Fantasy Classics : THE BOOK OF FANTASY <i> edited by Jorge Luis Borges, Silvina Ocampo and A. Bioy Casares (Viking; $19.95; 323 pp.; 0-670-82393-7)</i>

In her insightful introduction to “The Book of Fantasy,” Ursula K. Le Guin reflects on how fantasy today has become a business. One need only to visit the nearest bookstore-in-a-mall to see that this is so. Rows upon rows of gaudily packaged “fantasy” paperbacks are there to be consumerized.

What is disconcerting is their turgid sameness. Their covers and texts would suggest that fantasy is primarily concerned with semi-nude barbarians and Amazons who are forever slaying each other with glowing swords. There are certainly some exceptions, but most current fiction parading as fantasy displays a paucity of imagination that is deadening to the soul.

Fortunately, “The Book of Fantasy” provides a woodshed of tales, parables and fragments to rekindle the fire of our imagination. Borges and his friends have plucked paradoxes from the mists of ancient centuries, gathered tales of whimsy and revenge from the more discernible past, while adding modern stories of both apocalyptic dread and persistent hope. They have harvested these works from nearly every era and continent on Earth. Though the scope of their differences is enormous, they all share a special capacity to invite the reader to expand his world by challenging the static perceptions of reality.

Much of the intrinsic charm of this anthology stems from its unusual inception. Although published now for the first time in English, it is no hastily-thrown-together product of some publisher’s desire to capitalize on a fashionable trend. Rather its birth was on a rare evening in Buenos Aires, in 1937, when Jorge Luis Borges, Silvina Ocampo and A. Bioy Casares, three friends with literate and discerning minds, had the simple but pure idea to bring together a volume of fantasy based solely on what they liked best.

One cannot help but wonder how they arrived at their choices. Was there much argument? Why did they select Nathaniel Hawthorne’s “Earth’s Holocaust,” an oddly expository parable about the world’s population divesting itself of all institutional and intellectual trappings by throwing virtually everything, including books, into a giant conflagration? Surely one of them must have pointed out the superiority of Hawthorne’s darkly alluring “Rappaccini’s Daughter.” Perhaps they thought it was too commonly known.

It is easier to imagine them all eagerly assenting to Max Beerbohm’s “Enoch Soames.” This masterpiece of cynical humor about a frustrated writer who sells his soul to the devil for a chance to check out his literary reputation 100 years hence is a wonderfully welcome old friend. For those readers who remember it only as through a high school assignment dimly, its caustically precise dissection of artistic vanity is a joy to re-behold.

Their decision to open the volume with “Sennin” by the Japanese writer, Ryunosuke Akutagawa, was inspired. “Sennin” is a beautiful fable that demonstrates how the power of true belief, no matter how bizarre, can conquer the forces of those who accept nothing that reaches beyond the barriers of small-minded reality. An enchanting tale, it also aids the reader joyfully to embrace the suspension of disbelief that he needs to fully explore the labyrinths in the pages just ahead.

Here are tales of fantastic joy, terror and fear, satire and irony, and ugliness and beauty. Classics of horror such as W. W. Jacobs’ “The Monkey’s Paw” are juxtaposed with the ephemeral brevity of A. A. Ireland’s six-line “Ending for a Ghost Story.” The former drenches one in dread, while the latter clears the palate with a draught of delight.

Over the years, a few more contemporary pieces have been added. The most successful of these is J. G. Ballard’s “The Drowned Giant.” This bitter, yet superbly crafted tale tells of the brutal fate that a giant’s corpse suffers at the hands of callous humanity after it is washed up on an ocean beach. With this story alone, Ballard may lay claim to the misanthropic mantle of Jonathan Swift.

Borges and his colleagues have yoked together such disparate geniuses as Franz Kafka and Lord Dunsany; Chaung Tzu and Edgar Allan Poe; Oscar Wilde and Borges himself. Somehow, they all fit.

“The Book of Fantasy” is one of those marvelous volumes that are not meant to be read at a gallop. Rather, each story should be savored and mulled over, discussed and argued about in front of a winter fire or on the back porch on a hot mid-summer’s day. This book should be passed around from friend to friend, from parent to child, from lover to lover. It is a book of true fantasy and therefore filled with the wonder of boundless thought.