The terms externalization and internalization refer to a specific psychic modality of externalizing and internalizing the object. In general, externalization and internalization do not bear on aspects of the object, but rather on the relationships and conflicts that are inherent in the object and that it maintains with other objects. Therefore, if a given aspect of the object is internalized or externalized, a relationship is internalized or externalized. In "Analysis Terminable and Interminable" (1937c), Freud noted that "the ego grows accustomed to removing the scene of the fight from outside to within and to mastering the internal danger before it has become an external one" (p. 235). Freud was describing the ego's capacity for internalization, but was adopting a phylogenetic perspective: "[I]n the course of man's development from a primitive state to a civilized one his aggressiveness undergoes a very considerable degree of internalization or turning inwards; if so, his internal conflicts would certainly be the proper equivalent for the external struggles which have then ceased" (p. 244). His essential concern here was to argue for the dualism of instincts and to suggest that the death drive is equal in importance to Eros.
It was Anna Freud who introduced the clinical perspective in Normality and Pathology in Childhood, Assessments of Development (1965/1980). In evaluating pathology in terms of the type of anxiety and conflict experienced by the child, she distinguished internalized external conflicts, which correspond to anxieties linked to fear of object-loss and feelings of guilt, from conflict she described as "truly internal" (p. 133). The latter derives from the relationship between the id and the ego and their conflicting aims. According to her, only analysis can give access to this type of conflict.
See also: Character neurosis; Group psychotherapies; Identification; Internal object; Word-presentation.
Freud, Anna. (1980). Normality and pathology in childhood, assessments of development. New York: International Universities Press. (Original work published 1965)
Freud, Sigmund. (1937c). Analysis terminable and interminable. SE, 23: 209-53.