A funny thing happened to the short story on its way to the graveyard: It turned right around and came back to life. Written off only a few years ago as a dying form for which no discernible "market" existed, the short story has revived with a vigor that must give pause to any confident prognosticator of "trends." Indeed, a good case can be made that American writers are now doing more energetic and interesting work in the short story than they are in the novel--which itself, it will be recalled, was written off as "dead" not so long ago.

The demise of the short story was announced a couple of decades back with the collapse of the mass-circulation, general-interest magazines, chief among them The Saturday Evening Post and Collier's. These publications--like such earlier casualties as the American Mercury, Scribner's Magazine, Hearst's International and McClure's--had provided a substantial readership and a decent income for writers of both popular and literary short fiction. But they were killed off by television, and when they went under, the assumption was that the short story had gone with them.

It was a reasonable conclusion. The short-story writer hoping to make a living off his craft found that his options had been radically reduced. The New Yorker, though it paid well, was as much a members-only club as the Century or the Metropolitan; Harper's and The Atlantic usually published just one story an issue, and paid poorly for it; Esquire's interest in stories waxed and waned, depending on who was the current occupant of the fiction editor's chair; Playboy was interested primarily in celebrated bylines, even if it could get only their inferior work. All that remained, therefore, were the literary magazines, which could offer ample prestige within certain tiny circles but precious little by way of readership or income.

The predictable result was that with a few notable exceptions, people stopped writing stories and turned to novels--a risky way to make a living, given the unpredictable nature of the book trade, but a better one than trying to stay alive on occasional $50 checks from one little magazine or another. Acknowledged masters of the short story--Peter Taylor, John Cheever, Eudora Welty--were constantly urged by editors and publishers to write novels; the received wisdom in the book industry had become not merely that magazines did not buy short stories, but that readers did not buy short-story collections. A writer such as Taylor who stuck stubbornly to his last was regarded as an oddity--an admirable one, to be sure, but one who clung to his integrity at the cost of popular readership and acclaim, and the financial rewards therefrom. The short story, according to the prevailing orthodoxy, was dead, dead, dead.

So why is it that in recent months there have been story collections everywhere one looks? Why is it that any list of the most enthusiastically received works of fiction published in the past couple of years would have to include Raymond Carver's "What We Talk About When We Talk About Love" and "Cathedral," Bobbie Ann Mason's "Shiloh and Other Stories," Paul Theroux's "World's End," Richard Yates' "Liars in Love," Ellen Gilchrist's "In the Land of Dreamy Dreams," Ann Beattie's "The Burning House," Cynthia Ozick's "Levitations"--every one of them a story collection. Why is it that the spring and fall lists of the book industry for 1983 have contained a profusion of story collections that, by comparison with the lists of recent years, positively boggles the mind?

The answer appears to be one of those good-news, bad-news propositions. To take the second part first, there can be little question that the renewed interest of book publishers in story collections--and thus the renewed interest of writers in putting them together--is another example of the "upscaling" of the audience for books. Increasingly, the publication of serious literature in the United States is directed at a small group of customers who are intellectually and financially elite. Apparently enough of these people have shown themselves willing to spend $15 or more for slender volumes of short stories; publishers, knowing the market for these books is limited but affluent and highly motivated, are more willing to publish them than in the past.

The short-story market, in other words, is quite a different beast from the market for popular fiction; it is different, in fact, from the market reached by serious writers--Gail Godwin, William Styron, Anne Tyler--who have been able to cross over into the best-seller lists. A story collection that sells 10,000 copies has done very well indeed, and probably would be regarded by most publishers as a great success; by contrast, the novels of writers as diverse as James Michener and John Le Carre' each sell in the hundreds of thousands. The audience for short stories in the day of Raymond Carver and Ellen Gilchrist bears almost no resemblance to the market for stories in the days of Scott Fitzgerald and Ring Lardner; it is not a popular market at all, but an essentially literary one--and in this country, that means a small one.

But what matters is that it exists, and that of late it seems to have grown significantly. This is the good news: Writers and readers alike seem to have rediscovered the home truth that short, like small, can be beautiful. "Being short does not mean being slight," Flannery O'Connor once wrote. "A short story should be long in depth and should give us an experience of meaning." This is not easy to do, and the short story therefore poses challenges to the writer--and offers rewards to the reader--that the novel cannot always match. In a very limited space, as O'Connor pointed out, a great deal of business must be taken care of:

"A good short story should not have less meaning than a novel, nor should its action be less complete. Nothing essential to the main experience can be left out of a short story. All the action has to be satisfactorily accounted for in terms of motivation, and there has to be a beginning, a middle, and an end."

That is a tall order; filling it requires concentration, condensation and selection, thus tasking the writer's skill and discipline. In no way is it to denigrate the novel--an art form that surely ranks with the symphony in depth, complexity and richness--to say that the accomplished writer of short stories is a rarer creature than the accomplished novelist; it is often easier to put in than to take out, and taking out is what the story writer must do. That only two American writers--Hawthorne and Faulkner--have mastered both the novel and the story is evidence of how different the two forms are; a healthy literature requires that both flourish, which is all the more reason to rejoice at the short story's new flowering.