As someone who makes his living entirely by the pen, I approached the character of R Tranter in Sebastian Faulks's new novel, A Week in

December, with great interest and not a little envy - the envy of the writer fetched up alongside someone working in the same field who is clearly doing a great deal better than he is. Tranter, a score-settling fortysomething who lives alone in a seedy flat with a cat called Septimus Harding, is, for example, allowed to write simultaneously for two Sunday newspapers (a privilege that no self-respecting literary editor would ever dream of conceding). He is, in addition, supposed to make £30,000 a year simply by reviewing books. And then, during the novel's finale, in an act of munificence that would have had the Cheerybles in Nicholas Nickleby shaking their heads, his chief editorial sponsor hands him a contract worth £25,000 a year with the proviso that "you can only write about the 19th century".

It is that final caveat which establishes Tranter's unreality for all time. No book reviewer in England gets that kind of money, in those conditions, not even Professor John Carey, the Sunday Times books section's principal ornament these past 30 years and more. There is no one like him in modern Grub Street, and probably never was. Interestingly, the people who come closest to him, in habit, inclination and routine, are literary models such as Jasper Milvain, the thrusting young careerist of Gissing's New Grub Street (1891), or the anonymous drudge of Orwell's "Confessions of a Book Reviewer" (1946), settling down to appraise five fat and miscellaneous tomes, one of which is called Tribal Customs in Portuguese East Africa, in 800 words, while a pneumatic drill rumbles in the street and the staircase echoes to the boots of his creditors. And yet, in putting Tranter, with his hulking resentments and his shady backstage intrigues (and also, it should be pointed out, his thoroughgoing knowledge of contemporary writing), busily at work amid the pages of a sup­posedly realist novel, Faulks is also gesturing, with a certain amount of grudging respect, at one of English literature's most pervasive archetypes - the Man of Letters.

By chance, 2009 marks the 40th anniversary of possibly the most brilliant piece of literary-cum-social criticism I have ever read: John Gross's The Rise and Fall of the Man of Letters. Gross's chief area of concern is the literary culture of about 1800 to 1950 - from the rise of the Quarterly reviewers, say, to F R Leavis and Scrutiny - but the epilogue takes the story up to the era of the Angry Young Men, Marshall McLuhan and the global village. As for the thing itself, Gross never offers an exact definition. His Man of Letters can range from a simple "bookman", snug in his study with 3,000 novels for company, to the kind of highbrow critic whose followers invest his cult with well-nigh religious significance, or the moonlighting MP who sees literature as a kind of default setting for his political schemes. What unites them is a passion for books, a fixation with the culture in which books get produced and evaluated, and an assumption that, as Gross puts it in his final sentence, "the idea of the man of letters has a place in any healthy literary tradition". This and the fact that, with one or two trend-defying exceptions, men of letters are as extinct as the passenger pigeon.

What had done for the Man of Letters in the 120 years since Carlyle - no less - included him in the ceremonial pantheon of On Heroes, Hero-Worship and the Heroic in History? Gross, with his keen eye for the cultural cross-currents of the immediately postwar era, has several explanations, ranging from literature's general retreat before a tide of newfangled mass entertainment to the whole McLuhan-esque take on popular culture and its "more aggressive counterattack on traditional literary standards in the name of the media". There is also - and as an ex-don come to rest in Grub Street, Gross is notably shrewd about this - the rise of "English studies" as a university discipline, the professionalising of "criticism", and the assumption that book reviewing in newspapers is an amateur sideshow compared to the more rigorous instruction going on in college lecture halls.

All this is true, and most of the phenomena Gross identifies have simply calcified in the intervening 40 years. And yet one of the real reasons for the near-extinction of Gissing's and Orwell's (and before them Carlyle's and Thackeray's) "literary men" is much more straightforwardly economic.

It is not just that, here in the early 21st century, the once-homogeneous entity known as "literary culture" has become horribly dispersed, blown out into cyberspace and colonised by bloggers and self-appointed savants who think their opinion of a book is just as good as the Sunday Times's. It is merely that, with one or two very singular exceptions, it is impossible to make a living out of reviewing any more. In strict fiscal terms, the money available for the kind of low-level literary jobs relished by R Tranter has not kept pace with inflation. In the early 1900s, Hugh Walpole was paid three guineas for his weekly novel round-up for the Daily Telegraph - not far off the average clerical wage, and substantially more than the rent on his Celsea bedsit.

Thirty years later, Evelyn Waugh reckoned to make £5 out of a morning's work writing a Spectator book review, which may not sound a great deal, but my father, then starting his career at the Norwich Union Insurance Company, was earning £45 a year. (These days the Spec pays £200 - not bad, but you can't live off it.) Not only was the pay better, but the volume of publications available to print one's work was greater. There were half a dozen London evening newspapers in the 1930s: as Alec Waugh, Evelyn Waugh's elder brother, recalled, a short story had to be very bad, or very good (that is, hopelessly highbrow), not to find a home. Seventy years later, the only reliable market for short fiction in the UK is the Sunday Times Magazine or BBC Radio 4.

The only time in recent years when it was possible to make a decent income from the old-style literary life was that brief Indian summer of the late 1980s and early 1990s. In the wake of Murdoch's trouncing of the print unions, newspapers suddenly grew bigger, sprouted arts supplements, pined for new talent and paid over the odds for it. A real top-notcher who cultivated his contacts, took on any work offered him, and reviewed for one daily newspaper, one Sunday and any weekly magazine that would have him might have earned £20,000 a year 20 years ago, but he (or she) couldn't do it now. Rates have been slashed; contracts are frowned on by vigilant managing editors; books pages struggle to retain their identity amid the annual encroachments of film and music. Meanwhile, the prestige commissions that writers habitually take on to keep their names before the public grow ever less viable. Now, a 2,000-word piece for the Times Literary Supplement, the country's leading literary journal, pays £200 - even though it takes a couple of days to write and finesse. Agreeable pin money if one is a media don, but not if you are trying, as I am, to feed, clothe and educate three growing boys while trying to write a novel that, as Orwell once put it, will knock Proust into a cocked hat.

No doubt the professional literary man, who roams through the pages of Thackeray's Pendennis (1848-50), who hangs around the margins of Anthony Powell's Books Do Furnish a Room (1971) and whose handful of modern epigoni can still be seen clinging to a rock face that each year slips a little further into the sea, had his drawbacks. Like Tranter, a failed novelist and lower-middle-class ingrate, he could be consumed by spite in the presence of better-placed contemporaries. Like many of Gross's Victorian critics, he could sometimes forget that books, like anything else, are there to illuminate life, not to block it from view. On the other hand, he did have two inestimable advantages. One was that he was not an academic (Gross has some choice remarks about the "basic antagonism" that exists "between the very nature of a university and the very spirit of literature"). The other was that, however crude or ready-made his judgements, he tended to operate by a series of standards arrived at through long years at the coalface and an instinct for establishing whether a book was any good or not.

Even today, wanting an opinion on a newly published novel, and forced to choose between a newspaper critique, an internet book blog or Professor X of the University of Neasden loftily descending from Olympus to pronounce a few oblique compliments in the London Review of Books, I would always go for the man (or woman) in the newspaper, on the grounds that he (or she) is likely to have a better idea of what the book is about and tell me whether I want to read it.

Like the polar bear on his Arctic floe, uneasily conscious of the cracking ice and the rising tides that seethe about him, the Man of Letters' frail descendant needs all the help he can get. It was he who helped to create "literary culture" in the first place; in his absence, literary culture will never be the same again.

D J Taylor's new novel, "At the Chime of a City Clock", will be published by Constable in the spring