Why call a publishing company Gulliver House? In this novel, the reason seems transparent. Lloyd Erskine, the central character and a co-founder of Gulliver House, describes the moment of truth when he and his two partners (all disgruntled editors from the solid but perhaps too commercial house of Crowninsheld) are looking for a name "with a literary flavor."

"My own gaze fell on . . . a yellowing political cartoon, that of a supine giant, waking to behold the stakes and guys that restrain him, and the Lilliputians at their work. 'Gulliver,' I said, pointing him out. 'Gulliver House.'"

The image really doesn't make the case. Gulliver House is a literary expression of the idea that "small is beautiful." The three partners agree that they will publish a restricted number of really good books each year, and leave the profitable trash to others: "A small list, maybe 30 titles a year to start, but of such quality that our name on the spine of a book will mean excellence."

On the other hand, a giant immobilized by many small strings is the firm of Corwninshield, where Loyd and his partners learned about the bottom line in publishing. In the good old days, it published Melville, Hawthorne, Twain and Thoreau, turning out "monuments as a matter of course." Then in the '20s, on the verge of bankruptcy, it fell into the hands of Hugh Severance, who nursed it back to robust health. Now, a victim of its own success, it has merged with United Broadcasting and finds itself a victim of creeping efficiency.

Paul Peeling, who represents United on the board of Crowninshield, is wild about graphs and cost-effectiveness; his assignment is to rationalize book-publishing, organize it for optimum profit. Instead of a wild and wonderful kind of roulette, where ideas and images, stories and emotions are the chips, he would make its products something like the programming of television, to which it has become a subsidiary.

"He's methodically trying to rid the place of publishing taste and courage," Erskine complains early in the process, "so as to make way for the mediocre ideas and writing-to-formula that his graph tells him reach the most readers." And that fairly well sums it up.

John Leggett, director of the Writer's Workshop at the University of Iowa, had done time as a book editor in New York and describes the publishing scene, from the end of World War II to the present, with a wryly perceptive grace. And for those who love books, it is a scene well worth knowing, a scene of sweeping, even catastrophic changes since the arrival of paperbacks, television and acquisitive conglomerates.

In the days of Max Perkins, a hardcover editor's job may have been to take a promising manuscript and help it fulfill its promise. Now, the editor is the proprietor of a string of writers, not unlike a stable of racehorses; his work is done at lunch and at board meetings more than at a rewrite desk, and his quest is not so much for literary quality as for subsidiary rights - paperback reprints, book clubs, film and television contracts. In many ways, he looks more like the traditional idea of an agent rather than an editor - but, of course, he represents the publisher as well as the author. Above all, he represents himself, for he is something like an entrepreneur within the company, his status depending not on his literary taste but on his contribution to corporate profits.

Gulliver House is founded largely as a means of escape from this cycle - a company dedicated to the proposition that, over a period of years, consistently high quality can be at least modestly profitable. There is some truth in this idea, and there are a few publishers who have demonstrated it, but by the end of the novel Erskine and his colleagues are deep in sober second thoughts about how much quality they can afford.

Woven into the story of Gulliver House is that of Lloyd Erskine, from the beginning of his career until his 50th year, when he finally discovers some unpleasant truths about his personality and shows signs of reaching maturity. A good proportion of the book is devoted to his fairly routine personal problems - a marriage slowly dying in suburbia, an affair with his secretary, communication problems with his son - and from this viewpoint "Gulliver House" is a good but not exceptional novel of a familiar kind. What brings it to life is its background, its portrayal of the publishing industry. It should appeal to a specialized readership, but among those readers its appeal will be strong.