One of the first women at The Women's Therapy Centre in Islington in 1976 had been recently discharged from the local mental hospital. She surprised me by saying: "It was ever so lovely. You get your cups of tea, your food and your heat. All in. Nothing to do for anyone else. A good old rest and someone looking after me."

Recently I needed to find a place of safety for a suicidal 30-year-old. Such places are scarce. A house near the Arsenal stadium has such a facility where an individual in extremis may stay and be looked after for a maximum of 72 hours.

Between those two events, the demise of inpatient services and the development of care in the community, occurred. Therapeutic services were always scant. We shouldn't romanticise them and sanctuary was often less benign than the word implies. But as Charcot and later Freud were to demonstrate, madnesses and incomprehensible symptoms could, in principle, be understood, dissolved or endured less troublesomely. During the last century, the talking and listening therapies developed.

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What also developed was a wrangle with health services and health insurers who found such services relatively costly in the short term (although no one would argue they are in the long term as they save money in parts of the healthcare budget). Today, as a ghastly compromise, we have a plethora of psychological therapies in the marketplace offering transformations in six sessions and telephone therapy with manuals that don't look so different from the prompts given to salesmen and women. Being listened to and finding a place of safety are not easy and it will be interesting to see if the Coalitions' promise on 21 January – to roll out serious provision for mental health in April – actually reaches the places it needs to go.

The "Death of the Asylum" is detailed in Barbara Taylor's beautiful memoir through her personal experience of breaking down in 1981, ending up in Friern in 1985 and being formally discharged from the psychiatric service in 1992, several years after Friern closed. She tells an engrossing story of her "madness years", of her own analysis and of the demise of the asylum system.

Getting to know oneself is a peculiar business. The individual comes to therapy hoping to discover what's wrong and to excise or change what so hurts and disables them. In the course of a therapy, they discover how very foreign parts of themselves are to their conception of self. It can emerge that attributes they consider strengths turn out to protect them against parts of them which are frightened or appalled by things they consider needy or weak. They may not know the level at which they disdain their own needs. They may not know the conflict between wanting and receiving. They may not know, as Taylor is to find early on in her therapy, that the love and attention she craves from her analyst is not something she knows how to take in.

What she can do and show is how the possibility disturbs her and brings, in turn, the wish to repudiate it or to find it contemptible. It will be years before she can absorb the concern that her analyst, V, shows. It will be years before she can discover the desires behind her apparent wishes. It will be years of being in a place of encountering a nothingness and screeching pain before she is able to show up for herself in a way that can allow her to be on her own team.

The analytic process is paradoxical. It is doing several things at once which can appear contradictory and in some cases iatrogenic. One aspect is to enable the analysand to reflect on her or his experience. By paying attention to the motivations which propel actions, one helps the individual to countenance the feelings from which "doing" may be a flight. Another aspect involves trusting the analyst while simultaneously experiencing that relationship as inherently ambivalent. The therapy relationship is the place of potential hope but it is also drawn as a version of the relationship the analysand experienced with the most important figures in her early life. There is no such thing as a brand new relationship without the history of other significant relationships inscribed within it. What therapy does is to look at those inscriptions, to understand the psychic imprints that shape us. The balancing act of trusting the relationship sufficiently in order to reveal one's insecurities is tricky. Consider how much one wants recognition and acceptance but ends up in the Groucho Marx club full of contempt for those who dare show it.

This dilemma at the heart of treatment – the longing and then tussling with the defences against longing, and the self-hatred this longing can produce as well as the disdain for the other who proffers it – is trying for analyst and analysand. And so it was for Barbara and V. During her analysis, she learns, from the inside of herself, truths to live by which can sound banal. But tasting and knowing them is what makes it possible for her to make a life. Among these important truths is the recognition that familial, parental or lover relationships contain ambivalence. They are never and can never be perfect. Love and intimacy involve inevitable disappointment, getting it wrong, missing what's wanted or being unable to give.

It is hard to write well enough about this book because it is so good. It attempts to achieve many things – personal story, psychoanalytic process, the experience of madness, the feel of being an inpatient in the last days of Friern, the history of the asylum. Taylor does all of these things very well indeed. Her book is a piece of lived history in all senses; she tells us of the outside and the inside – the drama of the red diaper girl, the changing relations between the sexes, the hurts and terrors about being a child chosen to fulfil parental ambition and the struggle to find her way through the madness towards a life both ordinary and extraordinary.