I've got a pretty simple way to look at the difference between neurology and psychiatry:
Neurology is concerned with pathology intrinsic to the CNS and PNS
Psychiatry is concerned with pathology in the interaction between brain and environment.
By which I mean in stroke, the neurologist is concerned with the fact that an area of the brain is not functioning appropriately. I.e. broca's area.
In contrast, a psychiatrist is concerned with a schizophrenic's disengagement from the physical and social world.
The problem with psychiatry's legitimacy is that in trying to justify our existence we are trying to use medical models of disease.
The reductionist cause-effect model of medicine is a fundamentally ill-fitting approach to understanding the pathology of brain and behavior.
This is because the brain is not a pancreas or an adrenal gland, but a self-modifying structure. More importantly, self-modification is a normal and healthy property of the brain.
The brain is a complex entity that, by means of both negative and more importantly positive feedback, changes not only in reaction to the environment but also how it reacts to the environment.
The reductionist biomedical model simply does not have enough scope or nuance to truly capture the nature of an adaptive biological system.
I have long contended that in our approach to understanding the brain in health and disease we need to develop a mindset more similar to that of exercise physiologists or system ecologists. These are fields that are built on the recognition that the subjects they study are in constant flux.
Contrast the endocrinologist's approach to organic hypothyroidism with that of the exercise physiologist's approach to low to low-normal levels of thyroid hormone or impaired DST response.
The endocrinologist will look at someone's thyroid hormone levels and determine if the cause is pituitary or hypothalamic in nature, and then proceed to titrate the dose of exogenous thyroid hormone in order to restore this person to normal physiologic levels.
The exercise physiologist will look at someone with a mildly elevated TSH and reduced free T4 and look at their sleep patterns, stress levels, nutrition, and exercise habits. By manipulating these variables, they can often normalize thyroid function.
The reductionist medical model would fail the person with mild behaviorally-induced thyroid dysfunction because it doesn't treat the thyroid as an organ in flux.
Similarly, while there are cases of truly endogenous depression and anxiety, people whose symptoms aren't even abrogated in the slightest by psychotherapy, nurition, exercise, or other behavioral interventions, they are the exception, not the rule.
If I took two normal weight twins, currently engaged in watching endless hours of sportscenter and pigging out on pizza all day whose only physical activity was to change the channel with a remote, and then took one of them and subjected him or her to a comprehensive plan of exercise, nutrition, and rest, within one year, we would find numerous physiological differences between the two. Differences in HPA and HPG axis functioning, thyroid hormone, growth hormone, testosterone, insulin sensitivity, blood vessel density, heart function, and muscle fiber distributions, mRNA expression, glycogen concentration, and VO2 max would all be apparent. From a biochemical and physiological perspective, many would find it hard to believe they were genetically identical.
Yet both would be considered 'healthy' through the lens of the biomedical perspective.
More significantly, we would be looking at two people with vastly different phenotypes despite having the same genotype and the same basic logic of function of physiology.
Exercise physiology is the science of understanding this. It is the search for understanding the rules by which the body changes itself in response to environmental conditions. In both directions. From 'normal' to 'robustly healthy' and from 'normal' to 'diseased'.
Psychiatry, like all of medicine, has heretofore concerned itself with looking at the pathologic state and the 'normal' state and enumerating the differences between the two.
If we are truly to get a handle on the pathophysiology of the brain we must gain a better understanding of the normal rules of how it changes. From 'average' to 'depression/anxiety' resistant and from 'average' to 'depressed/anxious'. Or studying those with similar susceptibilities to bipolar or schizophrenia, and determining how the brain changes in those who develop these disorders and those who don't.
In a more medically-related analogy, the development of metabolic syndrome is a classic example of normal somatic adaptation that continues to the point of pathology. Some are more susceptible than others, but at the end of the day, this is a consequence of the normal rules of physiological adaptation. This is also why in the early stages of Type 2 Diabetes, intensive exercise and diet modification will resolve the hyperglycemia and hyperinsulinemia in 90% of cases.
Depression, anxiety, schizophrenia, and bipolar disorder are likewise syndromes that show themselves as a range of abnormalities including noradrenergic, serotonergic, chonlinergic, and dopaminergic pathways in the brain, and in addition in depression and anxiety are often accompanied by abnormalities in the HPA, HPG, and HPT axes. And much like the metabolic syndrome, early intervention can result in the resolution of symptoms and a much reduced morbidity and severity of disease (even to a degree in schizophrenia and bipolar DO).
I firmly believe that we will find this to be true for most psychiatric disorders, especially mood and anxiety disorders. Longitudinal studies in these areas even show that individuals who rely on medication rather than combination, psychotherapy, or lifestyle modification develop more severe disease with a higher frequency of recurrence.
Obviously it's not an easy job and would require intense long-term study of the brain functioning of a host of individuals with the genetic and phenotypic risk factors for the development of psychiatric illness, but it's the only way we'll be able to truly claim we have a handle on this whole business.
/end rant.