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"We can postulate that there must be diseases founded on a conflict between ego and super-ego. Analysis gives us the right to infer that melancholia is the model of this group, and then we should put in a claim for the name of "narcissistic psychoneuroses" for these disorders."
Neurosis is the result of a conflict between the ego and its id, whereas psychosis is the analogous outcome of a similar disturbance in the relation between the ego and its environment (outer world).