As you might expect, I think that judgments of literary quality are not necessarily just arbitrary. I don't think these judgments are binding on all rational beings, irrespective of their desires, interests, etc., but it's not as if we have no criteria at all or as if our criteria are totally divorced from what make novels, poems, plays, and so on, interesting and enjoyable for those who do in fact find them so. It's a messy situation, much messier than my pet example of judgments of the quality of motor vehicles. Still, it is possible to have rational discussions about literary quality, much as it is possible to have rational discussions about what is or is not a good motor car.
But this post by British literary critic Paul Kincaid can make you wonder. I know a lot of the books on the list of dystopian novels that he discusses, and I've got to say that he's right - the judgments of quality that this particular list makes do look rather arbitrary. All very puzzling.