This section is from the book "Dream Psychology", by Maurice Nigoll. Also available from Amazon: Dream psychology.
It is possible to look on some dreams as if they were compensatory. A man who experiences some dislocation of affairs that renders him despairing may find comfort in his dreams. What is lacking in reality, or what is lacking in waking consciousness, may find expression in dreaming consciousness. It may also find expression in the man's fantasies. For example, the Arctic explorers, in the midst of their hardships, when the deprivation of food was great, noticed that they had fantasies of, and dreamed of, certain articles of food, particularly carbohydrates. Now, carbohydrates—tarts, cakes, pastry.and soon—were lacking as facts of experience. This can be looked upon as a compensatory effect.
The poor peasant-girl who day-dreams of the prince who is to take her away to his castle, is also giving expression to something which is lacking in reality. The prince, and the cakes and pastry, would thus seem to be called into existence under similar circumstances. They are compensatory to reality. If we glance for a moment at the mutable influences that surround people's lives, it is evident that compensatory factors are continually at work. Social considerations demand the deliberate use of these factors, such as in the paying of compliments, or when we seek to comfort people even though we know that what we say is hardly true. One distorts reality slightly, with a definite object, all through the business of life, on the side of the compensatory factors. It is thought natural that a man should slightly exaggerate his income, his social status, his abilities, and so on. The persistence with which a man or wdman will cling to these slight distortions of reality might suggest that they are in some way essential to them. When a man describes what he has done in his career, his description is practically always coloured. The best side is emphasized. What was poor and mean is deliberately compensated by an extension of what was praiseworthy. This form of lying is not looked upon very seriously, just as the day-dreams of the peasant-girl are tolerated, because the total effect of this kind of compensation works contrary to the mood of despair. There is a powerful maohinery in us that is constantly engaged in this work of compensation. But the extent of its working has a limit, beyond which disaster is courted.
This machinery we can call the fantasy-building system, because all these slight distortions of reality are fantasies. Fantasy, then, in this sense has the definite value of compensation.
What connection has the fantasy-building system with the dream ? If we find that the dream is simply the fantasy-building system at work, then night-dreams and day-dreams must have a similar value. And if we say that a fantasy that compensates a deficiency in reality is the same as the fulfilment of a wish, then we might expect the dream to contain always a wish-fulfilment (Freud). But it may be asked why a compensatory fantasy should be the same as a wish-fulfilment. If a man goes to sleep in the middle of a swamp, with thunder and lightning overhead and a demon-chorus of jackals around him, and dreams that he is in his wife's arms at home, are we to look on this as a wish-fulfilment or as a compensatory effect ? It may be said that the one is contained in the other. Which is the greater ? If we take the view of wish-fulfilment, we give to the dream a narrow significance. We can say it is the fulfilment of a sexual wish. If we take the compensatory view, we can say that the dream in its primary aspect comes to counteract the distress of physical conditions, and permit an adjustment during sleep which is necessary to keep the balance of life ; and that the wish-fulfilment is a secondary aspect.
The period when fantasy is most active is during childhood. In what way is this compensatory ? It is possible to say that it is wish-fulfilment and nothing more. But it is also possible to say that it is wish-fulfilment, in a narrow sense ; and protective, in a wider sense. For the fantasy-building system surrounds the growing child like a dense cloud on whose outer margins fall the shocks of reality. As the child grows the thickness of this cloud diminishes. We might add here that the more sensitive an individual is, the more he requires compensatory fantasies if he is to exist in reality. Tough minds do not require this compensation in the same degree.
The main difference between the two views can be expressed briefly. The wish-fulfilment theory of Freud sees in the fantasy (and in the dream) the gratification of a wish that is not to be fulfilled in reality. The compensatory theory sees in the fantasy an attempt to provide that which is lacking in reality, and it is protective in meaning. That is taking a teleological view. Thus, a woman whose husband is reported to be missing at the front, and who, in spite of all facts of the case pointing to his death, constructs an elaborate theory that he is alive, can be regarded from two points of view. Her fantasy can be looked upon as the fulfilment of a wish, and this from the Freudian standpoint would, I suppose, spring from a sexual source. Or we can say that her fantasy is the outcome of a compensatory system in her psyche whose object is protective. It protects her, perhaps, from insanity.
But a larger view still may be taken of fantasy. In the unattractive peasant-girl's fantasy of the prince we can see, besides effects which are compensatory to her deplorable surroundings, an impulse that is valuable to her. As a result of the beautiful picture which her fantasy paints she might possibly be led to improve herself. It might act as a bait.
The fantasy that is common to poor people is based on society. The prince, the earl, and the lord are symbols of what they consider to be a better life. The poor—and others—work through these symbols. A society that contains earls and lords will be stable just for so long as earls and lords have a symbolical value and stand for supreme factors in the fantasies of the mass. When the early Pilgrim Fathers sought to throw off this fantasy, they went to America. Their descendants are still aware of this fantasy, but it is more in the nature of an interesting curiosity to them rather than a serious motive. The fantasy that has become serious is that of riches in which the millionaire is the supreme symbol. It is through this symbol that the American people work. In England, nowadays, people work through both the symbol of the lord and of the millionaire. One might be tempted to say that in France a very powerful symbol is that of the woman ; to the Russian people the aristocratic symbol in its purest form was until recently effective. But over the whole West, the symbol of the machine is potent.
Now the value of all these symbols round which fantasy works lies in the fact that they furnish the means through which the activities of the people are called into play and progress is made. They galvanize the people, and hold the social fabric together. If you could take away, by some magical process, all value from the symbol of the lord and the symbol of money, what would happen to the people of England ? To some people it would make no difference. But to others it would render life totally meaningless, and they would cease to work. In the case of the peasant-girl, if we took away her fantasy of the prince and did not replace it by any other fantasy, we would be doing her a tremendous injury. For we would be taking away the means whereby at that age progress is possible to her. If we could replace that fantasy by one that was religious—and this is problematical—then she would still have the means of progress, but along a different path. It is impossible to over-estimate the danger of destroying an individual's fantasies.
It must be recognized that there are fantasies within fantasies. In the case of the Arctic explorers, their fantasy about carbohydrates would have led them home if it had been the only fantasy. But it was overshadowed by the greater fantasy of discovering the pole.
 
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