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In this lengthy study the author presents a theory of the formation of the self and discusses the role of symbol-formation and narcissism. He attempts to link his theory to clinical material relating to borderline and psychotic patients. The central thesis of the paper is that in psychosis there exists a deficit in the process of symbolization, which permits the retention of asymbolic elements in the psyche. These asymbolic aspects interfere with normal functioning of the self and with the acquisition of a capacity for the mastery of stress. Hautmann reviews Freud's comments on the development of symbolic systems and the development of Freud's thought on the relationship between the symbolic system and psychosis. Repression, repudiation, denial, and splitting of the ego are stages in the development of Freud's reflections on the specific psychotic defense. Hautmann emphasizes that the essential element in splitting is that the symbolic system has not been able to become organized; he also stresses that Freud thought of perception as an active process. He infers that the self organizes itself by forming a layer of thought processes which elaborates each given of psychical reality by inscription in a symbolic system. One of the functions of this symbolization is the organization of a within and a without, that is, the development of a dimensional aspect to the psychic apparatus. This can be linked to incorporation and expulsion and to affirmation and negation. In psychotics this demarcation of without and within fails. Hautmann introduces case material from borderline and prepsychotic patients. In such cases there are typical defects in symbolization, which may be transformed and corrected