THE BLUE FLOWER.<i> By Penelope Fitzgerald</i> .<i> Mariner/Houghton Mifflin: 226 pp., $12, paper</i>

It is not certain that God makes a distinction between Beethoven’s writing the Waldstein sonata and a parent’s folding the baby’s diapers. Not because there is no difference but because God, if I can interpret, may reason that a certain equipment (genius) went to Beethoven and that a certain equipment (a washing machine) went to the parent and that each made full and perfect use of each.

Further, it is always possible that the clean diapers will wrap some infant Beethoven of the future, who otherwise would perish from an infected rash, or that the parent was lifted out of suicidal tedium by hearing the Waldstein on FM radio.

This may sound pious and bland, but it is an attempt to get at the elusive quality of Penelope Fitzgerald, an author who is in no way pious, though in some sense religious. Far from being bland, she is, almost sentence by sentence, thrilling and funny and, I have come to believe, the finest British writer alive.

Deceptively small in size, “The Blue Flower” is a fictional evocation of the Romantic movement that revolutionized Europe’s sensibility at the beginning of the 19th century and of the contrast between the intellectual passions of any such large movement and the humbler, more permanent truths of human nature.

Big subjects--and Fitzgerald does, in fact, start them in the laundry. A young man travels from Jena with his former fellow-student the Freiherr Friedrich von Hardenberg, later famous as the German Romantic poet Novalis. They arrive at the decrepit Hardenberg townhouse only to find themselves under a snowstorm of sheets, pillowcases, chemises and drawers pitched from the upper stories into the courtyard.

“The Freiherr is trampling on the unsorted garments,” shouts the housekeeper from a second-story window. Knee-deep in underthings, the two young men below discuss whether there can be said to be such a thing as a thing in itself. In “The Blue Flower,” laundry is philosophical, and philosophy and poetry exist as materially as the fact that the family wash is done three times a year and that a young man will therefore own 89 shirts, allowing for an occasional two-day stretch.

Novalis, a mystical poet, was the son of a strict and devout father, a minor noble and director of the state salt works in Brunswick. Taking part in the intellectual ferment at the university in Jena, with such figures as Fichte and Schlegel, he died in 1801 at the age of 29, a few years after the death of his teen-age fiancee.

Within the facts, Fitzgerald has woven a shimmering fictional garment. Instead of a running narrative, her brief chapters are a series of sudden illuminations, sharply juxtaposed. They range from family scenes, to a glimpse of the Jena circle, to a duel, to Fritz (as Novalis is familiarly called) riding through the countryside. They present Sophie Kuhn, whom Fritz meets when she is 12 and promptly dubs “my philosophy,” and a terrible glimpse of a surgical operation without anesthetic.

Fitzgerald is the most cosmopolitan of English writers. Her three best books--”Innocence,” “The Beginning of Spring” and “The Gate of Angels”--are set, respectively, in Italy, pre-revolutionary Russia and Oxford before World War I. Like any excellent writer she creates a world, but like only a very few--Milan Kundera and Italo Calvino come to mind--she creates a metaphysics as well.

There is a magical immanence in her world, but it has no hierarchy. It is found in the grand Romantic ferment but also in a family routine, a young woman concealing a sudden start of love, a child running down to the river after the mildest of scoldings.

Take that last one. Fritz’s angelic little brother, “the Bernhard” (Fitzgerald imparts the faintest of German locution with just “the”), hides on a river barge.

Fritz, no longer the dreamy poet but a panicked brother, runs to find him. “The Bernhard” is briefly defiant and then allows himself to be hoisted on his brother’s shoulders.

“How heavy a child is when it gives up responsibility,” Fitzgerald writes. It is the finest of natural observations, but there is something more. Novalis’ poetry about the affinity between life and death has planted itself in the mischievous 8-year-old--years later he will drown in the same river.

Or take any of several scenes with Fritz’s autocratic, penny-pinching father. (The family’s penurious piety is such that Sidonie, the incandescent daughter who manages things, has to argue that providing a slop-pail for a visitor in no way breaches “a plain and God-fearing life.”)

The old Freiherr conducts an annual Christmas examination in which he proclaims a spiritual balance for each member of the family. One Christmas, looking shrunk, he cancels the ceremony. His Moravian Brethren preacher has told him he is too old to act as judge; his Christmas duty now is to be childlike and joyful.

“Anything less childlike than the leathery, seamed, broad, bald face of the Freiherr and his eyes, perplexed to the point of anguish under his strong eyebrows, could hardly be imagined.” The author adds that “the Brethren were experienced in joy, and perhaps sometimes forgot what a difficult emotion it is. . . .”

For the old man, it is conversion: a lofty event and also terribly funny. Fitzgerald’s writing is exquisite but not graceful: a choppy stream not a smooth one, a sublime current broken up by rocky absurdities. The episodes, some barely a page long, roughly converge around the motifs of love. Fritz is candid, awkward and sweet-natured, but he and his poetry are propelled by the abstract Romantic passion that is just beginning its historic reign. When it touches two particular women, it injures.

One is Sophie, whose childhood in a large and boisterous family, wonderfully evoked, is flooded out by Fritz’s prophetic tidal wave. She is unformed--her diary is a series of entries: “Nothing happened today”--but she responds as best she can. She keeps a poem of his with her list of dogs’ names.

Fitzgerald does not judge between art and life. But after Sophie dies, following an operation that in a few lines is the book’s most frightening scene--the author fulminates by withholding--we sense the emotional depth under the intellectual shallows.

Even more moving is Katherine, memorably human. She is the poet’s intimate confidant and too real for him to love. Her love for him is expressed through brilliant evasive strategies that are both comical and sad.

Fitzgerald has always been easier for British critics to admire than define (she has won the Booker Prize once and been a finalist twice), though the failures have produced some splendidly perceptive prose. I can do no better. It occurs to me, though, that closer than any literary comparison are the films of Eric Rohmer, their powerful emotional charge achieved, mosaic-like, by playful indirection and digression.

Like Rohmer, she has never quite caught fire in the United States--”The Blue Flower” appears only in paperback, which seems absurd--but it is hard to believe that a conflagration will never come.