I've written about psycho-narration before, and I've come up with a couple of examples of quoted monologue here and here. In addition to these, Dorrit Cohn and Suzanne Keen after her suggest the third mode open to third-person narrators when they attempt to represent a character's inner psyche: narrator's monologue or free indirect discourse. I've left the discussion of these to the last, because I remember having a lot of fun with this idea in class -- and because I was also trying to come up with good examples of this mode in recent fiction.
First, the definition. "Narrated monologue presents the character's mental discourse in the guise of narrator's discourse," Keen reports. This is what makes it fun -- we receive two voices in a single phrase, frequently leaving us uncertain what the relationship between the narrator and the character is: what does the narrator think about the character? is the narrator treating the character's thoughts in good faith? is the narrator indirectly making fun of the character? Narrated monologue does this by retaining the tense and person (third) of the narration while at the same time allowing the feel of the character's inner speech to come through--the word choice, the sentence structure might be borrowed from the character's own diction. "Reading narrated monologue gives the impression of the words and modes of expression of the character, while retaining the tense and person of the narrator's language," summarizes Keen.
The difference between narrated monologue and free indirect discourse is largely formal: narrated monologue turns into free indirect discourse when it omits tagging, words like "he thought." On a historical aside, Keen reports that this technique is considered "one of the most significant innovations in the nineteenth-century novels, though some critics have spotted it in earlier texts."
Perhaps, this is just due to my inattentiveness (what do I pay attention to while I'm reading??), but trying to find definitive examples of this technique in the recent magazines turned out to be rather difficult. One good example I did find, comes from Sona Avakian's story "Artichoke Hearts" in Instant City's volume 5. The main character of this short story, Harry, is addicted to smoking, so much so that even when his wife and his daughter threaten to cut him out of their lives unless he quits, he's unable to comply. The narrative mode is very interesting, because while the events are told as if seen through Harry's eyes (Harry serves as the main focalizer for the heterodiegetic narrator), the narrator is not necessarily sympathetic to Harry. The narrator never breaks the fourth wall and tells us directly that Harry is a selfish old man, no, nothing like that; instead, we're able to surmise this purely through the way the story is narrated.
Free indirect discourse seems to be key here. On the one hand, the narrator puts us very close inside Harry's mind. For example, at one point Harry goes to see a performance by a traveling circus and reminisces. The narrator tells us: "And each booth filled him with a longing for the good old days. Days when cars had ashtrays in the back seat and you could smoke in the hospital when your mother was dying." The second sentence is narrated monologue without tagging: this is Harry thinking about ashtrays in the back seats of cars, Harry remembers smoking in the hospital. And this memory clearly brings Harry pleasure, because the narrator also reveals (in a bit of psycho-narration) that Harry's longing for the "good old days," key word being "good." We get another affirmation of how much Harry enjoys these memories when he becomes attached to one of the circus performers and repeatedly goes back to see her.
So on the one hand, we know that Harry's attachment to the cigarette smoking is very earnest and goes to the very depths of his psyche -- it seems to be all that Harry ever thinks about; and on the other hand, we get a chance to see that the narrator disapproves because these flashes into Harry's mind are so brief that they seem to function like quotes taken out of context. When these flashes repeatedly come at the end of a paragraph, for example, at the time when we're expecting a minor revelation, the narrator seems to set up Harry's thoughts as punchlines to the jokes about the man himself. For example, when Harry is considering the hypnosis treatment, the narrator reports: "He looked forward to being put in a trance. If nothing else, maybe he could ignore Arla and Jennifer better." You can almost hear the drum roll at the end of this paragraph. The last sentence seems to be lifted almost exactly from Harry's own thoughts. However, this is reported to us still in the narrator's discourse. And if Harry's thinking this in earnest, the narrator's stance in reporting this is very coy.
Keen explains that "most theorists consider [narrated monologue or free indirect discourse] a double-voiced kind of discourse." It allows us to glimpse deep within the character's mind and at the same time makes us aware of the subtle commentary by the narrator.
Nothing good can come to the character who's the butt of a joke for his narrator -- and certainly nothing good comes to Harry.
I'll keep looking for more examples of FID, there's got to be loads of it out there that I'm simply not seeing. It's too easy to read without paying attention to any of this.