Do I need faith not to slump into nihilistic despair? Is life as tragic as it's being painted out to be by these people?
Tolstoy argues yes. Below is my attempt to explain his argument, since I think that is the best way to answer this question of yours.
Originally he thought the purpose of life was to experience happiness, by which he seems to mean sensual pleasure. Some people experience happiness from intellectual pursuits, and his argument still stands if that is included in the definition of happiness. At the time Tolstoy had his crisis, he had plenty of money, was an elite in his society, and had a very active social life. It was easy for him to obtain happiness. The problem was death.
All of us are going to die regardless of what we experience or do. From the perspective of a person's entire life, from birth to death, a person who rarely experiences happiness because of their circumstances is equivalent to a person whose life is regularly filled with happiness. Both still died, and both experience the same thing after death: nothing.
Today or tomorrow sickness and death will come (and they have already arrived) to those dear to me, and to myself, and nothing will remain other than the stench and the worms. Sooner or later my deeds, whatever they may have been, will be forgotten and will no longer exist. (pg 31)
That 'nothing' is why he considered life to be meaningless. The amount of happiness experienced does not change the ultimate outcome of our lives, and so trying to achieve that purpose is futile. The purpose of experiencing happiness is illusory. It is something that people who have not seen life from that broader perspective can do because they don't realize the futility of their actions, but once you have seen life from that broader perspective you cannot go back to living a futile life.
The delusion of the joys of life that had formerly stifled my fear of the dragon [death] no longer deceived me. No matter how many times I am told: you cannot understand the meaning of life, do not think about it but live, I cannot do so because I have already done it for too long. Now I cannot help seeing day and night chasing me and leading me to my death. This is all I can see because it is the only truth. All the rest is a lie. (pg 32)
The futility was reinforced by the fact that our ability to obtain happiness is heavily influenced by our birth (i.e., circumstances completely outside our control). Tolstoy had a 'good' birth, in that he had access to plenty of resources that could provide him with happiness. The average person in Feudal Russia had very little access to happiness and had plenty of suffering. Furthermore, accidental events can completely remove our ability to achieve happiness. Environmental disasters, disease, war, etc. can destroy our wealth, body, and brain and often these events can happen regardless of what we do. Thus, not only is achieving happiness irrelevant at the end of our lives but during our lives it is heavily based on chance and outside of our control.
Well, what about avoiding pain? If we have limited ability to maximize happiness, do we at least have control of avoiding pain? Yes, but through suicide. Since after death we experience nothing, no pleasure and no pain, then after death is the point of minimal pain. Since we can commit suicide at any time, even when we have limited physical capacity by not eating, we have far more control over our ability to minimize pain than to maximize happiness.
Tolstoy felt that there were four solutions people typically follow to address the meaningless of life (see Chapter 7):
- ignore it entirely or avoid ever being exposed to the possibility of realizing our futility in seeking happiness
- while knowing that the purpose of life is meaningless focus instead on the now, the immediate joy we can experience in any our actions
- commit suicide
- remain hopeless, depressed, and live the rest of your life that way
Tolstoy rejected 1 since he couldn't become ignorant.
There was nothing I could learn from them [the ignorant], for we can never cease knowing what we know (pg 45)
He rejected 2, what he considered a way of merely pretending to do option 1, because he couldn't:
I could not imitate these people, for not sharing their dullness of imagination I could not create it artificially in myself. (pg 46)
He rejected 3 because he wasn't strong enough, and thus remained with option 4:
People in this category know that death is preferable to life but, lacking the strength to act rationally and bring a quick end to the deception by killing themselves, they seem to wait for something. This is the escape of weakness, for if I know of something better and it is within my reach, then why not yield to it? (pg 46)
Note that I'm not saying he rationally chose to become depressed. Rather that he was already very troubled by the supposed purposelessness of life and tried, through reading the lives and ideas of many others, to determine the logical possibilities. These were the four options that he came up with.
Tolstoy further reflected and eventually came to the conclusion that the entire "purpose of life" question was problematic. This led to his solution that creating a connection to the eternal avoids the problem of death. If our lives are somehow eternal, then our actions have meaning (i.e., they have an effect regardless of when and how we die).
I had asked: what meaning has life beyond time, beyond space and beyond cause? And I was answering the question: 'What is the meaning of my life within time, space and cause?' The result was that after long and laboured thought I could only answer: none. (pg 52)
Whatever answer faith gives, regardless of which faith, or to whom the answers are given, such answers always give an infinite meaning to the finite existence of man; a meaning that is not destroyed by suffering, deprivation or death. (pg 54)
Although Tolstoy uses the term faith here, I have emphasized the idea of eternity because I think it fits better with his definition of faith:
Faith is a knowledge of the meaning of human life, the consequences of which is that man does not kill himself but lives. Faith is the force of life. If a man lives, then he must believe in something. If he did not believe that there was something he must live for he would not live. If he does not see and comprehend the illusion of the finite he will believe in the finite. If he does understand the illusion of the finite, he is bound to believe in the infinite. Without faith it is impossible to live. (pg 54)
His particular connection to the eternal was through Jesus Christ, but I don't think his argument in A Confession does much to explain why that particular connection is the best or preferred one. The strength of his argument is mainly in favor of the necessity of a connection to eternity.
Likewise, it's important to realize that although he became Christian he was harshly critical of the Christian church. And not just any one Church, but the whole of organized Christianity:
I first turned to believers from my own circle, to learned people, Orthodox theologian, elder monks, theologians of the newest types of Orthodoxy, and even to the so-called New Christians who taught salvation through faith in redemption. … I could not accept the faith of these people. I saw that what they took to be faith gave no explanation to the meaning of life but obscured it, and that they themselves did not profess their faith in response to the question of life, that had led me to faith, but for some other reasons which were alien to me. (pg 57)
Thus, his argument is not "Without Faith in Jesus, life is meaningless" but rather "only a connection to the infinite gives meaning to life."
How are his beliefs at this time not discarded as foolish?
Hopefully you can see that Tolstoy's argument is a general one, not dependent on any particular time and place. The purpose of obtaining happiness (seeking pleasure and avoiding pain) is still highly considered the purpose of life, and so his argument remains relevant. Another purpose could be sought out, but then we run into the problem of death again (i.e., the problem of finite actions). Living for one's family, living for self perfection, living for intellectual affairs and advancement of science, living for the development of humanity, and so on can all be considered using the same argument since the effects of all actions made in pursuit of those goals will eventually disappear. Those goal, actions, and effects are all finite in nature.
Why do we give it any credence? Why is he celebrated?
For a person who comes from a background where religious faith is already present to some degree then it can be reassuring that someone more wealthy, intelligent, and worldly successful reached a familiar conclusion. Thus, it's easy to celebrate his argument among circles that are already amenable to religious faith as necessary for life (even though he largely rejects the whole of organized religion).
For philosophers, his argument can be celebrated because it encourages people to reflect on the purpose of life, provides an example of the necessity of this reflection, and provides a step-by-step sequence of how he came to that point. His logic (elaborated far more in the book than what I included here) is a useful case study for why some people might accept nihilism and how to reject nihilism.
It is probably given credence though because, historically, most people don't use logic to make decisions but instead rely on supposedly obvious signs of credibility (e.g., worldly success and/or fame, intellectual prowess, authority, etc.) and then agree with whatever that person said. We didn't have the capacity or time to look into arguments with detail, use logic, think about the argument for ourselves, or relate it to our experiences and engage in reflection. Tolstoy was a very famous and successful author for his time, and his financial success, intellectual capacity, and skill with writing was well respected. This gave him credibility for his philosophical arguments. Is that a valid reason to have credibility? Maybe, but we often have difficulty gauging what makes a person credible or reliable, especially when we lack knowledge of the domain in which someone claims credibility.
I highly recommend you read Tolstoy's work, use it as a mirror to reflect upon purpose in your own life, and decide whether it is worthy of credence. My description here is biased, but so is Dr Peterson's, and the only way to get through that bias is to see the original for yourself.
Quotes are from the 1987 Penguin Classic translation by Jane Kentish title Leo Tolstoy: A Confession and other religious writings.