How was lobotomy used in the 1950s and how is that portrayed in the novel?

Lobotomies were used in Europe as early as the 1880s. From the 1930s to the 1950s, lobotomies were used not just for psychoses but for all kinds of severe conditions and, despite complications, often had positive effects (as opposed to a lifetime in an institution anyway).

As for One Flew Over The Cuckoo's Nest, one of the key debating points is about whether Mac has a clinical condition or not. In the film and book, he is portrayed as someone with a disrespect for authority and someone who puts his own needs above that of any society or authority. He is also shown as gregarious, politically astute, and while he uses the men (i.e. taking their cigarettes during card games), he also gives back to them (investing them with titles on the boat trip, allowing them to experience normal life in the outside world, and also arranging for Billy to lose his virginity). In the film at least, he's played as charming and likeable. His eventual lobotomy robs him of so much of that spirit that the Chief smothers him and kills him rather than let him exist as a shell of himself. It seems clear that he was only on the ward as a way of escaping prison and that, for once, his ability to work the system lets him down badly.