The last few years witnessed a worrying rise in populist and often demagogue political parties and movements. There are many different causes for the rise of populism, but a common feature is fundamental change in the mental representations of some voters about the political domain – how people think about politics. Explaining the causes and consequences of this mental re-orientation is an important task for applied social psychology, and calls for a new, multi-method approach to document the shifting perceptions of voters. This chapter discusses the concept of collective narcissism, emphasizing the need for positive group identity and advocating an illusory sense of collective greatness as a key feature in the rise of anti-liberalism in a number of countries. These processes will be illustrated through the recent history of Hungary, which has emerged as a prime exponent of illiberalism in Europe. The paper will discuss the role of historical adversity in the rise of collective narcissism, and data from national surveys and the analysis of linguistic narratives will be presented documenting how populist government propaganda can exploit the need for positive identity. The role of such multi-method approaches to understanding large-scale political processes such as the rise of illiberalism will be considered as an important task for applied social psychology.