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This is a translation of a paper read by the author before the International Congress of Psychology at Oxford, on July 31, 1923. Psycho-analysis has shown that thinking in early childhood is influenced by instinct. Laying stress on the importance of the oral stage of infantile development, Abraham points out that to the child at this stage the outside world consists of objects which he wishes to incorporate in himself, the ego being more important than the object world. This is simply a matter of pleasure and pain. In adults consciousness moderates instinctual life. when two objects excite feelings of pleasure or pain in the child's mind he identifies them. As an example the case of a child is quoted who identifies a hot stove with a biting dog. Analogous thought processes are found among primitive races, and this primitive form of thinking persists in myths, fairy tales, and dreams. As the child grows older he naturally becomes conscious of the imaginary character of this process of thinking by identification. The gradual establishment of differentiation in thinking is motivated by the child's narcissism. The common identification of parents with animals is analogous to the animal-totemism found in primitive races. The later desire to possess and master the object includes a tendency to preserve and protect it, and paves the way to adaptation of thought to reality. At this stage narcissism is still paramount and the child invests his desires and thoughts with unlimited omnipotence. These ideas of omnipotence subsequently become displaced on to the idea of authority which is represented in the father or God. Phantasy is an important source of gratification to the child, logical thinking gradually replacing this pleasure-giving form of play. In conclusion, the author emphasises the importance of infantile instincts in the evolution of thought. Instincts are earlier than thought in the evolution of the individual and the race. It is therefore impossib