It has been argued that the diagnostic approach to Schizophrenia is flawed, as it relies on an assumption of a clear dividing line between what is considered to be mental illness (fulfilling the diagnostic criteria) and mental health (not fulfilling the criteria). Recently it has been argued, notably by psychiatrist Jim van Os and psychologist Richard Bentall, that this makes little sense, as studies have shown that psychotic symptoms are present in many people who never become 'ill' in the sense of feeling distressed, becoming disabled in some way or needing medical assistance.

Of particular concern is that the decision as to whether a symptom is present is a subjective decision by the person making the diagnosis or relies on an incoherent definition. More recently, it has been argued that psychotic symptoms are not a good basis for making a diagnosis of Schizophrenia as “psychosis is the 'fever' of mental illness - a serious but non-specific indicator".

Perhaps because of these factors, studies examining the diagnosis of Schizophrenia have typically shown relatively low, or inconsistent levels of diagnostic reliability. Most famously, David Rosenhan's 1972 study, published as 'On Being Sane in Insane Places' ,  demonstrated that the diagnosis of Schizophrenia was (at least at the time) often subjective and unreliable. More recent studies have found agreement between any two psychiatrists when diagnosing Schizophrenia tends to reach about 65% at best. This, and the results of earlier studies of diagnostic reliability (which typically reported even lower levels of agreement) have led some critics to argue that the diagnosis of Schizophrenia should be abandoned.

Proponents have argued for a new approach that would use the presence of specific neurocognitive deficits to make a diagnosis. These often accompany Schizophrenia and take the form of a reduction or impairment in basic psychological functions such as memory, attention, executive function and problem solving. It is these sorts of difficulties, rather than the psychotic symptoms (which can in many cases be controlled by antipsychotic medication), which seem to be the cause of most disability in Schizophrenia. However, this argument is relatively new and it is unlikely that the method of diagnosing Schizophrenia will change radically in the near future.
The diagnostic approach to Schizophrenia has also been opposed by the Anti-Psychiatry movement, who argue that classifying specific thoughts and behaviours as an illness allows social control of people that society finds undesirable but who have committed no crime. They argue that this is a way of unjustly classifying a social problem as a medical one to allow the forcible detention and treatment of people displaying these behaviours, which is something which can be done under mental health legislation in most western countries.

An example of this can be seen in the former Soviet Union where an additional sub-classification of 'Sluggishly Progressing Schizophrenia' was created. Particularly in the RSFSR (Russian Soviet Federated Socialist Republic) this diagnosis was used for the purpose of silencing political dissidents or forcing them to recant their ideas by the use of forcible confinement and treatment. In 2000 similar concerns about the abuse of Psychiatry to unjustly silence and detain members of the Falun Gong movement by the Chinese government led the American Psychiatric Association's Committee on the Abuse of Psychiatry & Psychiatrists to pass a resolution to urge the World Psychiatric Association to investigate the situation in China.

Western psychiatric medicine tends to favour a definition of symptoms that depends on form rather than content (an innovation first argued for by psychiatrists Karl Jaspers and Kurt Schneider). Therefore, you should be able to believe anything, however unusual or socially unacceptable, without being diagnosed delusional, unless your belief is judged to be held in a particular way. In principle, this would stop people being forcibly detained or treated simply for what they believe. However, the distinction between form and content is not easy, or always possible, to make in practice (see delusion). This had led to accusations by Anti-Psychiatry, surrealist and mental health system survivor groups that psychiatric abuses exist to some extent in the West as well.

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