Ninotchka got the prizes,"" Louis B. Mayer once thundered. ""Blue ribbons! Purple ribbons! Which picture made the money? Andy Hardy made the money. Why? Because it won praise from the heart. No ribbons!"" But what holds for Andy can be as easily said of the endlessly acclaimed Citizen Kane, points out David Thomson in this consistently absorbing study of the cinematic process. Whatever its erudition, ""successful"" American film-making--every aspect of it from narrative and setting, to the properties of celluloid itself and the techniques it engenders, to the dark, cool caverns designed for its display, to the carefully concocted images of its creators--is calculatingly, often cunningly, geared to the longing and needs of its public. In sum: ""palatable fantasy."" Thomson, a British critic and lecturer, probes thoughtfully and well. ""We should notice how far 'innovator,' 'artist,' 'great director,' 'pioneer,' and 'success' are terms forever [joined] in an involved dance in Hollywood,"" he notes in a discussion of ""The System."" Subsequent chapters, drawing on a plenitude of films as examples, effectively illustrate how profoundly that dance has shaped this country's image of itself (consider, of late, The Godfather's structured social system). The more adventurous directors (Rafelson, Scorsese, et al.) offer some prospect for liberation; but in them, Thomson concludes, ""there must be some recognition of the duplicity of cinema as a form. . . . It is concerned with the difficulty of looking at things and understanding--or of seeing and agreeing that one cannot know."" For the irregular audience interested in a larger perspective.