Academics determine what is taught, but they do not determine what is "literary". Literary, like language, is determined by use.Use by critics among others, I think, not the general readership alone. Books can have an extraordinary appeal to a vast public, and it is among the critics tasks to study what the basis of the appeal might be, and then to make distinctions among the elements, to give or detract value to specific works, their genre, and techniques. A concept of "literature", a kind of writing that does the reader a tangible good with a malleable knowledge that can be applied to one's life with good effect, is a creation of a university system where critics had to justify the systematic study of poetry, fiction and drama. The literary criteria has since trickled down to the larger, popular discussions among the public, not the other way around.
Academics hardly try to eliminate works from the ranks of literature: more often than not, the aim is to bring works into the fold, though no one, whatever degrees they do or do not hold, will ever be convinced that the mass and popular use of Danielle Steele will confer upon her literary qualities that will have her stock rise amongst academics, critics, what have you. This is an activity that comes from a critical discourse that makes such a conversation possible beyond a popularity contest.It's not that the best criticism claims to create the things that makes writing ascend to greatness, but only that it gives those things names that make them comprehensible to a larger, curious audience. But the terms are not locked, not fixed: literature changes given the changes in the world its writers confront, and so the terms of discussion change to, lagging, perhaps, a bit behind the curve. It's less that descriptions of literature fail, but instead are forever incomplete.
Literature, by whatever definition we use, is a body of writing intended to deal with more complex story telling in order to produce a response that can be articulated in a way that's as nuanced as the primary work, the factors that make for the "literary" we expect cannot be reducible to a single , intangible supposition. Use is a valuable defining factor, but the use of literature varies wildly reader-to-reader, group-to-group, culture-to-culture, and what it is within the work that is resonates loudly as the extraordinary center that furnishes ultimate worth, varies wildly too; there are things that instigate this use, and they aren't one determinant, but several, I suspect. A goal of criticism, ultimately, is not to create the terms that define greatness, but to examine and understand what's already there, and to devise a useful, flexible framework for discussion. Ultimately, the interest in useful criticism is in how and why a body of work succeed or fail in their operation, not establishing conditions that would exist before a book is written.
Myths, as well anyone can describe them, are working elements of our personal and social psychology, and whose elements are "modernized"-- better to say updated -- as a matter of course. Declaring a goal to make them relevant to the slippery degree of modernist convention sounds is an insight best suited for a Sunday book review.
Jung and Campbell are ahead on that score, and Eliade certainly stresses the relevance of mythic iconography strongly enough: current gasbag extraordinaire Harold Bloom advances the case for mythic narrative ,-- borrowed in part from Northrop Frye (my guess anyway) -- in the guise of literature, constructs the psychic architecture that composes our interior life, individually and as member of a greater set of links: the stuff helps us think ourselves, personalities with an unsettled and unfastened need for a center aware of its adventures in a what comes to be , finally, an unpredictable universe.
Bloom argues, somberly, that Shakespeare is the fount from which mythic forms find a contemporary set of metaphors that in turn became the basis for our modern notion of dramatic conflict, and argues that Freud's genius lies not in his scientific discoveries, but for the creation of another complex of metaphors that rival Shakespeare's for dealing with the mind's nuanced and curious assimilation of experience, the anxiety of influence in action, as process, and not an intellectually determined goal to navigate toward. The point is that modernization of myth is something that is that is already being done, a continuous activity as long as there are people on this planet...