Complex, time-consuming, expensive and usually inconclusive: it's hard to define what purpose psychoanalysis really serves. Janet Malcolm, one of few modern writers able to explain the Freudian method in clear, uncluttered prose, likened the process to pouring water into a sieve. "The moisture that remains on the surface of the mesh is the benefit of the analysis," she wrote in 1983.

Thirty years later, the medical reputation of psychoanalysis has deteriorated, even from that modest appraisal of its value. Particularly in Britain, it has been superseded by simpler, shorter, more research-friendly cognitive therapies. The psychoanalytic profession has, in the meantime, done surprisingly little to defend itself. Once the dominant psychological system of the 20th century, it has since tended to retreat into private practice, or obscure theoretical factionalism.

Inadvertently, Stephen Grosz provides an illustration of why that is. His book is not an argument. It is a collection of case histories: patient accounts that, though reduced to parable-like brevity, took 25 years to accumulate through painstaking care and attention to individual lives. These are shaped like short stories, but true and moving in ways that fiction cannot be. Rather than validating a system or method, each of his cases speaks uniquely for itself.

Grosz avoids almost all psychoanalytic jargon and, even when he uses a concept such as "splitting", he has the humour to suggest that ordinary expressions may be more effective. In one of his book's 30 pithy chapters, a woman describes to him how she was disowned by her strictly observant Jewish father after she married a blond Catholic man. Years later, she discovered that her father had, all the time, been having an affair with his blond Catholic receptionist. "The bigger the front, the bigger the back," she concludes.

It's a great phrase and, as Grosz rightly decides, a better explanation of self-contradictory human behaviour than "splitting", because its larger truth has been hewn from firsthand knowledge. Yet there's a bit more to the anecdote than flagging up the therapist's humility in the face of experience. It's not immediately obvious, but he is still subtly demonstrating the value of a psychoanalytic concept. If you didn't know what splitting was before, you do now.

All the stories in The Examined Life work like this, on two levels. First, they are intimate accounts of real individuals, whose conditions are particular to their circumstances: the gay professor recognising his sexuality only in his 70s, the untidy girl wetting her bed in her super-tidy home, the learning-disabled boy remorselessly spitting in the face of his therapist, the therapist's own father refusing to recognise the sites of childhood from which his family was cleared by the Nazis.

But then they are also narratives that have been distilled through long examination into finely crafted literary form, each with a distinct meaning. And in turning people's lives into stories with (at least partial) resolutions, Grosz persuades us to see how the psychoanalytic encounter can help people change  a little  or perhaps accept the ways in which they cannot change. This hardly amounts to a rallying cry, but it is powerful nonetheless. He does not act as advocate for psychoanalysis. He makes his larger case by showing, not telling.

Some might question the propriety of revealing so much of the confidential encounter between doctor and patient, even with names changed. But the case history is the indispensable foundation of all clinical psychology  whatever the discipline  and it is currently in danger of being neutered in mainstream practice by computer-formatted records, institutional correctness and the box-ticking diagnoses of cognitive therapy. Without the written case, individual histories cannot be shared and all that's left are brief assessments, research-findings and methods learned from manuals.

Not that psychoanalysis emerges here as a redemptive cure. In fact, Grosz's stories reveal both the strengths and weaknesses of his profession. The most obvious problem of sitting (or lying) in a room with a therapist and talking (or lying) about yourself is that there can be neither corroboration, nor contradiction, of the account you provide.

I'm not sure whether Grosz is being ironically self-aware when he describes the reasons men see prostitutes, for example, or whether his next remark is itself a kind of Freudian slip. "Of course, prostitution is a monetary transaction and this inspires fantasy," he writes. Well, psychoanalysis is also a monetary transaction and it, too, can inspire fantasy.

The job of a good analyst is  of course  to observe the contradictions in any account and to help the patient to observe them too. Patient and therapist have entered into an agreement and a relationship. In this way, the patient may emerge from the cocoon of subjectivity to cope better with the real world. But the lack of any witness-check in psychoanalysis is further exposed when a case history is turned into a published story. Because now there are three people in the room: patient, therapist and reader. What if the reader disagrees with an interpretation?

"Emily's parents had made her the problem so that they did not have to deal with problems of their own," Grosz writes at the end of one brilliant and touching story. While reading it, his analysis struck me as the result of convincing psychological detective work. But that's because I was reading it more like fiction, assuming the author's knowledge of his characters. In reality, an analyst cannot achieve such authority. Although Grosz had spent a long time with Emily, the only evidence he gives of her parents' problems is a few brief exchanges. Maybe he was right about them, maybe he wasn't. There's no way to tell.

That's an inherent doubt which applies to any one-on-one interview or investigation, therapeutic or otherwise. It does not detract from the good-humoured wisdom of these stories, or the case they implicitly make for the value of the psychoanalytic encounter. Indeed, Grosz dedicates a chapter to the illusion of any definitive conclusion. "My experience is that closure is an extraordinarily compelling fantasy of mourning," he writes. "It is the fiction that we can love, lose, suffer and then do something to permanently end our sorrow."

Instead of that fiction of a final explanation, or cure, the real value of the encounters he describes is to allow a person to feel "alive in the mind of another". That's the doctor-patient mesh that Janet Malcolm described, through which the story of a life can pour and leave something behind. Gradually accumulating through his book, Grosz provides, not a definition, but an enactment of the purpose of psychoanalysis, which is both modest and profound.

For anyone who has ever bemoaned the dismal lack of excellent writing about contemporary psychoanalysis (and there are some of us, though not as many as there should be), this plain-looking book with its austere title arrives like a box of chocolates.

Thirty-one elegantly presented chapters which, when you bite into them, each reveals something sweet, rich or crunchy. Every one of these case histories bears repeating. All offer worthwhile insights. Grosz has worked as a psychoanalyst, privately and in the NHS, for 25 years. These are the patients, families and relationships and situations that have stayed with him. His first book is an account of his life's work so far.

It opens with "a patient who shocked me" by faking his own death, and there are more shocks ahead. One man is introduced as a "pathological liar", a stranger on a plane starts a conversation by saying she is on her way to visit the mother who cut her off. A married father-of-four announces at his first appointment that he is thinking of coming out, aged 71, while a woman who has just celebrated her 50th birthday realises a sexy dream that bothered her was about her son.

But the stories that stay longest in the mind are those where Grosz himself is most deeply engaged. With good reason, he fights shy of jargon and for most of the book he does an admirable job of translating ideas derived from decades of theory as well as practice into plain words. (It's a mystery as to why more psychoanalysts are not good at this, when offering interpretations in language even children can grasp is their job. But putting such deeply private material in a book for a general audience is ethically tricky and puts others off: even with identities disguised, Grosz's patients must know who they are.)

Bit by bit, he introduces terms such as splitting ("one way we have of getting rid of self-knowledge"), envy that is "unconscious: furtive, resistant to investigation", and, finally, "transference: how we all construct each other according to early blueprints".

In daily life, transference might help us think about why a woman abused in childhood may find herself choosing abusive partners, or why those born into privilege so often hang on to it. In psychoanalysis, transference is the whole point, and what sets it apart from even the most thoughtful counselling or advice. In order to change, we must access the unconscious feelings and memories that have shaped us. The analyst is the partner in this process.

With Anthony, who at 29 has been diagnosed with HIV and begins sleeping through his sessions, Grosz finds himself losing all sense of time: "whole sessions could go by in what felt like minutes, or just the opposite". In "Through Silence", my favourite piece of writing here, they together come to understand these supervised naps as a kind of rehearsal for death.

In "How anger can keep us from sadness", Grosz describes being spat at every day for a year and a half by a nine-year-old boy until, desperate to make it stop, he seeks advice from an eminent colleague. She helps him see how he is complicit in the spitting and the rage it produces because he cannot face the truth. Analyst and patient are locked in a pretence that if only the boy would try harder he could get well.

"On being boring" does a fantastic job of showing how even boredom is worth thinking about: how boring others (including your analyst) can be a means of attacking them. Another piece, "A passion for ignorance", describes the author's frustration with a young woman who chooses not to notice that her lover is a cheat. "On being a patient" recounts a lunch with a friend who talks through the anxious etiquette of the doorstep, the waiting-room and the couch. Elsewhere, and lest we forget these conversations must be paid for, we learn of unpaid bills.

Most of these pieces build to a breakthrough or solution (many began life as magazine columns). But the author does show how hard-won such moments are. He gives a real (and rare) sense of the texture of analysis, of the weeks and months filled only with frustration, of the missed sessions, tedious repetitions and fruitless guessing as to what is going on. And he makes a point of contrasting all this effort with pop psychology platitudes such as the five stages of grief.

"Think about the impasse," Grosz's colleague tells him of the spitting boy. "You know that when there's a deadlock it's usually because the impasse serves some function for both the patient and the analyst. Think of the deadlock as an obstacle that the two of you have created. What purpose does it serve you?"

Psychoanalysis is by definition indigestible. It is an analyst's job to tell you things you would rather not think or hear. Critics cavil at the Freudian idea of "resistance" because it can be used as a shield against criticism, but anyone who has spent any time in a consulting room will tell you there are times when there is literally nowhere you would less like to be than on the couch.

When Grosz hears one patient use the term "sweetie" of the husband she no longer desires, he defines it as "sugar-coated hate". When I liken The Examined Life to good chocolate, I mean it as a compliment. Grosz's book should give confidence to all psychoanalytic therapists that their work, much more remote from ordinary social interactions than most talking therapies, can be made perfectly accessible and even tempting to anyone who can read.