I've heard both sides of this debate for years. Those devoted to literary fiction scoff at mysteries, romance, sci-fi, and so on as hack work, though they might allow these are okay for "summer reading." Meanwhile fans of genre fiction laugh at literary fiction. There is a series of jokes which ask, "What's the difference between literary fiction and genre fiction?" Answers: "In genre fiction, you're allowed to have a plot." And, "if you're selling lots of books, it's genre fiction."
Laura Miller, book critic for Slate has taken a more constructive approach in her essay, "In Praise of Reader Reviews." She tells us why she looks at reader reviews on sites like Amazon and Goodreads. "I already know how people like me, people who read books professionally and with a particular set of aesthetic values, respond to a text. I go to reader reviews to see how the other half reads."
Okay, that still sounds like "us vs. them," but she gets into detail about what each side likes. I think she nails it when she writes, "The lament that 'nothing happens' in a novel often means that the main character or characters don’t drive the novel’s action or events; things happen, but they happen to the characters rather than being caused by them. People want to read about characters they like and identify with, which often means characters who take charge of their destinies instead of passively moping around being “whiny” (another common complaint)."
That's it in a nutshell. In literary fiction, the action is like real life: mostly things happen to people. In genre fiction, the action is what life would be like if we had control over our lives. Take your pick.
Miller also makes this useful observation about books that get five stars from readers: "What literary critics seem to most prize--beautiful sentences--barely seems to count at all." True. That's why writers of genre fiction are constantly told, "Forget fancy writing."