Quoted from Wikipedia entry on Carl Jung (footnotes and links removed):
Views on the state
"Jung stressed the importance of individual rights in a person's relation to the state and society. He saw that the state was treated as 'a quasi-animate personality from whom everything is expected' but that this personality was 'only camouflage for those individuals who know how to manipulate it', and referred to the state as a form of slavery. He also thought that the state 'swallowed up [people's] religious forces',and therefore that the state had 'taken the place of God'—making it comparable to a religion in which 'state slavery is a form of worship'. Jung observed that 'stage acts of [the] state' are comparable to religious displays: 'Brass bands, flags, banners, parades and monster demonstrations are no different in principle from ecclesiastical processions, cannonades and fire to scare off demons'. From Jung's perspective, this replacement of God with the state in a mass society led to the dislocation of the religious drive and resulted in the same fanaticism of the church-states of the Dark Ages—wherein the more the state is 'worshipped', the more freedom and morality are suppressed; this ultimately leaves the individual psychically undeveloped with extreme feelings of marginalization."
The last part of this quotation can't be fully understood without understanding Jung's theory of the formation of individual personality. That's outlined in the cited article.