Elaborate this questions with reference to theoretical positions concerning literature that you familiar with.
There will be a great deal of discussion and debate on this particular question. I do think that literature does reflect contingency of context because it arises from these contexts. It reflects them because it is a part of them. For example, Salman Rushdie's "Midnight's Children" reflects the socio- economic and political relationships in the new India of the time period following Independence. The work reflects this because it is a part of it. At the same time, literature can help to shape these relationships because it is such an authentic expression of it. Rushdie's work helped to explore the complexity of the relationships in modern India that we now take for granted.
This is a great topic indeed!
Reading the question, Edward Said's Orientalism came into my mind. In its introduction, he says that, every text has a context, and the context leads us to know many a things. The post-structuralists themselves claim that, if you go to read a literary text, you must have to go beyond the text itself to interpret it. Authors re-present (Re Present or to present again) the text from his own perspective however impartial s/he wants to be. His text will surely support a certain custom, belief, value or trend. No writer is away from bias. That is why, literature directly or indirectly will for sure try to shape. motivate even mold one's culture and beliefs, be it political, or social or economic.
This subversion of the realistic position of literary verisimilitude can be approached from theoretical positions of poststructuralism and postmodernism. The idea that language constructs or produces reality instead of representing reality is a position that is elaborated in the works of postmodernist thinkers like Jean Baudrillard. His essay on the simulacrum is an instance. In the poststructuralist tradition of Foucault, Barthes, Derrida and Lacan, the world as an always already written down text is a prevalent issue. Everything is always already represented and thus in a Platonic way, everything represented is actually re-represented. The notion that discourse shapes reality rather than the other way round in Foucault and Derrida, the Real being appropriated and restricted by the linguistic symbolic in Lacan are all relevant directions.