Well, I can certainly think that Le Guin has plenty of reason to be cynical about the effects of commercialism. There was that horrible TV series that was ended up having little in common with her actual books besides the name. I'm guessing those decisions to whitewash everyone and completely change the story were made in the interest of commercialism.
So I hear what she's saying, but I don't know what the answer is. Should all writers write only as a hobby? That's mostly the case now, as very few published authors make a living at their work (and this has actually been mostly true throughout the history of novel writing). Should all writers go the self publishing or indy route?
I guess the big question really is, does being popular and marketable always correspond with lower quality, or generic, uninspiring work? Or is every area of human endeavor characterized by occasional paradigm-shifting leaps into uncharted territory, followed by a sort of free and wild "anything goes" period of amazing innovation, followed by standardization and incremental improvement within more limited parameters, based on which innovations were most successful or popular?
Until something comes along to pull the rug out from under everyone's feet again, and a new period of experimentation arises. And is the trigger for the new era something external to writing, such as a larger change in society itself, or can it stem from something writers themselves can do, like the invention of a new genre or approach to getting their work out there or something?
And wow, I feel like I'm describing the punctuated equilibrium model of biological evolution.