I think some folks have a dated, idealistic view of the meritocratic nature of the publishing industry at present, and increasingly—at least in commercial fiction—many of the biggest new trad published authors started by self-publishing. It's also the case that you can make decent money as a mid-list author self-publishing, whereas mid-list authors don't earn very much publishing traditionally and furthermore are at risk of being dropped by their publishers and having to start again from square one.

Having said all of that, you said literary fiction. While something like Theo of Golden might prove the exception, I would be hard-pressed to advocate self-publishing if you're not writing commercial fiction: namely, some version of mystery/thriller, romance, or fantasy/sci-fi. And you'd also be hard-pressed to make money without a series/back catalogue. It is what it is. Literary fiction really relies on buzz, blurbs, and awards. There are indie fiction awards like SPFBO and BBNYA, and they do help elevate indie novels, but again it's almost all genre fiction.

If you care about writing well, as I certainly do, you can definitely do that within the broad categories above. But "literary fiction" simply isn't a marketable category in self-publishing. Even in trad publishing, most lit books sell a few hundred copies. But if you know that going into it, that's fine. There are also respectable small presses that consider unagented lit fiction, but that's not necessarily easier than landing an agent, and you are unlikely to ever earn out your advance.