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The word derives from the Greek allegoria ("speaking otherwise"). The term loosely describes any writing in verse or prose that has a double meaning. This narrative acts as an extended metaphor in which persons, abstract ideas, or events represent not only themselves on the literal level, but they also stand for something else on the symbolic level. An allegorical reading usually involves moral or spiritual concepts that may be more significant than the actual, literal events described in a narrative. Typically, an allegory involves the interaction of multiple symbols, which together create a moral, spiritual, or even political meaning. The act of interpreting a story as if each object in it had an allegorical meaning is called allegoresis.
If we wish to be more exact, an allegory is an act of interpretation, a way of understanding, rather than a genre in and of itself. Poems, novels, or plays can all be allegorical, in whole or in part. These allegories can be as short as a single sentence or as long as a ten volume book. The label "allegory" comes from an interaction between symbols that creates a coherent meaning beyond that of the literal level of interpretation. Probably the most famous allegory in English literature is John Bunyan's Pilgrim's Progress (1678), in which the hero named Christian flees the City of Destruction and travels through the Valley of the Shadow of Death, Vanity Fair, Doubting Castle, and finally arrives at the Celestial City. The entire narrative is a representation of the human soul's pilgrimage through temptation and doubt to reach salvation in heaven. Medieval works were frequently allegorical, such as the plays Mankind and Everyman. Other important allegorical works include mythological allegories like Apuleius' tale of Cupid and Psyche in The Golden Ass and Prudentius' Psychomachiae. More recent non-mythological allegories include Spenser's The Faerie Queene, Swift's Gulliver's Travels, Butler's Erewhon, and George Orwell's Animal Farm.
The following illustrative passage comes from J. A. Cuddon's Dictionary of Literary Terms and Literary Theory, 3rd edition (Penguin Books, 1991) :
To distinguish more clearly we can take the old Arab fable of the frog and the scorpion, who met one day on the bank of the River Nile, which they both wanted to cross. The frog offered to ferry the scorpion over on his back provided the scorpion promised not to sting him. The scorpion agreed so long as the frog would promise not to drown him. The mutual promises exchanged, they crossed the river. On the far bank the scorpion stung the frog mortally.
"Why did you do that?" croaked the frog, as it lay dying.
"Why?" replied the scorpion, "We're both Arabs, aren't we?"
If we substitute for a frog a "Mr. Goodwill" or a "Mr. Prudence," and for the scorpion "Mr. Treachery" or "Mr. Two-Face," and make the river any river and substitute for "We're both Arabs . . ." "We're both men . . ." we turn the fable [which illustrates human tendencies by using animals as illustrative examples] into an allegory [a narrative in which each character and action has symbolic meaning]. On the other hand, if we turn the frog into a father and the scorpion into a son (boatman and passenger) and we have the son say "We're both sons of God, aren't we?", then we have a parable (if a rather cynical one) about the wickedness of human nature and the sin of parricide. (22)
For more information about Allegory see A Glossary of Literary Terms by M.H. Abrams
"Why did you do that?" croaked the frog, as it lay dying.
"Why?" replied the scorpion, "We're both Arabs, aren't we?"
If we substitute for a frog a "Mr. Goodwill" or a "Mr. Prudence," and for the scorpion "Mr. Treachery" or "Mr. Two-Face," and make the river any river and substitute for "We're both Arabs . . ." "We're both men . . ." we turn the fable [which illustrates human tendencies by using animals as illustrative examples] into an allegory [a narrative in which each character and action has symbolic meaning]. On the other hand, if we turn the frog into a father and the scorpion into a son (boatman and passenger) and we have the son say "We're both sons of God, aren't we?", then we have a parable (if a rather cynical one) about the wickedness of human nature and the sin of parricide. (22)
For more information about Allegory see A Glossary of Literary Terms by M.H. Abrams