Joseph Campbell (1904-1987) offered sweeping views of the human condition and the history of humanity. As a point of reference, he drew heavily on Carl Gustav Jung (1875-1961) who drew on an encyclopedic wealth of information drawn from hundreds of international sources as well as from his research in psychology and especially on dreams.
The problem one always encounters with "sweeping views" is that they are grounded on enormous generalization that can be followed by people who drill down on specifics and find the generalizations don't always hold. That's a generic problem with "big histories" when crafted by historians. When it comes to a psychologist like Campbell telling us what happened "around 2000 BC," we have the added problem of someone speculating about the past with very little real understanding of sources or scholarship about the past. Campbell arrived at many of his ideas through something of a reverse engineering: this is how I view humanity and its place in the world, therefore, this is the way the past must have unfolded.
The Middle Kingdom fragment, now called "Dispute between a man and his Ba or The Debate Between a Man and his Soul," can be translated differently. Campbell was apparently relying on (and slightly changed) a translation from a German text, which was a translation of the papyrus fragment.
While an important document, this is a fragmentary isolate. Campbell uses it as his evidence for a change sweeping a vast region - beyond Egypt. This is typical of what Campbell does: he uses a strand of evidence, framed in a way that suits him, and then he uses it to generalize in the broadest terms he can imagine. But "imagine" is not proof. Campbell was a profoundly important thinker, and his imaginings have carried weight for many, but we must understand the limits of one person's imaginings as we seek more information. You ask, "is this theory still accepted?" I am sure it is among those who follow Campbell, just as it is and always has been viewed with skepticism among those who do not.
The following is an excerpt on Campbell and Jung from my Introduction to Folklore:
The popularity of one approach among non-folklorists warrants a digression. In the last part of the twentieth century, Joseph Campbell (1904-1987) created a great deal of interest in mythology and folklore with a series of publications on the subject. This was followed by a 1980s series of television interviews, which propelled Campbell to popularity, but not necessarily with all folklorists. To a certain extent, Campbell was relying on an older approach that Carl Gustav Jung (1875-1961) developed. Jung was a Swiss psychologist who studied with Sigmund Freud (1856-1939) but later broke with his mentor’s teachings to form his own approach to the study of the human mind. Jung developed the idea of the collective unconscious, maintaining in almost spiritual terms that all of humanity is linked by archetypes that existed in an unconscious common denominator. Ultimately, Jung implied that certain themes are woven into the fabric of the universe. According to Jung, all of humanity shared a symbolic vocabulary which manifests in dreams, mythology, folklore, and literature.
Jungian psychology was extremely popular during the upheavals of the 1960s when people looked for mystical explanations of life to unify all existence. Despite the faddish qualities of the late twentieth-century consumption of Jungian ideas, it is easy to regard Jung as an exceptional thinker with an extraordinary background of diverse reading. Campbell borrowed heavily from Jung, presenting many of these ideas in an easily consumable package that, in its turn, became something of a fad during the 1980s. Campbell drew not only on Jung, but also on Otto Rank’s 1932 publication, The Myth of the Birth of the Hero.
There are clearly many good ideas in this literature, but there are problems with the approach of Campbell, Jung, and Rank from the point of view of folklore studies. The first is that they tend to present the concept of tale types in mythology and folklore as though it were a new discovery. In other words, they ignore the highly developed bibliography that the discipline of folklore offers. The second, more serious problem is that this line scholarship makes no distinction between the core of a story and its culturally specific or narrator-specific variants and variations. The Jungian-Campbell approach treats any variant of a story as an expression of the collective unconscious, regardless of whether its form is the product of an individual storyteller’s idiosyncrasies or of the cultural predilections of a region made irrelevant by traveling to the next valley. And with this process, all the other variants are ignored, including ones that may contradict the initial observation. This does not mean that there are no valuable insights in the work of Jung and Campbell. There are, of course, but folklorists regard their approach as removed from their own discipline and flawed, to a certain extent.
Dundes presented a similar critique of Freudian-based psychoanalysis of folktales. In his The Study of Folklore (1965), he wrote that “the analysis is usually based upon only one version…To comparative folklorists who are accustomed to examining hundreds of versions of a folktale or folksong before arriving at even a tentative conclusion, this apparent cavalier approach to folklore goes very much against the grain. How does the analyst know, for example, whether or not the particular version he is using is typical and representative.” (107) Dundes also pointed out that often the “variant” presented by the psychological analysis is from “a children’s literature anthology, rather than directly from oral tradition.”