Historicism has many definitions and uses in scholarship. Broadly, historicism is literature read with history, especially cultural history (both past and present).
For literary studies, historicism impacts text selection.
In formalist literary studies, texts are typically restricted to "creative writing": poetry, fiction, drama, with occasional autobiographies and essays. Following New Criticism, such texts are usually read as autonomous or stand-alone works expressing universal human values. To process a great work of literature, all you need is the words of the text itself.
In historicist studies of literature, creative-writing genres continue to dominate reading lists, but historical, economic, legal, and government documents are also read as literary texts. For example, Harriet Beecher Stowe's Uncle Tom's Cabin might be read with Lincoln's Emancipation Proclamation. Instead of independent or autonomous literary texts expressing their own unique meanings, texts are read together, intertextually.
How literature and history may interact through historicism:
A literary text may be related to history then or now.
OR, instead of merely reflecting history, literature may shape history then or now. In this sense, literature is history. Most of our knowledge of the past comes through writing or other records. Writing shapes our idea of later reality.
OR, the survival or appeal of a particular story may illuminate our present history. What about us now responds to or seeks out an event or story from earlier in history? (while ignoring other stories?)
This last aspect of historicism—past literature and history matter now—is potentially the most powerful yet dangerous appeal of historicism.
Historicism is not necessarily antagonistic to Formal studies of literature. The social nature of language and its many forms means that the effect on history by literature may be measured by the power of symbols, narratives, etc., or history and literature may share certain narratives or symbols or figures of speech.
Notes on Historicism from web sources:
As part of a wider reaction against purely formal or linguistic critical approaches such as the New Criticism and deconstruction, the new historicists, led by Stephen Greenblatt, drew new connections between literary and non‐literary texts, breaking down the familiar distinctions between a text and its historical ‘background’ as conceived in established historical forms of criticism.
Inspired by Michel Foucault's concepts of discourse and power, they attempted to show how literary works are implicated in the power-relations of their time, not as secondary ‘reflections’ of any coherent world-view but as active participants in the continual remaking of meanings.
New historicism is less a system of interpretation than a set of shared assumptions about the relationship between literature and history, and an essayistic style that often develops general reflections from a startling historical or anthropological anecdote.
[Stephen] Greenblatt's books Renaissance Self-Fashioning (1980) and Shakespearean Negotiations (1988) are the exemplary models. Other scholars of Early Modern (‘Renaissance’) culture associated with him include Jonathan Goldberg, Stephen Orgel, Lisa Jardine, and Louis Montrose. The term has been applied to similar developments in the study of Romanticism, such as the work of Jerome McGann and Marjorie Levinson. A major concern of new historicism, following Foucault, is the cultural process by which subversion or dissent is utimately contained by ‘power’. For a fuller account, consult Paul Hamilton, Historicism (1996).
a method of literary criticism that emphasizes the historicity of a text by relating it to the configurations of power, society, or ideology in a given time
According to Stephen Greenblatt, the role of the New Historicist is to create a "more cultural or anthropological criticism" which will be "conscious of its own status as interpretation and intent upon understanding literature as part of a system of signs that constitutes a given culture." Literary criticism and cultural critique are integrated, with the critic's role being to investigate "both the social presence to the world of the literary text and the social presence of the world in the literary text."
— Stephen Greenblatt, Renaissance Self-Fashioning
New Historicism began to coalesce in the 1980s as another critical return to focusing on the importance of historical context to understand literature. The New Historicist understands literature to be rooted in its cultural and authorial connections. In fact, the study of literary text is only one element of the New Historicist's exploration of the poetics of culture. This exploration draws upon the insights of Structuralist and Post-Structuralist theory. Some of the assumptions of the New Historicist also are reminiscent of the Marxist view of the dynamics of culture.
Like the Marxist critic, the New Historicist explores the place of literature in an on-going contest for power within society but does not define this contest narrowly in terms of an economic class struggle. Rather, within a culture a chorus of disparate voices vie for attention and influence. Literature provides one venue in which this web of conflicting discourses — of diverse interests, impulses, values, and attitudes — can be heard. While the traditional socio-historical critic seeks to articulate a single determinate social meaning in the text, the New Historicist seeks to acknowledge the "episteme" of culture — the multiplicity of perspectives that define the historical reality reflected in the text. This episteme of culture embodies cultural codes used in the crucial social process of exchange. In the social exchange of goods, ideas, attitudes and even people, the cultural imperatives of constraint and mobility find expression. Through its forces of constraint, a society seeks to preserve itself, but through its forces of mobility a society moves to modify itself. Out of the conflicting discourses and countervailing forces of exchange within a culture, its direction and destiny emerges.
The New Historicism Reader, H. Aram Veeser 1996
1) every expressive act is embedded in a network of material practices; 2) every act of unmasking, critique and opposition uses the tool it condemns and risks falling prey to the practice it exposes; 3) literary and non-literary "texts" circulate inseparably; 4) no discourse, imaginative or archival, gives access to unchanging truths or expresses unalterable human nature; and 5) a critical method and a language adequate to describe culture under capitalism participate in the economy they describe. (2)
notes from Fredric Jameson, Postmodernism or, The Cultural Logic of Late Capitalism. Durham NC: Duke UP, 1991.
Ch. 7. Immanence and Nominalism in Postmodern Theoretical Discourse
Part 1. Immanence and the New Historicism
183 In the realm of literary criticism, the New Critics also worried eloquently and productively about this problem, opting for that well-known primacy of textual immanence we now sometimes in hindsight dismiss with the shorthand term formalism. Their words for immanence and transcendence were “intrinsic” and “extrinsic”; the forms of theoretical transcendence they sought to repel were extrinsic historical and biographical information, but also political opinions, sociological generalizations, and “Freudian” concerns: the “old” historicism plus Marx and Freud.
184 [New Historicism] is a shared writing practice rather than any ideological content or conviction that seems to mark its various participants.
186 [To abstract some useful stereotype of this “movement”] can only be done, I think, by storytelling (we had this, and now we have this); and it is a story I propose to tell by way of the changes wrought by the introduction of the concept of a “text.” Those changes do not at first take place in the literary area, but they return to it later from an “outside” modified by the notion of textuality, which now seems to reorganize the objects of other disciplines and to make it possible to deal with them in new ways which suspend the troublesome notion of “objectivity.”
187 [Levi-Strauss] invent[s] a different kind of fictive (or transcendent) entity, in terms of which the various independent “texts” of kinship, village organization, and visual form can be read as somehow being “the same”: this is the method of the homology. As distinct as they are from each other, these various local and concrete “texts” can nonetheless be read as homologous with each other insofar as we disengage an abstract structure which seems to be at work in all of them, according to their own specific internal dynamics. . . . At the same time, it must be said that the notion of the homology rapidly proved to be an embarrassment and turned out to be as crude and vulgar an idea as “base and superstructure” ever was, the excuse for the vaguest kind of general formulations and the most unenlightening assertions of “identity” between entities of utterly distinct magnitude and properties.
188 We will therefore describe the New Historicism as a return to immanence and to a prolongation of the procedures of “homology” which eschews homology’s theory and abandons the concept of “structure.” This is also an aesthetic (or a writing convention, or mode of Darstellung) for which a formal rule emerges governing something like a ban or taboo on theoretical discussion and on the taking of interpretive distance from the material, the drawing up of a provisional balance sheet, the summary of the “points” that have been made. Elegance here consists of constructing bridge passages between the various concrete analyses, transitions or modulations inventive enough to preclude the posing of theoretical or interpretive questions. Immanence, the suppression of distance, must be maintained during these crucial transitional moments in such a way as to keep the mind involved in detail and immediacy. Whence, in the most successful of such artifacts, that sense of breathlessness, of admiration for the brilliance of the performance, but yet bewilderment, at the conclusion of the essay, from which one seems to emerge with empty hands—without ideas and interpretations to carry away with us.
189 [Greenblatt] A thematic association initially identified as the “self” and grasped with all the analytic sophistication of psychoanalysis is not dismissed but refashioned and, as it were, transcoded . . . .
190 a highly theoretical reluctance to “theorize”
192 . . . Benjamin’s reluctance to tell the reader of his historical “constellations” or montages what they meant and how to interpret them.
194 [articulation] triggers the homological or analogizing process
214 a new homological series