Janice Galloway said mainstream publishers in the UK had become caught up in a “relentless profit machine” were now unwilling to take on risky or experimental work.
And she said the independent outfits that aspiring authors were turning to could “barely afford” to pay them.
Speaking at the Edinburgh International Book Festival, the Ayrshire-born writer said the national arts agency Creative Scotland “to do something drastic” to ensure the nation’s authors were better paid.
She said Scotland’s publishing industry was virtually back to square one, with authors having to get by on the equivalent of what Roberts Burns was paid when he was a struggling writer in the 18th century.
Galloway made her name in 1989 with her debut novel The Trick is to Keep Breathing, about a young drama teacher’s battles with depression after the death of her married lover.
Galloway said: “I don’t think anyone would publish The Trick is to Keep Breathing now. Anything that is slightly experimental is a worry to most publishers.
“Small publishing outfits will take a risk. New writers are getting their breaks with publishers who can barely afford to pay them, that is how it is at the moment.”
Galloway added: “I think publishing in this country is beginning almost afresh. There are so many new publishers out there. There are a lot of them, but they don’t necessarily have a lot of money.
“We are more or less back to Burns. He got 16 bob for one book of poems and nothing at all for working on his songs.
“That at one time was regarded as the writer’s lot. I don’t think it should be. It is a valid job. Writing saves lives, just like music saves lives.
“If you have put huge amounts of work into something and produced something well, why shouldn’t somebody pay you for your effort?
“The problem is finding something in publishing who thinks that who hasn’t been taken over by the relentless profit machine.
“It is all the wrong way around. Like most of life, the people with too much money have astonishing ranges of ways to keep it.
“Everything these days is down to profit. People don’t count much. If you don’t earn much nobody is that bothered about you.
“They (publishers) can make squillions from a book that will sell all around the world in 56 different translations. It is hard to fault the monetary logic.
“The moral and aesthetic logic is quite another matter. That’s why we need Creative Scotland to do something drastic. Most writers, even those you have heard of, live below the breadline. That’s just how it is.
“You have to look after yourself and find the breaks where you can. Nobody comes knocking on your door.”