Illusion and Reality was written quickly during the summer of 1935, while Caudwell was in the process of a political conversion to Marxism. Portions of the manuscript were produced at a rate of 5,000 words a day. In its use of political theory and history the book was influenced by the philosophy of Karl Marx, but it also was strongly indebted to the literary criticism of I. A. Richards. Caudwell develops two main arguments in Illusion and Reality. First, each unique era of British poetry develops from a particular economic arrangement in bourgeois society. Caudwell writes: Caudwell, here, is working within the Marxist framework of base and superstructure and argues that both the poetic form and the content are determined by the economic base. To further illustrate this point Illusion and Reality includes a table that outlines the "General Characteristics" of the capitalist economy in Great Britain during ten different eras and their related bourgeoispoetic forms, or "Technical Characteristics," from that same period. For example, Caudwell writes: The table provides an outline for the historical progression of forms that Caudwell examines in Illusion and Reality and exemplifies the connection Caudwell sees between poetry and economic social relations. Caudwell's second major claim is that the act of creating poetry is a response by human instincts to the unfavorable conditions of bourgeois life. In this argument, Caudwell modifies the Freudian understanding of the creative process through Marx.
Criticism
Early reviews
Illusion and Reality was published shortly after Caudwell's death and was welcomed by Marxist critics who viewed Caudwell as something of a martyr. Among the non-Marxist literary establishment it received little notice.
1950–1951 Caudwell controversy
In the Winter issue of The Modern Quarterly, Maurice Cornforth published an article that challenged Caudwell's opinion of poetry—particularly as it appeared in Illusion and Reality. Cornforth argued that Caudwell's theory of poetry was idealized, dependent on a Freudian concept of pre-social 'instincts' that was incompatible with Marxism. George Thompson answered Cornforth in the next issue by reaffirming Illusion and Reality's contribution to Literary criticism. The next two issues saw the publication of another twelve responses, all differing on the value of Caudwell's theory. Further responses were also published in journals in both Great Britain and the United States. The debate provoked a re-evaluation of Illusion and Reality and 'The Caudwell Controversy' became an important intellectual moment in the evolution of the British Socialist movement.
Later criticism
As Marxist Literary theory underwent a 'cultural turn,' Illusion and Reality was increasingly seen as dogmatic and rigid in its discussion of bourgeois poetry. The debate shifted away from its use of Freudian concepts to its ties with Stalinist Marxism. In Culture and Society, Raymond Williams said of Illusion and Reality that it had "little to say of actual literature that is even interesting" and that the book "is not even specific enough to be wrong." Terry Eagleton remarked about Caudwell in 1976 that "there is little, except negatively, to be learnt from him." Even E. P. Thompson, one of Caudwell's most generous late-interpreters, argued that the status of Illusion and Reality should be downgraded among Caudwell's works in favor of Studies in a Dying Culture. From the late 1950s until the late 1980s, Illusion and Reality was equated with vulgar Marxism. However, Christopher Pawling's 1989 book on Caudwell sought to restore the reputation of Illusion and Reality by suggesting that it belongs to what Raymond Williams called an "alternative Marxist tradition" that included Antonio Gramsci, György Lukács, and Lucien Goldmann.
