The standard short story syllabus relies on a canon of realist short fiction; when I teach, I like to add a dash of the fantastic. Tzvetan Todorov, in The Fantastic: A Structural Approach to a Literary Genre, defined the chief quality of the fantastic as ‘that hesitation experienced by a person who knows only the laws of nature, confronting a supernatural event.’ These in-between stories occupy a liminal space between literary and genre fiction, between belief and disbelief, borderlands which Michael Chabon elegantly makes the case for in his essay ‘Trickster In A Suit Of Lights’ (Maps And Legends: Reading and Writing Along the Borderlands, McSweeney’s 2008). All these stories contain fantastical elements, some dreamlike, others straightforwardly speculative or deliberately metafictional.
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Check out Library of America two-volume set, “American Fantastic Tales: Terror and the Uncanny.”
Vol 2 includes a really wild Chabon story, “The God of Dark Laughter.”