Kobayashi was born in the Kanda district of Tokyo, where his father was a noted engineer who introduced European diamond polishing technology to Japan, and who invented a ruby-based phonograph needle.

In the early 1930s Kobayashi was associated with the novelists Yasunari Kawabata and Riichi Yokomitsu and collaborated on articles for the literary journal Bungakukai and became editor in January 1935.

In literature, he reserved his highest praise for the works of Kan Kikuchi and Naoya Shiga, whereas he expressed a low opinion of Ryūnosuke Akutagawa for being too cerebral.

In November 1937, he wrote a strongly worded essay Senso ni tsuite ("On War"), which appeared in a leading intellectual magazine, Kaizō.

In the essay, he lashed out at fellow writers and intellectuals who continued to oppose the growing war in China, sharply reminding them that their duty as subjects of the emperor took precedence over all else.

Following the end of World War II, Kobayashi was sharply attacked by leftists for his collaboration with the Japanese military, but the US occupation authorities never filed any charges against him, and he was not even purged from public life.

It is awarded annually to a work of nonfiction published in Japanese, between July 1 and the following June 30, that offers a fresh image of the world based on the demonstration of a free spirit and supple intellect.