond the bounds of its primary definition. Indeed, this must produce the impression that one is working with a mystical principle. The Problem of Libido in Dementia Præcox I have sought to show these infringements in a special work, “Wandlungen und Symbole der Libido,” and at the same time the necessity for creating a new conception of libido, which shall be in harmony with the energic conception. Freud himself was forced to a discussion of his original conception of libido when he tried to apply its energic point of view to a well-known case of dementia præcox—the so-called Schreber case. In this case, we had to deal, among other things, with that well-known problem in the psychology of dementia præcox, the loss of adaptation to reality, the peculiar phenomenon consisting in a special tendency of these patients to construct an inner world of phantasy of their own, surrendering for this purpose their adaptation to reality. As a part of the phenomenon, the lack of sociability or emotional rapport will be well known to you all, this representing a striking disturbance of the function of reality. Through considerable psychological study of these patients we discovered, that this lack of adaptation to reality is compensated by a progressive increase in the creation of phantasies. This goes so far that the dream-world is for the patient more real than external reality. The patient Schreber, described by Freud, found for this phenomenon an excellent figurative description in his delusion of the “end of the world.” His loss of reality is thus very concretely represented. The dynamic conception of this phenomenon is very clear. We say that the libido withdrew itself more and more from the external world, consequently entered the inner world, the world of phantasies, and had there to create, as a compensation for the lost external world,