A century from now people will still be reading the fantasy stories of Ursula K Le Guin with joy and wonder. Five centuries from now they might ask if their author ever really existed, or if Le Guin was an identity made from the work of many writers rolled into one. A millennium on and her stories will be so familiar, like myths and fairytales today, that only dedicated scholars will ask who wrote them. Such is the fate of the truly great writers, whose stories far outlive their names.

The real woman would certainly tell me off for confusing her with the legendary author of some of our greatest fantasy stories. Having just turned 83, she's living evidence of the truism that "art is long while life is short", and like all great writers she wisely invests her time in writing great books. But with the publication of The Real and the Unreal: The Selected Stories of Ursula K Le Guin you can expect to hear a great deal about the legendary author over the coming weeks and months.

The two-volume edition, published by the highly influential Small Beer Press, presents the two halves of Le Guin's short fiction. Volume One: Where On Earth collects her realist and magical realist writing. Volume Two: Outer Space, Inner Lands includes Le Guin's overtly fantastic fiction. Le Guin will be best known to most readers for her spectacular run of science fiction novels The Left Hand of Darkness (1969), The Lathe of Heaven (1971) and The Dispossessed (1974) and the fantasy saga of Earthsea. But in this collection of short stories, spanning five decades of the author's creative life, Le Guin's fiction is shown in its full diversity.

The purpose that unites all of Le Guin's best writing, both short stories and novels, is illustrated in perhaps her most famous story, The Ones Who Walk Away From Omelas. The citizens of the utopian fantasy city of Omelas live lives of peace and plenty. But in a cell at the heart of the city is a lonely child, kept mute and dirty and starving and denied the light of day and the love of family. The people of Omelas come to see the child that suffers so that they may live in paradise. Some scorn the child, others experience guilt. And a very few walk from Omelas, towards a place even less imaginable, although "they seem to know where they are going, the ones who walk away from Omelas".

"The Master leads / by emptying people's minds / and filling their hearts." So says the Tao Te Ching, among the core texts of Taoism, the philosophy that colours much of Le Guin's writing. And Le Guin is a master at creating stories that employ the fantastic to step past the confusion of the mind and make their moral appeal directly to the heart. This is what gives them their power. Le Guin's stories contain a moral authority that we feel in our hearts, even if our mind finds ways to reject it.

We tend to relegate simple stories with a moral to children's literature. We demand greater moral complexity for adult contemporary fiction, at least in the literary world. And yet the moral choice faced by the citizens of Omelas is entirely familiar to us – citizens of the developed world that rely so heavily on the continued labour of the developing nations. Day after day, year after year, we choose not to walk away from Omelas. The moral complexity of much contemporary literature can be its own kind of escapist fantasy, one which comforts us with the idea that absolute good can never be achieved, so our failure to achieve it is acceptable. Surely the citizens of Omelas liked such books as well?

If Le Guin's stories sit uncomfortably with the moral ambiguity of contemporary literature it is also because they belong to an older literary tradition. Arguably the oldest of all. The literary critic Harold Bloom identifies the roots of this tradition in The Book of J, where he argues cogently for the biblical book of Genesis as a great work of literature – and one almost certainly composed by a woman writer as a mythic tale communicating a simple moral message. Only centuries later was the story co-opted as part of Christian religious dogma. In Le Guin we have a modern-day counterpart to this nameless literary genius, whose writing has survived through the millennia to influence generations.

The metaphorical language of fantasy has the capacity to touch us in the most profound ways. But many otherwise great fantasy writers, including JRR Tolkien and CS Lewis, fall too easily into the traps of dogma and moral superiority, making their medicine sometimes hard to swallow. The stories of Ursula K Le Guin manage the sublime trick of touching our hearts while also satisfying our cynical, modern minds. For this reason her stories will pass into legend, to touch many generations to come.