An incisive discussion of literary prizes in a review of James English's The Economy of Prestige, in the New Yorker:
English believes that contempt for prizes is not harmful to the prize system; that, on the contrary, contempt for prizes is what the system is all about. “This threat of scandal,” as he puts it, “is constitutive of the cultural prize.” His theory is that when people make these objections to the nature of prizes they are helping to sustain a collective belief that true art has nothing to do with things like politics, money, in-group tastes, and beating out the other guy. As long as we want to believe that creative achievement is special, that a work of art is not just one more commodity seeking to aggrandize itself in the marketplace at the expense of other works of art, we need prizes so that we can complain about how stupid they are. In this respect, it is at least as important that the prize go to the wrong person as that it go to the right one. No one thinks that Tolstoy was less than a great writer because he failed to win the Nobel. The failure to win the Nobel has become, in the end, a mark of his greatness.
English speculates that this willingness to speak without embarrassment about the significance of prizes and awards, and about the whole economy of cultural production and consumption, may, paradoxically, signal the demise of the prize system. “As we lose our ability or our willingness to see the prize as a fundamentally scandalous institution”—scandalous because art ought to have nothing to do with winning and losing—“there is bound to be a period of painful contraction in the awards industry,” he says. “Faced with the withdrawal of what has been by far their richest and most reliable source of publicity, prizes may after so many years of uncontainable expansion at last show some signs of fatigue.”