...there is a discrepancy between the aims of the smooth functioning of society and of the full development of the individual. This fact makes it imperative to differentiate sharply between the two concepts of health. The one is governed by social necessities, the other by values and norms concerning the aim of individual existence.
Unfortunately, this differentiation is often neglected. Most psychiatrists take the structure of their own society so much for granted that to them the person who is not well adapted assumes the stigma of being less valuable. On the other hand, the well-adapted person is supposed to be the more valuable person in terms of a scale of human values.
If we differentiate the two concepts of normal and neurotic, we come to the following conclusion: the person who is normal in terms of being well adapted is often less healthy than the neurotic person in terms of human values. Often he is well adapted only at the expense of having given up his self in order to become more or less the person he believes he is expected to be. All genuine individuality and spontaneity may have been lost. On the other hand, the neurotic person can be characterized as somebody who was not ready to surrender completely in the battle for his self. To be sure, his attempt to save his individual self was not successful, and instead of expressing his self productively he sought salvation through neurotic symptoms and by withdrawing into a fantasy life. Nevertheless, from the standpoint of human values, he is less crippled than the kind of normal person who has lost his individuality altogether. Needless to say there are persons who are not neurotic and yet have not drowned their individuality in the process of adaptation. But the stigma attached to the neurotic person seems to us to be unfounded and justified only if we think of neurotic in terms of social efficiency.
As for a whole society, the term neurotic cannot be applied in this latter sense, since a society could not exist if its member did not function socially. From a standpoint of human values, however, a society could be called neurotic in the sense that its members are crippled in the growth of their personality. Since the term neurotic is so often used to denote lack of social functioning, we would prefer not to speak of a society in terms of its being neurotic, but rather in terms of its being adverse to human happiness and self-realization.
excerpt from: Erich Fromm (1941) Escape from Freedom.