Using hospitals as prisons; Institute of Fools, by Victor Nekipelov. New York: Farrar, Straus, and Giroux Inc. $15.

The USSR is the first country to abuse psychiatry for political purposes -- with its deliberate governmental policy for incarcerating sane but politically inconvenient people.

Since 1962 this has become an auxiliary punishment for dissidence, no less oppressive than the notorious labor camps. Thanks to samizdat,m accounts by former victims of "psychiatric terror" began to leak out to the West in the late 1960s, along with such ex-prisoners as Vladimir Bukovsky and Leonid Plushch.

By 1975 Amnesty International felt compelled to report, "Numerous Soviet citizens have been confined to psychiatric hospitals as a direct result of their political or religious beliefs and with no medical justification." Throughout the '70s numerous civil rights organizations in Western Europe and America were publishing such accounts as well as condemning the Soviet practice of psychiatric terror, as, for example, at the notorious Serbsky Institute in Moscow.

"Institute of Fools" is the story of one of the more recent victims. Refusing to remain silent about this inhumane practice after his release, he was arrested for a second time in December 1979, just before the Soviet invasion of Afghanistan, when the Kremlin unleashed a new wave of arrests and incarcerations of dissidents.

Victor Nekipelov is a poet and Helsinki Watcher, whose courage is as intense as his devotion to the exposure of shocking injustice in his own country. "There were almost no real fools in the Institute of Fools," he writes. But the truly insane among the Serbsky's inmates do endanger the lives of the political prisoners and make this form of punishment as much to be dreaded as the gulags.

Mr. Nekipelov confirms that the Serbsky doctors make no real attempt to determine if the political prisoners are mentally competent. Far from it: "Dissidentism . . . love of freedom . . . love of truth . . . originality of thought" -- these are symptoms of schizophrenia, according to the psychiatrists. As Mr. Nekipelov phrases it: "'Reformist tendencies,' 'deliriums of truthseeking ,' 'deliriums of opposition,' and 'anti-Communist manias' [make us] all very, very ill."

Protest outside such institutions is subject to the same types of accusations: "If you distribute leaflets and write protests, if you insist that Solzhenitsyn should be published and that there is no freedom in the Soviet Union, if you do not vote in elections and ask for a Bible in prison, then you are very, very crazy."

Mr. Nekipelov writes contemptuously of the doctors who administer hypodermic injections of mind-altering drugs, who are, in fact, "responsible for their crimes in knowingly committing people to psychiatric hospitals for beliefs or ways of thinking that do not conform to government forumlas . . . . These descendents of Hippocrates sullied the oath of their great mentor. But they went further, into deliberate collaboration with a system of terror. They grew into it and became tentacles that grasped and would not let go . . . .

"My book is an appeal to bring them to trial . . .," he continues. "I believe that the time will come when all these doctors will be given a real criminal trial, not out of revenge, not imprisonment for imprisonment. This trial of conscience and morality will resound throughout the world. I believe in a free, democratic Russia in which such a trial will be possible."

One wonders how "abnormal" such sentiments would seem, were disaffection of the type felt by the Nekipelovs of the camps and the psycho wards, as well as the samizdatistsm who still get their messages out of the USSR, to become a widespread phenomenon in that "largest mad-house," the whole country. In a sense, all Soviet citizens live under detention. But most of them have become resigned to it. ". . . [My] mind does not feel anything anymore," writes Mr. Nekipelov. Yet, the author's despondency is not permanent; his impatience with injustice asserts itself. This could happen sometime to the Russian masses as well.