There is an interesting article by Thomas S. Szasz in the current issue of Liberty on mental illness.
Deirdre McCloskey — the Tinbergen Distinguished Professor at Erasmus University in Rotterdam — is an internationally recognized economic historian, teacher, and writer. In addition to numerous works on economics, she is the author of "Crossing: A Memoir" (1999), an autobiographical account of her journey from Donald to Deirdre McCloskey. What makes McCloskey's "Memoir" of particular interest and importance is that she is, to my knowledge, the only prominent libertarian who has been personally violated by psychiatrists: she was "hospitalized" — twice — because she "suffered" from a dread disease called "transsexualism." If not for her professional and social status, good attorney, and financial ability to fight the Chicago psychiatric machine, McCloskey might still be languishing in some Illinois state mental hospital. And she, too, probably wisely, chose to not engage the psychiatric Leviathan.
During my own lifetime, psychiatrists have removed masturbation, fellatio, cunnilingus, and homosexuality from the list of mental illnesses, yet managed to triple and quadruple the number of disorders listed in the American Psychiatric Association's (APA) "Diagnostic and Statistical Manual," adding, for example, caffeinism, nicotinism, dysmorphobia, and pathological gambling.
The legitimacy of psychiatry rests entirely on its being a branch of medicine.
I wrote more about my thoughts on the matter here and here.
Szasz is the most notable libertarian proponent of the idea that psychiatry isn't legitimate because mental illness doesn't exist. Though, unlike the Scientologists, he's not coming after your Prozac. He's also a fervent drug legalizer and wishes to make it easier to get Prozac and any other drug an adult wishes to take.
Though as I've noted before, I think Szasz shoots too far. Mental illness/disorders DO exist, but they are matters of health, not morals or social norms. They are not unlike having high cholesterol or diabetes. (Think of Prozac or Xanax, in this regard, like medicine to lower your cholesterol or insulin.)
Psychiatry's/Psychology's real sin was in trying to medicalize moral or socially normative issues; in that sense, the practices are frauds. There may be some overlap and again the physical health analogy is apt. For instance someone might be unhealthily overweight because of the "sin" of gluttony. Or the person might eat a modest diet and suffer from bad genetics or metabolotics. In both instances, the unhealthy result is the same. Science concerns itself with health not sins or social norms.
Regarding mental health, there might be a real "disorder," kleptomania. However, that it is a "disorder" has nothing to do with why the underlying behavior is wrong. Stealing is wrong because it's wrong. And many, perhaps most thieves are not kleptomaniacs (in a clinical sense) but rather people who want to get something for nothing.
Consider a whole slew of mental disorders whose "irrational behavior" is not the slightest bit immoral. For instance obsessive compulsive folks who need to go through rituals like jumping over cracks in the sidewalk, or flicking the lights on and off a certain number of times, or else they feel something terrible will happen to them or their loved ones. This person does have a "disorder," is not in "optimal" mental health; but there is nothing whatsoever wrong with flicking lights on and off a certain number of times. And this -- not the social deviant -- is the typical mentally disordered person. Folks who suffer from things like OCD, mild to moderate depression (or sometimes severe depression which greatly increases risk of suicide), ADD, ADHD. This is a significant portion of the population.
With the guy who feels the need to step on cracks in the sidewalk, usually taking Prozac or some other kind of SSRI raises serotonin levels and reduces those tendencies. On those meds, there is less of a feeling that something "bad" will happen if you don't go through the irrational ritual.
Likewise there are severe mental illnesses like bipolar and schizophrenia. And the medical treatment does tend to help there as well.
The social right started this abuse of the mental health system by claiming things which they thought immoral as "mental illnesses" -- masturbation, fellatio, cunnilingus, and homosexuality. The people who got them removed from the DSM were right to do so. These things may be sins; they may violate the "natural law"; (personally, I don't think they are/do). However that they are mental illnesses is laughable. But today, disturbingly, the social left does the same thing. For instance the equally laughable idea that racism is a mental illness. Racism is wrong and ought not be socially acceptable in modern civilized society. But it's not a mental illness. It's the same mindset that led folks to argue things like homosexuality or masturbation were mental illnesses.