Narcissism represents the psychological dimension of this dependence. Notwithstanding his occasional illusions of omnipotence, the narcissist depends on others to validate his self-esteem. He cannot live without an admiring audience. His apparent freedom from family ties and institutional constraints does not free him to stand alone or to glory in his individuality. On the contrary, it contributes to his insecurity, which he can overcome only by seeing his "grandiose self" reflected in the attentions of others, or by attaching himself to those who radiate celebrity, power, and charisma. For the narcissist, the world is a mirror, whereas the rugged individualist saw it as am empty wilderness to be shaped by his own design.The applications of this to social networked seem pretty self-evident. The empty profile page provides the illusion of providing that "empty wilderness" to conquer, but that is just the alibi for the real function of social networks, which is to gratify our bottomless need to be validated in as close to real time as possible. Clearly Facebook and Twitter serve to meet that need, and what's more, it taps into the latent narcissism of all its users, rendering self-involvement even more socially acceptable. It's now a perfectly plausible and respectable basis for a business model.
In general, The Culture of Narcissism is a bit cranky and dated, and a bit too much of a jeremiad to be persuasive; its chief virtue is to reference Richard Sennett's far more comprehensive and convincing The Fall of Public Man, which charts the disappearance of the public sphere and speculates about what exactly caused it to vanish. The gist of Sennett's argument is that (perhaps for reasons that Habermas articulates in The Structural Transformation of the Public Sphere) society was once such that we maintained public and private selves: We donned a public persona, guided by rules of public conduct, when we sought to contribute to society, and in private we had an intimate self appropriate for family life. The two were only tangentially related, and neither was considered the absolutely authentic, real self. With the rules of civilization clearly in place, public discourse was civil and impersonal, and therefore far more objective and constructive, a place for "rational-critical debate" --- the sort of thing Habermas celebrates.
But thanks to the individualism fomented by the rise of capitalism prompted a growing fascination with authenticity, "realism" in the novelistic sense, depth psychology, and the all-consuming importance of an integral identity that we establish in our own minds through our deeds and public behavior. (The roots of this can be glimpsed in the 18th century cult of sensibility and then romanticism. In those movements was the advent of studied spontaneity. The 18th century had vestiges of a theatricalized public sphere that is annihilated by a new emphasis on authentic personality -- one must represent rather than present emotion, so all public behavior is at a remove from the new standard of authenticity. Anxiety, and vulnerability to marketing campaigns, ensues.) Gradually we started to conceive as the public sphere as a place to establish our identity; it became a mirror rather than a realm for discourse and the shared social construction of reality. This makes social interaction difficult, since our whole personality is at stake, at all times, with all people we encounter. Consequently, convenience becomes synonymous with avoiding interpersonal contact (self-service begins in earnest). And we fall prey to "passive participation," or the impulse to vicariousness, which allows us to partake in society, now reconceived as a kind of pageant of self, but without the vulnerability. Hence deliberation and conversation are out; marketing and celebritization are in. And the next thing you know, there are tattoo parlors on Main Street.
Facebook and Twitter would seem to complete the erosion of the wall between public and private selves, offering us the technology to broadcast every moment of our private lives as if the world was nothing but an audience waiting for updates, or a canvas onto which to paint our ever-evolving self-concept. It moves us from vicariousness to a more direct kind of self-display, because the filter of the internet shields us from the rejection incumbent with social participation (aka "social anxiety"). I imagine, though, that apologists for the technologies view the matter in precisely the opposite way, regarding the space of social networking as a rebirth of the public sphere, where no identity represented should be regarded as authentic but as evidence of free play and an experimental testing of possibilities for the purposes of our collective edification. But I don't think that holds up: Most people would regard having multiple profiles on the same social networking site as sneaky, and a fictitious profile not as a expression of creativity but a pack of lies. Social networks seem to function as a more manageable substitute for actual presence in relationships, you get the upside of validation of your "true self" without the hassle of actual reciprocity. What distinguishes social networks from the blogosphere generally is that they are defined specifically by their not being forums for the exploration and debate of ideas. The prevailing purpose is to display yourself to your best advantage and "stay in touch" with people with whom it would otherwise take effort to remain in touch with.