Turner Prize 2012, Tate Britain, London

“The craziness was all around, and certainly not confined to the patients,” R. D. Laing reports of Britain’s psychiatric hospitals in Luke Fowler’s film “All Divided Selves”.

The craziness is all around Tate Britain too, and not confined to the artists. Whoever thought of running Fowler’s 93-minute documentary about a Glaswegian psychiatrist in an art gallery? If the interminable interviews and archive footage spliced with Scottish folk songs and Fowler’s home-movie extracts in “All Divided Selves” can expect any audience, it can only be for DVD biopic connoisseurs.

And whoever thought of showing, anywhere, ever, Elizabeth Price’s numbingly dull collage of photographs of ecclesiastical architecture, girl-band performances and newsreels of a Woolworth’s warehouse fire, “The Woolworth Choir of 1979”? I have never seen a more pointless exercise, in any medium.

The Turner Prize 2012 exhibition is a madhouse. It was inevitable, anticipating the inauguration of Tate’s Tanks dedicated to live and film art, that these disciplines would be prioritised in the shortlist. More clearly than any other Turner Prize show, this one demands that you abandon preconceptions of what a museum is. It is now many things at once: a theatre inviting audience participation, a cinema with raked seats and scheduled showing times, as well as a white cube where private fantasy worlds are made public. The installation is a maze; every visitor when I was there got lost.

Laing believed normality was achieved by adjusting ourselves to an alienating world. If Price and Fowler are essentially archivists who embody alienation and cultural disintegration within the fragmented format of their infuriating non-narrative films, Paul Noble and Spartacus Chetwynd are creators of craziness – orchestrators of absurd environments built up by anarchic storytelling, and through a quirky revisiting of modernism common to many artists today.

For nearly two decades, Noble has depicted – in graphite drawings achieved in a variety of densities and textures – the imaginary city Nobson Newton: a cold fantasy of modernist architecture peopled, if at all, by turd-like creatures. Only two drawings here are new, and the best is the earliest: “Paul’s Palace” (1996), a deco playground with basketball pitch, skateboard space and artist’s studio, built on sand between flimsy-looking rocks composed from Henry Moore and Hans Bellmer motifs. “Trev” is a greenhouse placed on a giant table, with the plants growing surreal roots beneath it; in “(Large) Trev” the edifice floats out to sea, tied with a rope to a platform studded with upstretched, amputated hands.

Noble’s is an obsessive project, accomplished yet slight, over-controlled, and not quite compelling within the demanding setting of a public gallery. Chetwynd’s performance piece, “Odd Man Out”, by contrast, is baggy, raw, deliberately amateurish. A 20-minute burlesque, it takes place within a pair of black and white tents, one constructed from a wallpaper of reproduced images – nudes, cockatoos, serpents, Victorian narrative paintings – and the other lined with stripes, spotlit green. It opens with masked dancers dangling papier-mâché tentacles who lead each audience member to hear a whispered, nonsensical secret. Mine was “You are deceived”; the range ran from “I’ve got food poisoning” to “We are building a statue in your honour”.

Clowns in ragged costumes wander among us with marionettes recounting the story of Jesus and Barabbas, the prisoner saved from crucifixion, to percussion cacophony. A black inflatable bouncy castle-like mass is surrounded by posters whose references – Plato’s Republic, Polish Solidarity film-maker Andrzej Wajda, a “Polling Station” operated by puppets, Rabelais – betray Chetwynd’s academic training as a social anthropologist.

The artist adopted the name Spartacus after the Roman gladiator who led a (failed) rebellion. Heroic folly, and sincerity so extreme that it is parodic, characterise her endeavour, which is full of warmth, colour, noise. A placard announces that “Odd Man Out celebrates political ineptitude”. Although formally this is all a postscript to 20th-century theatre – the carnivalesque mood, low-budget materials and collapsed actor/audience hierarchy go back to Brecht, via 1970s happenings – Chetwynd skims many 21st-century concerns with a light touch: political disenchantment, reactions against slick professionalism, breakdowns between real, fictional and virtual worlds. But the reason I want her to win is that she is the only artist here whose work pulses with life.

Until January 6, www.tate.org.uk

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