In Edward St Aubyn's frothily mischievous new novel Lost For Words, the Elysian Prize, like the Man Booker on which it is so shamelessly modelled, is the one every novelist - and their hangers-on - wants to win.

There is no real rationale to this. Much depends on the judges, who, it seems, are often chosen not because of what they know but who they know or what they represent. This may account for the preponderance among their ranks of politicians and academics, neither of whom have great track records when spotting literary talent. The same might be said of celebrities whom those in charge of prizes adore because of the free column inches that are accorded their every utterance. It matters not a jot that they cannot read other than from left to right; what's important is that the non-reading public recognises their names.

The Elysian's panel is chaired by Malcolm Craig, a bored backbench Scottish MP. He is joined by Penny Feathers, who works at the Foreign Office and who, like Stella Rimington (ex-head of MI5 and one-time chair of the Booker judges), writes cliche-clogged thrillers of numbing banality in which product-placement is more blatant than in a Bond movie. There are three other judges: Vanessa Shaw, an Oxford academic who is on a quest to reward "good" writing; Jo Cross, a media personality who is given to saying things like "it's important that it works at a 'realistic' level, while simultaneously operating as the boldest metafictional performance of our time"; and Tobias Benedict, a coke-snorting actor who is the godson of the Elysian's administrator and who, by his own admission, had been "a fanatical reader ever since he was a boy". Whoop-de-doo!

As St Aubyn, the author of the superb Patrick Melrose novels, is well aware, this is all perilously close to the bone. Inbred as the literary world is with pretentiousness, charlatanism, back-scratching and nepotism, and bankrolled by companies with questionable ethics, it is the perfect setting for satire. The problem, however, is that in this case fiction is an inadequate substitute for reality. The contemporary world of books is one in which hyperbole and insincerity rule and where what makes literature that will last is increasingly hard to find amid the PR and hoopla, networking and rubbernecking.

Nor, as St Aubyn describes, are authors any less culpable than the other constituents of the book trade. None more so than sexy Katherine Burns who, were it possible to sleep her way to the top, would be the recipient of a Nobel Prize. As it is, her publisher, with whom she is sleeping, forgets to submit her book, thus ending their relationship. Another of Katherine's camp followers is Sam Black, author of The Frozen Torrent, which is destined to make the Elysian shortlist, much to Katherine's chagrin. She is also acquainted with Sonny, an Indian potentate, who is so convinced of the merits of his "magnum opus", The Mulberry Elephant, he has already written his acceptance speech.

It would be remiss of St Aubyn not to revel in such promising material. Lost For Words moves at a lick and its author - who has himself been shortlisted for the Man Booker - enjoys poking his stick in the eye of sundry targets. It may be over-sensitivity on my part, but he appears especially to have it in for Scots. Malcolm Craig, for example, who is one of us, asks his secretary to skim through submissions looking for "anything with a Scottish flavour". One is called The Greasy Pole, another is entitled wot u starin at, from which St Aubyn quotes at length. Alas, this only serves to demonstrate his limitations as a parodist: wot u starin at may contain echoes of Irvine Welsh and James Kelman but only if they've got Cockney accents.

In his previous novels, St Aubyn showed rather than told and the effect was devastating. Moreover, every line seemed to be laced with arsenic. Here, there is little in that vein. Ultimately, a book prize is at stake and who really cares about that? As those in charge of such things hope, the winner turns out to be "controversial". "What is literature?" asks the recipient of the palm. No answer is forthcoming. Whatever it is, it has diddly-squat to do with prizes like the Elysian or the Man Booker.