Although theory is usually opposed to practice, literary theory many times performs the practical purpose of evaluating literary history and criticism. Not only theoretical texts may discuss what is allowed and what is forbidden when one speaks of literature, but debates, discussions, critiques also frequently use theory as a tool to prove that the other is wrong since they committed something theory forbids. Through such acts, theory emerges as the police of literary criticism, with those performing such acts implicitly claiming the power to reward the good and punish the naughty. This article analyzes some examples of forbiddance (the ‘fallacies’ of New Criticism) and reward (Mikhail Bakhtin’s survey of those scholars who at least partially realized the polyphony of Dostoevsky’s writing). The case study with which the article ends takes on the history of the Department for Literary Theory (at the Institute for Literary Studies of the Hungarian Academy of Sciences), to show both the oppressive and the subversive potential of literary theory.