January 27, 1985

IS the quality of American cars improving? Anyone who has received a recall notic might not think so. Someone who discovered that a new car's windows would not close in a thunderstorm, that its transmission would not shift into reverse or that its radiator fan stayed on when the engine was turned off, draining the battery might also be skeptical. Detroit standards slipped in the 1970's, the manufacturers and their critics agree, and foreign companies quickly earned a reputation for higher quality. The consensus among the automotive experts now is that foreign cars still hold an advantage, but domestic automobiles seem better than they were five to eight years ago.

What ever happened to the literary underground? The image of the avant- garde writer in resistance to the status quo, keeping a critical distance from the establishment, used to be part of a sustaining myth for many poets and novelists well through the 50's. Today, if you raise the old question of ''selling out'' among writers, the response is likely to be not a tortured ''whether?'' but an ironic ''how?'' The 60's, Ronald Sukenick is working on a nonfiction narrative about the American cultural underground. A novel, ''Blown Away,'' will be published this year, as well as two other books. with an avant-garde vitality yet to be assessed, redefined much in American culture, including middle-class esthetic standards, but at the same time eroded the mystique by which artists had resisted the pressures of the marketplace. Nobody planned it that way, but there is a logic in the history of the situation. Subterraneans wanted simultaneously to rant at Moloch and be part of Moloch, as if you could bite the hand of oppression and then demand it feed you. However, the contradictions that caused the collapse of the underground, once apparent, may finally define its legitimate relation to the culture.

Milton Berle ''I had the training of working with great comedians. I was always watching and listening, to timing, to how jokes were told. You would find someone to admire. For me, it was Ted Healey. He was flippant, aggressive, had a cocksure demeanor. We call it put- downs now. I modeled myself after him. I didn't steal anything, but I did style myself after him.

The theater critic William Dean Howells spent much of his life searching for indigenous American drama, and in 1886 he announced he had found it in the person of one Edward Harrigan. Here was a man, Howells declared, who wrote, directed, acted and managed his works in the manner of a Shakespeare or a Moli ere. Here was a social realist on the order of Dickens or Zola. Such accolades must have sur prised Howells's highbrow readership, for Harrigan was not the product of a university or a conservatory, but rather the self-educated son of a seaman. He had grown up in Manhattan's Irish slums and had run away to sea in his teens. His plays carried the cheapest ticket in town and their most devoted spectators were the orphaned newsboys whom New York had by the thousands. But with his featured actor Tony Hart and his songwriting partner Dave Braham, Harrigan created plays that were unsentimentally true to the New York of the immigrants. From the 1870's through the 1890's, as much American theater was imitating European farce or the English music hall, Harrigan evoked the city of pushcarts and tenements, landlords and ward heelers. The accents heard on his stage came from the mouths of Irish, German, Italian and Jewish immigrants and the blacks streaming to the urban north after the Civil War.

Ann Crittenden writes on economic issues from Washington. WASHINGTON THE Democratic Party is in trouble. And a large part of the problem is the party's inability to enunciate an economic policy that stands a chance of capturing the imagination of the electorate in the way that Ronald Reagan's anti-government, pro-growth rhetoric has done. The Democrats' ignominious defeat in November was, among other things, a resounding rejection of the New Deal creed of ever-more beneficent government programs that has dominated the party for half a century. What's worse, the polls were scarcely closed before the Republicans had stolen and run away with the issue of tax reform, one of the few ''new ideas'' put forward with any vigor in recent years by some of the younger, more pragmatic Democratic members of Congress.