The Rug Merchant<i> by Phillip Lopate (Viking: $16.95; 218 pp.)</i>

One day, the owner of an Oriental rug shop on New York’s formerly shabby and now booming Amsterdam Avenue, receives a letter telling him that his rent is to be tripled.

It is the everyday bloodshed of urban gentrification and real estate gold-mining. Small groceries, hardware stores, cobbler shops and stationers are replaced by an ice cream franchise selling have-it-all-now flavors, or a boutique with a single spotlit pair of shoes in the window and a name like Ten Little Piggies. Suddenly, you have to go 20 blocks to buy a pencil or get a heel fixed.

It is a small incident and a large symptom; a symptom of the passing of the intimate, pedestrian neighborhood and, beyond that, of the city itself as a place where all classes, ages and occupations find themselves in lively proximity. The city as ecology is replaced by the city as monoculture.

Phillip Lopate has taken incident and symptom and made a small and quietly wonderful novel out of them. The eclipse of the city is the eclipse of the cultivated, the passive, the obstinate, the perennially hopeful and discouraged Cyrus Irani: ethnic American, failed art student, tangential lover and incompetent businessman.

In a bottom-line era, Cyrus, is a hopeless top-liner, with his elegant gray hair, his troubled and ineffective heart, his absorption in the particular and his utter failure to spot a trend.

While his neighbors talk rent-strike, community action, newspaper campaigns, Cyrus is composing a thoughtful letter to the young promoters who have taken over the building. It argues neighborhood values, cultural balance, his long and punctilious tenancy. It notes that his garbage is “minimal and non-odorous.” It suggests discussion and reasonable compromise. It deals with landlordism, in short, as if it were a craft and mystery like his own rug business; something conducted for money, of course, but also for its own sake.

The letter is a masterpiece: entirely true, entirely futile and entirely illustrative of the fictional character. Cyrus is distantly related to Oblomov; he doesn’t stay in bed, but he is incapable of engaging himself in any active resistance to the currents that are undermining him.

He is a non-improver by nature. Track-lighting would better his rug display, but he doesn’t install it. When given a poor hotel room on his travels, it never occurs to him to ask for a change. “It was almost a point of pride with him to accept the provisional as the inevitable,” Lopate writes. “He regarded his stay on Earth as that of a subletter.”

Aberjinnian, a friendly rival, gives him a whirlwind display of dynamic rug-selling; Cyrus profoundly admires the aesthetic qualities of the performance but remains stubbornly in place. His mother and brother propose various schemes that range from moving to Queens, to taking a job, to getting married. He agrees that all of their suggestions are sensible--”That’s just another form of your obstinacy,” his exasperated mother declares--but doesn’t budge. His only plan, in fact, is to pay the tripled rent for a few months until his savings are exhausted, and then try to borrow more.

Lopate skillfully sets Cyrus amid and against his ethnic community. His family is Persian, but they belong to a sub-group. They are Zoroastrians, adherents of a dualistic religion whose followers are thinly scattered over Iran, India and Pakistan. They are enterprising and tight-knit; cultivated but, at least in the tiny immigrant community described by the author, provincial. At a party, Cyrus seriously offends the community’s richest member by suggesting that Zubin Mehta’s conducting sometimes lacks subtlety. To the community, the only important thing is that Mehta is a Zoroastrian.

Cyrus’ drifting nature comes, in part, from taking the melting-pot notion seriously and from trying to elude his background. He had been an art-history student at Columbia University, hoping to find a place in the universal world of high culture. His lack of energy and self-confidence, coupled with his father’s death, sent him into a depression--”His whole body had started to feel as one’s foot does when it falls asleep”--and he took refuge in his uncle’s rug business, which he eventually inherited.

He is neither one thing nor the other: neither rooted nor successfully uprooted, good at neither art history nor rug-selling. He is seduced by the appearance of these things, by the notion of himself doing them; but he rejects the commitment, the brute ego that the world requires of almost any success, from scholarship to salesmanship.

Cyrus can understand and appreciate everything; he can talk gracefully and eloquently, but he can’t say: “I want.” When he tries to explain Walter Benjamin’s theory about the aura acquired by old objects to Aberjinnian, the latter exclaims: “You are a poet.” But he strikes a brutally hard bargain when Cyrus asks if he will help him sell his stock.

Cyrus forms complicated sentimental attachments to two women, both of them neighbors--passiveness again--and comically misconstrues their feelings. Reluctantly, he goes to a sex-encounter establishment--he puts on his best clothes for an occasion that requires him to strip--and is unexpectedly moved and overwhelmed by a young woman he meets there. He fails to follow up, though, and finally it is not clear whether her seemingly intense response was real or imagined.

He moves through misapprehensions like a marsh bird through mud. The author relates these in a series of vignettes, written with remarkable grace. Cyrus is the protagonist, but he is also our guide to a comical and observant tour of contemporary New York and New Yorkers. Lopate possesses a wit that is remorseless without ever being cruel; a compassion that is moving without ever being sentimental.

Cyrus is a fully achieved and perduring character. But he is more. His incompetence at the war games of modern life may not be ours but, under his maddening recessiveness and fumbling, there is a haunting suggestion that perhaps it ought to be.