From David Malouf

Henry James' conclusion is that what really matters is that the writer should be one of those 'on whom nothing is lost': that is, an observer, a listener, a close attendant on the world's smallest affairs, a scavenger, a snapper-up of otherwise unconsidered trifles; and that everything he sees, and hears and overhears, should be laid down in his memory, taken into the spider-web of the consciousness and kept there to await the moment when, transformed by imagination, it finds its use.

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All this is what the young Shakespeare found himself happily working with -- and I say 'found himself' because he must simply have set himself to work at first with what he was given: an eclectic mix of traditional and folk material, of slapstick, Senecan horror, Italian or Spanish romance, for an audience that was prepared to be transported wherever the play might take them; with an ear for language that was elevating and ricj, but a taste as well for the scurrilous tha was almost the equal of Shakespeare's own. With no qualms, or so it appears, about the purely commercial nature of what he was engaged in, the young Shakespeare simply set himself to do a good job as his talent, his interest, his experience allowed him to do.

Like his great Spanish contemporary, Lope de Vega, he made a distinction between his poems, which do aim to be literature, and the plays, which do not...The plays were something else. Not Works, but work. If he worked on them to the top of his bent it was because he was by temperament the complete professional and could do no less. But what they belonged to was not literature but the lively and engaging world of entertainment: in a continuum with such other forms of popular diversion as bull-baiting, bear-baiting, cock-fighting, and in its darker aspects, the spectacle provided by exhibitionary torments and executions, the state's own theatre of cruelty and last words. Anything he hit upon and drew out of himself, in the way of originality and daring, must have emerged in the heat of the work itself, as his talent and interest, both of which as it happens were prodigious, discovered possibilities in the material before him that till he conceived of them, 'in the quick forge and working-house of thought', had no existence.

Language itself teaches him what he has to say. He gives a Flastaff or a Hamelt, or a Rosalind or Mercuito, their head, and puts at their disposal, as langugae-creatures, his fund of words and allusions, his fantasy, his humour, his capacity to break through to those revelations of insight and feeling that we call 'Shakespearian'. And none of it is fixed. The language-world of Romeo and Juliet -- and of Romeo or Capulet or Mercutio or the Nurse within in -- is not the language-world of As You Like It, or of Henry IV Part I or Hamlet. 

From 'The Writing Life' by David Malouf