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Practically speaking, from a student's point of view, literary theories are different ways of analyzing literature. Literary theories are perspectives one brings to literature when one analyzes, or "criticizes," literature.
For instance, one might study medieval Arthurian legends from a feminist perspective, feminism being one literary theory. One might find that Arthurian legends present women as either Virgin Mary-like beauties (Madonnas) or scapegoats for society's ills. Women are either put of pedastals and idolized for their beauty and purity and destined to be rescued by men, or are impure and morally at fault and cause society's problems.
One might also look at the famous story "The Necklace" from a Marxist/Economic point of view. What is Mathilde's economic situation? What chance for economic success does she have? If she were not poor to begin with, wouldn't she have been aware of the possibility that the necklace was only costume jewelry, rather than genuine? What are the physical costs of poverty?
Numerous literary theories exist, of course. For a student, they enable one to do literary criticism from various points of view and perspectives.
Literary criticism is the study, evaluation, and interpretation of literature, whereas Literary theory is the philosophical discussion of its methods and goals.
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