Cover of From Fatwa to JihadWith images of Geert Wilders being turned back at Heathrow fresh in our minds, seldom can a book have had a more searing relevance to contemporary events. Seldom has a book offered a more revealing portrait of both a religion and a nation's frail carapace and intellectual and moral failings. And seldom do we see so clearly that one of the lessons of history is that no one learns the lessons of history.

The government's shameful and self-defeating ban on Wilders, continuing a policy of appeasement in the face of extremist threat, makes Malik's case for him: that the Rushdie affair continues to cast a long, baleful shadow over the British cultural landscape.

Malik, an Indian-born, Manchester-raised writer and broadcaster, is perhaps best known as an acute commentator on race and a staunch critic of multiculturalism, a case he has refined in his previous books The Meaning of Race (1996) and Strange Fruit: Why Both Sides Are Wrong in The Race Debate (2008). This book is both a social and intellectual history and a personal journey, since the Rushdie affair stands as a decisive turning point in his own relationship with the left, where, as a member of the Socialist Workers' Party in the 1980s, he cut his political teeth.

Malik's opening chapter, laying out the sequence of events which led from the publication of The Satanic Verses to the issuing of Khomeini's fatwa and its consequences across the Muslim world, not only highlights the commendably steadfast reactions of the publisher, Penguin, but also explains how the fatwa helped to irrevocably alter the geography of Islam. Previously a fatwa only had validity in states under Islamic authority, but the Iranian ayatollah's 1989 edict (a cynical attempt, as Malik reminds us, to divert attention from difficulties at home) relocated the confrontation between Islam and the West to the heart of Western Europe.

In clear, racy prose he remorselessly exposes the fallacy that The Satanic Verses was an attack on Muslim cultural identity; reminding us that not all Muslims supported the fatwa, and many more had not even noticed it until it was brought to their attention by the crude opportunism of demagogues. Making the most of his own experience Malik discusses how some of his former confrères in the SWP ended up in Bradford organising anti-Rushdie demonstrations for the Islamist activist group Hizb ut-Tahrir. Malik explains this counter-intuitive switch by pointing out what a poor job the left had done, failing to offer a compelling version of modern British identity that could match the appeal of radical Islam.

In a chapter called "The Rage of Islam" Malik convincingly maps the road to the 7/7 bombings. In attempting to understand how British-born Muslims could carry out such atrocities, he dismisses the idea that the rage was driven by Western foreign policy and instead looks at internal contradictions within British-Asian culture, between modern and globally aware young Muslims and the traditional and in some cases anti-modern culture of their parents.

In his discussion of the now infamous Danish cartoons, Malik shows how the preposterous Islamic reaction was fuelled more by extremist political expediency than by a genuine sense of religious outrage, and how the global response to cartoons - the normalisation of claims of offence, the increasingly cowardly response of Western governments in the face of threats - led to the landscape of free speech being irrevocably changed for the worse.

The book asks some difficult but critical questions, and is not afraid to answer them: is Islam really the religion of peace or an irredeemably violent belief incompatible with Western values? For Malik, though he is decidedly secular, the problem lies in false interpretations rather than in the Koran itself. Is the "recolonisation of Europe by Islam" taking place before our eyes, or is this just a right-wing myth? There are critical issues being fought through in European cities, but we must not fall for the anti-immigration rhetoric of the far right. How far should we go to maintain freedom of speech? Malik is Voltairian in his commitment to supporting anyone's right to express themselves, no matter the message.

From Fatwa to Jihad is a powerful critique of both Islamic fundamentalism and Britain's multicultural policy. Malik readily sees that multiculturalism, with its emphasis on difference as opposed to a common identity and shared citizenship, has created an environment where Islamic alienation and ostracism are all too possible, and his critique of the liberal establishment is refreshing as well as necessary. Although in some respects Malik's arguments share much with those made by polemicists on the right, like Melanie Phillips or Mark Steyn, and the so-called "decent left", like Nick Cohen and Christopher Hitchens, he would not welcome the company. He is rigorously critical of both camps, as he projects an image of the left which is based on Enlightenment principles of free speech and universal values, and less concerned with protecting putatively authentic identities than it is with addressing social inequality and injustice.

From Fatwa to Jihad is published by Atlantic on 1 April.