Final answer:
The novel by Joseph Heller that satirizes war and politics is 'Catch-22,' which reflects the absurdities and frustrations associated with World War II and remains a pivotal work in American literature.
Step-by-step explanation:
The novel written in 1961 by Joseph Heller that exaggerates the problems of institutions in war and politics is Catch-22. Heller's work satirically explores the absurdity and frustration that many characters felt about World War II. The book is a critical success, much like other anti-war and critical societal novels such as Hemingway's A Farewell to Arms and Orwell's 1984, which delve into the disillusionment of their respective eras. Catch-22 remains a significant part of American literature that captures the spirit of the postmodernist movement and the complexities faced during this tumultuous period.