IN 1942 Arthur Waley, the foremost British translator of Chinese and Japanese literature, published in England a book called ''Monkey,'' an adventurous fantasy paraphrased from certain chapters of an old novel, known in its 16th-century Chinese original as ''Xiyou ji'' (''The Journey to the West''). In 1943 - just 40 years ago - there followed an American edition of the Waley book. I turned 12 that year and got a copy for my birthday. I read and reread it; I drew illustrations for it; and for weeks or months I tagged along, in imagination, with its impudent and valiant hero, the Monkey King, as he established his reign over the Cave of the Water Curtain, learned martial and magic arts, extorted a wonder-working cudgel from the Dragon of the Eastern Sea, raided Hell and Heaven, stole Laozi's elixir, was punished by Buddha and redeemed himself as the faithful (although not very well-behaved) disciple of an absurdly incompetent saint, Tripitaka, with whom he trudged westward to the Vulture Peak in search of holy sutras and shastras - fighting demons all the way, of course. For a boy of 12 it was a delectable introduction to Chinese literature. ''Monkey'' is still a minor landmark of 20th-century English translation. Edith Sitwell judged shrewdly its fit of style to matter, praising its ''absence of shadow, like the clearance and directness of Monkey's mind''; she called it ''a masterpiece of right sound.''

Honor where honor is due. Waley's ''Monkey'' has several sorts of permanent value. But it must now relinquish its always slender claim to represent, with any degree of substantiality, the Chinese original. Waley may have caught the color of Monkey's mind, but in his 300 pages, rendering less than a third of the complete work, he made no attempt to capture the scale of the original ''Journey to the West'': its spiritual depths or its rich variations of style. To judge these things, the reader of English will now turn to a version that quite magnificently supersedes Waley's: ''The Journey to the West,'' edited and translated by Anthony C. Yu, who is a professor in the Divinity School - and also in the departments of English and of Far Eastern Languages - at the University of Chicago. The appearance of the fourth volume now -the first three were issued in 1977, 1978 and 1980 -completes one of the great ventures of our time inhumanistic translation and publication. Like most of the large and artistically important Chinese novels, ''The Journey to the West'' dates from the Ming dynasty (1368-1644). Some of these novels have undergone massive expansions and contractions over the centuries, and it can be extremely difficult to tell which versions are older or more authoritative. The textual history of ''The Journey to the West'' is relatively simple. The standard modern version, translated by Mr. Yu, is substantially the same as what is thought to be the first edition, in 100 chapters, published (the author was anonymous) at Nanjing in 1592. (Mr. Yu's version differs from this mainly by the addition of a single episode, drawn from a short version of the novel dating to about the same era.) The narrative is mostly in a polished vernacular prose, but about 750 poems and verse passages in an older and more classical language are interspersed through the book. These introduce, summarize or comment upon the action, sometimes in the arcane language of mythology or alchemy, or they provide descriptive set-pieces - landscapes, battles, banquets. They may suggest the turning of the seasons and thus the passage of time during the long westward pilgrimage, or they may permit a warrior - whether priest or demon - to make his brag before combat. Mr. Yu has translated all of this, giving us for the first time the whole of ''The Journey to the West'' in English - in 1,873 pages. It is the tale of a monk sent to heaven in quest of the basic Buddhist scriptures, accompanied by a Sand Monk, a Monkey King and a pig spirit, among others; their adventures occur on many literary and intellectual levels at once in a story that moves with surprising speed through its many chapters.

Everything about ''The Journey to the West'' suggests a basically intact text by a single author. As a poet, the author enjoys showing off his mastery of every verse form, from the four-line jue-ju to lengthy ''rhymeprose'' (fu) and his own idiosyncratic expansion of the aria form (qu) used in song cycles and operas since the Mongol Yuan dynasty. Yet poetry and prose harmonize throughout in a functional way. The verse is simple, lively and descriptive. The way it naturally fits into the prose has helped insure its survival, since verse has disappeared from many of the old Chinese novels. The poetry in this one concentrates our vision, thrusting us among the concrete details of life, rendering everything visible, smellable, tangible. Thus the monkey hero, on a spying mission, transforms himself into a moth: A small shape with light, agile wings, He dives to snuff candles and lamps. By metamorphosis he gains his true form, Most active midst rotted grasses. He strikes flames for love of hot light, Flying, circling without ceasing. Purple-robed, fragrant-winged, chasing the fireflies, He likes most the deep windless night.

The author loves to stroke his characters: ''Dear Monkey!'' ''Dear monster!'' ''Dear wind!'' Dear men!'' But who was this good-humored author? We do not know. In the 1920's an old theory was revived by the modern scholar Hu Shih, claiming authorship for a certain Wu Cheng-en, a minor author of Huai-an in Jiangsu, where the Grand Canal used to cross the Yellow River. In an introduction to the 1943 American edition of Waley, Hu Shih - who by then was Chinese Ambassador in Washington - wrote that the local history or gazetteer of Huai-an, dated 1625, ''definitely recorded that the novel . . . was written by him . . . the first Chinese novel of which the authorship is now authentically established.'' The Ambassador's confidence was quite unjustified. What the gazetteer says is that Wu wrote something called ''The Journey to the West.'' It mentions nothing about a novel. The work in question could have been any version of our story, or something else entirely. In a bibliography of the time it is listed as a work of geography. Although some libraries probably catalogue ''The Journey to the West'' under Wu Cheng-en's name, that name does not appear on the title page of Anthony Yu's translation.

Despite the clear handiwork of one author throughout, this is by no means a story made of whole cloth. Its main source is well known. It is the story of Tripitaka, an actual monk - his religious name was Xuan-zang - who lived from 602 to 664. He was given the title Tripitaka, which means ''the three baskets'' or, so to speak, three testaments of the Buddhist scriptures, by a Chinese emperor. The title was appropriate, since in the words of the eminent Buddhologist Paul Demieville he was ''the Saint Jerome of Chinese Buddhism,'' greatest among the hundred-odd Chinese ''scripture pilgrims'' who went to India in search of holy writ between the third and eighth centuries. Tripitaka left China for 16 years, beginning probably in 627. He spent 12 years in India, where he mastered Sanskrit, and he returned to China with 657 scriptural and other texts, 75 of which he with his helpers translated into Chinese.

THE accounts of the monk's career come from disciples who had access to his own papers, and they are relatively free of legendary material, even though they record a few visions and probably exaggerate Tripitaka's triumphs as a court figure, religious debater and outwitter of bandits in India and Central Asia. At some unknown stage, however, Tripitaka's story entered the world of popular storytelling, accumulating legendary material in profusion. Very likely Tripitaka became a subject of bian-wen, morally instructive song-and-story routines performed by mendicant Buddhist entertainers in late Tang times. From the Song dynasty (960-1,280) we have two Chinese chapbooks preserved by chance in the Kozanji Monastery near Kyoto, Japan. These books, a humble reflection of the professional storytelling art practiced at that time in urban teahouses, present a form of the Tripitaka story that must already have required many evenings of serial narration to relate in full. In them Tripitaka had already acquired superhero disciplines, along with the Monkey King and the pig spirit Zhu Ba-jie, known also as Idiot (or in Waley as Pigsy).

By the 14th century the multiple episodes of these stories may or may not have been assembled in a novel. Operas based on the Tripitaka cycle survive from that time. Perhaps not until the anonymous 100-chapter novel of 1592, however, did the crucial change occur, with Monkey displacing Tripitaka as the principal character, arrogating to himself the opening seven chapters of ''The Journey to the West.''

Men of the early republican period, like Hu Shih, felt that traditional vernacular novels such as ''The Journey to the West'' ought to serve as a new kind of classic, lending authority to modern schooling in vernacular Chinese, just as the Confucian classics had lent authority to schooling in the ancient Chinese that had prevailed down to the time of World War I.

But Hu Shih's contemporaries were ambivalent about the old novels. Their episodic form was an embarrassment because it was not ''modern'' by the standards of European naturalism and realism. Their allegorical content was an embarrassment because it was Confucian and thus reactionary, and Buddhist or Taoist and thus superstitious. Of the ideological matter in ''The Journey to the West'' the most salvageable, for Hu, was the satire, especially the portrayal of the heavenly bureaucracy as a caricature of the earthly, imperial bureaucracy. Indeed, while there is much spiritual doctrine in ''The Journey to the West,'' nothing is sacrosanct. Buddha's own disciples demand cumshaw before yielding the scriptures sought by the pilgrims, giving the bribe-taker's usual self-justification: ''If we imparted the scriptures to you gratis, our posterity would starve to death!'' That from a pair of celestial celibates.

ANTHONY C. YU belongs to a newer generation of scholars who have come to appreciate much more fully than those of Hu Shih's time the intellectual, allegorical side of old Chinese fiction. The most original part of his splendidly comprehensive 62-page introduction to the ''Journey'' gives us a glimpse of his own investigations into relations between the novel and obscure portions of the vast, littleknown Taoist canon. While his translation does full justice to the adventure, lyricism and buffoonery of ''The Journey to the West,'' it is completely sensitive to the spiritual content of the text as well.

''The Journey to the West'' embodies several kinds of stories that either are or tend to stand for a spiritual drama. First, like the Gospels, the Arthurian and Robin Hood stories and the Chinese novel ''Water Margin'' (also known as ''All Men Are Brothers'' or ''The Outlaws of the Marshes''), it is the story of the gathering of a brotherhood - in this case the band of pilgrims including Tripitaka, Monkey, Idiot, Sand-Monk and their horse which is a small transformed dragon. Second, like the Grail legend and most fairy stories, ''The Journey to the West'' is a quest. The quest is a drama of perils overcome, often after initial failure, perils that commonly take the form of a temptation. The quest as a whole is penitential: Idiot and Sand-Monk are celestial immortals banished to earth, one for flirting with a moon spirit, the other for breaking a glass at a heavenly banquet. The horse is a young cut-up who set fire to the house of his dragon father. Even Tripitaka is a fallen spirit, the Buddha's own disciple Golden Cicada, who fell asleep during a lecture by the Master and so must undergo purgation through 81 tribulations.

In part, ''The Journey to the West'' is an allegory too, but only in part. At one point Monkey murders six robbers who must be taken as what Buddhists think of as six senses. A typical little allegorical touch occurs later, when some bodhisattvas test the pilgrims' purity by appearing to them as wealthy beauties; Idiot, succumbing as usual, finds that their house contains lofty thresholds, ''causing him constantly to stumble and fall.'' A character in strict allegory, however, is a personification and not a person, only an aspect of people and their experiences, such as a virtue, vice, passion or faculty. But Tripitaka himself began as a historical person, not a personification. In ''The Journey to the West'' he has been said to stand for Everyman, but that would not distinguish him from any other major figure in novels. The character of Monkey in this book may have derived in some way from Chinese folklore, from the monkeyfamiliar Hanumat in the Indian ''Ramayana'' epic, or from both; in ''The Journey to the West'' he is one of several animal spirits, among whom are a bear and a mink that have become Taoist immortals. Monkey, like Tripitaka, begins as a kind of person, not a personification.

But undeniably he has become, in part, a personification. In a very ancient Buddhist formula, cited several times in the novel, he is the ''monkey of the mind.'' As Monkey stands for mind, so Idiot stands for body; inside his hoggish bulk lurks the uncontrollable domestic tenderness of Papageno.

The Mind-Monkey, then, is partly an abstraction. Not only that, but he has been abstracted from Tripitaka, leaving that saint an astonishingly stupid figure, compared with his historical original. In this novel, Tripitaka is humanness minus intelligence, which therefore cannot survive without its intelligent monkey servant. By himself Tripitaka hangs onto the purity and kindliness of the self; yet he is sluggish, petty-minded, lacking in judgment, able only to worry and whimper through his 81 ordeals. His purity, incidentally, creates hazards. Having totally retained his semen through 10 incarnations, he represents a concentration of ''primal yang'' that is enormously tempting to monsters, male and female, who stand to gain greater power, the males by devouring him, the females by seducing him. However, it is only the human Tripitaka who can win the scriptures from heaven, walking there at a human pace. Mind-Monkey and pig-body must restrain themselves and accompany him. They themselves can fly through the air, wielding mighty weapons, but they cannot lift and transport the weight of a human soul.

IN contrast to the pedestrian Tripitaka, Monkey is all energy and impetuousness. A central insight of the book is that intelligence, on its own, rushes headlong, far ahead of judgment and compassion. And total commitment is one of the gifts of intelligence, so Monkey begins with total commitment to Taoist self-cultivation and ends with total commitment to the Buddhist quest. Mr. Yu, among others, has observed that ''The Journey to the West'' represents not merely the jumble of religions in folk belief but an intelligent Ming movement to syncretize Taoism, Buddhism and Confucianism. The monkey is an intelligence that has mastered Taoist powers but must learn the meekness and compassion of Buddhism.

In the West we are familiar with novels, such as ''Don Quixote'' and ''Madame Bovary,'' about those who have been led astray by novels. ''The Journey to the West'' translates a novel about a great translator. I am glad, though, that Mr. Yu has cast his translation more in the Mind-Monkey's vivid spirit than in the pallid spirit of the translator Tripitaka as this novel represents him. With Monkey's utter candor, but also with something of Monkey's grace and strength, Mr. Yu cavorts fearlessly, and in graphic, uncondescending literalness, through more than 81 difficulties. This is the most exciting translation of any book I have read in quite some time.

If you know a 12-year-old, give him or her the ''Monkey'' of Arthur Waley. Do not be surprised, though, if your 12-year-old comes back for more - for the whole thing, Mr. Yu's ''Journey to the West.'' And read it yourself. It will win you merit on your own westward journey to the Spirit Mountain of Tathagata.

Illustrations: Drawing