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The problem with refusing to define literacy because of a concern for reductionism is that this strategy can effectively freeze out of the public discourse those very people who have a complex, contextual concern for that elusive bag of practices and knowledges that we group under the term literacy. So, if literacy was reading (cf. Latin root word Lectere [?], French word lire, etc.) and it now also involves its dialectical counterpart, writing, then let's assume that literacy involves reading and writing (which both broadens and narrows it in scope from the Southam report's functional literacy). I'll venture the following definition: literacy is the ability to read and write as appropriate to one's day to day needs and desires and the confidence to learn to expand that ability as one's day to day needs and desires change. Of course, this sounds a bit hokey for schools which are supposed to be preparing young people for the information future, or what have you, so I guess that I haven't really answered the question.