When Andrew Goldstein pushed Kendra Webdale in front of a New York subway train in January 1999, he brutally and pointlessly ended the life of a 32-year-old stranger. He also demonstrated, in the most horrific terms, the burgeoning crisis in American psychiatry. A schizophrenic with a history of dangerous impulses, Goldstein frightened even himself, and he had pleaded with state psychiatric centers to provide him with the treatment he needed to help him stay on his medication and out of trouble. But over and over again, he was turned away by hospitals that could not justify the expense of inpatient and outpatient services for a man whose illness was supposedly controllable with drugs alone. It was Webdale who finally paid.

T.M. Luhrmann's impressive "Of Two Minds" is far more than a simple indictment of the negligent way we have come to treat acute mental illness in this nation, but that's one of the more urgent notes it sounds. An anthropologist who set out in 1989 to write an ethnographic account of the way psychiatrists acquire the basic skills of their profession and come to regard their work and their patients, Luhrmann happened to pick a time when the field was undergoing deep and disturbing changes.

In the early 1980s, doctors who espoused what Luhrmann calls a "biomedical" approach to treating mental illness, regarding madness as an organic disease best controlled with drugs, supplanted those who hewed to the "psychodynamic" model rooted in the "talk therapy" that Sigmund Freud pioneered. The biomedical model also appealed to managed health care companies, Luhrmann writes, because "psychopharmacological approaches seemed cheaper and more like the rest of medicine."

For anyone at all interested in how shrinks are made, the first half of Luhrmann's book is a fascinating account. A former medical student, she embarked on four years of fieldwork that included "more than sixteen months of full-time, intensive immersion" -- that is, for more than a year she lived as a psychiatric resident, attending classes, working at a hospital, even seeing patients and undergoing therapy herself with a training psychiatrist.

It's always a bit unsettling to be reminded how medical residents are "taught" their jobs -- a mother-bird strategy in which fledgling doctors are shoved out of the nest on the theory that the best way to learn to fly is to just do it. And Luhrmann's detailed, nuanced descriptions of the way teams of doctors work together as groups ("Shame is a common teaching tool in medical education") remind you how valuable anthropology can be in the rich, specific knowledge it contributes to the culture.

In the second half, though, when Luhrmann tackles the split between biomedical and psychodynamic psychiatry, she kicks "Of Two Minds" into an even higher gear. The conflict between the two approaches is a debate between "two profoundly different notions of what it is to be a person," she explains, and it takes up "some of our oldest philosophical dilemmas." Luhrmann can move from the politics of backbiting gossip among psychiatric nurses (it's usually worse in the less hierarchical psychodynamically minded hospitals) to an explication of the disagreement between David Hume and Immanuel Kant over the roots of moral judgment without ever being less than impeccably lucid and fair-minded -- which only makes the breakdown she chronicles that much scarier.

"You have the opportunity of seeing our profession in the beauty of its great sunset," a psychiatrist tells Luhrmann, who witnesses the virtual dismantling of the inpatient psychiatric unit at an urban hospital. "This is chaos and confusion," the unit director announces as the staffing and budget cuts take effect. "In these circumstances, we will kill someone!" Luhrmann presents conclusive evidence that a combination of psychopharmacology and psychotherapy is often the only truly effective way to treat acute mental illnesses -- a conclusion that even the biomedical psychiatrists she talks to agree with -- yet managed-care budget cutters prefer to deem drugs a cure-all.

But above and beyond these practical concerns, Luhrmann insists, the simple "disease" model of mental illness diminishes all of us. The ideals of psychodynamic psychiatry are based on the belief that "the mastery of bad circumstances is inherent to what a person is ... the sense of a person is of someone who has overcome suffering in a particular way and forged a specific path through life." We live in a society obsessed with blame, and the disease model offers an attractive out once the finger-pointing begins. But we retire the notion of responsibility at our peril. By treating severe mental illness as a permanent misfortune that eclipses a person's self but isn't part of that self, the biomedical model threatens an individual's humanity. It's a subtle, abstract argument that Luhrmann renders, in heroically plain language. It's also one we can't afford to ignore.