A couple of years after Beyond the Pleasure Principle, Freud wrote Future of an Illusion to clarify why so many people believe in God and why this is a problem for society. All through the book he's guided along by a clever imaginary critic questioning him at every turn to ensure he presents a solid argument against religion. He has no concerns with the book harming people by suggesting God is a hoax because those with unshakable faith will remain steadfast, but he is briefly concerned that people will write off all his theories, and all of psychoanalysis, because of his atheism. It's funny that he didn’t at all foresee that people might instead write him off for his perceived obsession with sex. His atheism didn't become as commonly known.
First, what does he mean by illusion. An illusion isn't an error; it's something that could be possible but probably isn't. Primarily it's a belief based on what we wish to be true, not what is true. A girl might believe that one day a prince will carry her off. It's actually possible, but highly unlikely. As a child, it's a harmless illusion, but as a middle-aged woman, the illusion can keep her from a fulfilling life. We approach religion in the same way. It's something many people really want to be true and will defend to the death, but, according to Freud, it's keeping us from a more fulfilling, authentic life. The belief in God is often an appeal to consequence: If God exists he'll take care of us. We want Him to take care of us, therefore, God exists. Why do we fall for this?
We believe because we're insecure.
As children mature, they often go through a neurosis of obsessions and compulsions as they first discover that some of their desires must be repressed. This creates anxiety. Most people get over this neurosis naturally as they age. For Freud it follows that, “Religion would thus be the universal obsessional neurosis of humanity…. it is to be supposed that a turning-away from religion is bound to occur with the fatal inevitability of a process of growth, and that we find ourselves at this very juncture in the middle of that phase of development (ch8). If we could only grow up already. But there's another problem...
We also tend to believe we need religion to keep society in control.
"One thus gets an impression that civilization is something which was imposed on a resisting majority by a minority which understood how to obtain possession of the means to power and coercion, [which is fine so long as] these leaders are persons who possess superior insight into the necessities of life and who have risen to the height of mastering their own instinctual wishes" (ch1).
But Freud insists we can be good without God because it’s rational to be good. Harming others will bring harm back to us. If we want to live safely, we need to agree to not hurt each other, not selflessly, but for entirely egoistic reasons. “Insecurity of life, which is an equal danger for everyone, now unites men into a society which prohibits the individual from killing and reserves to itself the right to communal killing of anyone who violates the prohibition.”
BUT, Freud also adds that our, “purely reasonable motives can effect little against passionate impulsions” (ch8).
But he wonders if our passions override reason because of religious indoctrination and an unnecessary repression of sexual thoughts: “So long as a person’s early years are influenced not only by a sexual inhibition of thought but also by a religious inhibition… we cannot really tell what in fact he is like....Here we are justified in having a hope for the future – that perhaps there is a treasure to be dug up capable of enriching civilization and that it is worth making the experiment of an irreligious education” (ch9).
He was writing during prohibition in the US, and saw that taking away narcotics makes the longing for them more intense. This would happen with religion too, so it's “senseless to begin by trying to do away with religion by force and at a single blow.” The neurotic need their intoxicants to cope.
“But surely infantilism is destined to be surmounted. Men cannot remain children for ever; they must in the end go out into ‘hostile life’. We may call this ‘education to reality’. Need I confess to you that the sole purpose of my book is to point out the necessity for this forward step?” (ch9)
Why not believe?
The problem with religious illusion is that it's incapable of correction. We're not allowed to question it or fix it or alter it. It must be kept as it always was even when that clearly doesn't work. Rational theories, on the other hand, can be questioned and altered. The intellect sets itself the same aims as religion “namely the love of man and the decrease of suffering.”
“Since we are prepared to renounce a good part of our infantile wishes, we can bear it if a few of our expectations turn out to be illusions. Freud claims that “civilization runs a greater risk if we maintain our present attitude to religion than if we give it up.” (ch.7) There's no evidence that religion helps society, so we should try something else.
“It has ruled human society for many thousands of years and has had time to show what it can achieve. If it had succeeded in making the majority of mankind happy, in comforting them, in reconciling them to life… no one would dream of attempting to alter the existing conditions. But what do we see instead? We see than an appallingly large number of people are dissatisfied with civilization and unhappy in it, and feel it as a yoke which must be shaken off....It is doubtful whether men were in general happier at a time when religious doctrines held unrestricted sway; more moral they certainly were not. (Ch.7)
Since the discovery of mirror neurons, we can prove that people are empathetic. When someone is hurt, it hurts observers too. So it's not just for egoistic gain that we're nice to one another, but for our own emotional health as well. We don't need dad watching over our shoulder any more.