Literary Theory is a systematic explanation of practice or a situation of practice in a broader framework; theory brings to light the motives behind our practice; it shows us the connection of practice to ideology, power structures, our own unconscious, our political and religious attitudes, our economic structures; above all, theory shows us that practice is not something natural but is a specific historical construct.
Literary criticism deals only with the literary text in terms of its form, prosody, characterization, etc. It hardly touches upon the politics of the text, and, at the point of politics, literary theory comes into action. Literary theory is not only about politics.
There are various schools of thought which completely negate the idea of putting a text into a political framework and insist on only reading the structure, figure, etc. in the text. One such school is “New Criticism’.
It is said that a literary critic—one who operates on the literary text—is always a critic. S/he is never a literary theorist. Literary theorists beget theories which are applied to the text to draw particular perspectives, and the one who applies is a critic.
This is to also say that criticism is a practical application of the theory. So, a Marxist reading of a text would be called Marxist Criticism and the one who reads according to Marxist theory would be called a Marxist Critic.