In February, a Conservative party fundraiser auctioned off internships at City firms and glossy magazines. With thousands of young people struggling to find work, wealthy Tory backers paid thousands to secure plum opportunities for their children.

While Nick Clegg sermonises about social mobility, David Cameron has admitted to being "very relaxed" about giving an internship in his constituency office to his neighbour's son. Cameron's words, bringing to mind Mandelson's 2008 admission that he was "incredibly relaxed about people becoming filthy rich", seemed almost calculated to stir resentment. Despite all political parties swearing allegiance to "fairness", today's blighted economy still offers ways for the elite to flourish through a system of privilege and patronage. In the guise of widening opportunity, internships often promote social injustice, shutting out those who cannot afford to work for nothing. This, however, is not the whole story behind the recent, chaotic "internship boom".

The culture of unpaid work is troubling and complex but rarely subject to thorough scrutiny. American writer Ross Perlin's Intern Nation is a compelling investigation of a trend that threatens to destroy "what's left of the ordered world of training, hard work and fair compensation". With entry-level jobs disappearing and competition fierce, many young people slip into a "relentless credentialing slog", amassing internships in the hope that a resplendent CV, a testament to dedication, may unlock the door to that elusive prospect  the paid job. In the UK, "internship" once denoted a structured period of experience with a guaranteed stipend. As anyone who has recently tried interning knows, this is no longer the case.

Perlin traces the history of the internship, which originally referred to a time of training in the medical profession. The term was appropriated by Capitol Hill, before spreading insidiously across the globe. In the popular consciousness, it calls to mind eager coffee-fetchers, bright-eyed at the photocopier, while the "Monica-gate" scandal represents intern willingness gone too far.

But the proliferation of internships has blurred any sense of meaning. As Perlin says, the word itself is a "smokescreen, lumping together an explosion of intermittent and precarious roles". While "entire industries rely unabashedly on this source of free or cheap labour", the question of legality is obscured as hordes of graduates willingly accept their devalued positions. The Disney college scheme is a particularly disturbing example. Clouded in the rhetoric of dreams and make-believe, this megacorporation lures college students to do barely compensated "grunt work" with the promise of bogus "academic credit", undercutting its regular workers in the process.

With great clarity, Perlin delineates the economic circumstances in which the internship boom has flourished, a "fast-changing, intangible economy built on networks and highly general skills". In this uncertain environment, "go-it-alone autonomy is pitched as a way to survive". Looking further back, "post-industrial, networked capitalism has provided the ideal petri dish for the growth of internships one of many forms of nonstandard or contingent labour that have mushroomed since the 1970s". The rise of internships goes with the decline of apprenticeships. This system of solid, paid training has deteriorated with the gradual loss of interest in, and respect for, skilled labour.

Perlin's sociological insights are complemented by his personal experience of interning at a London NGO, working 300 hours without pay. His observations resonate. Financial circumstances dictate how long one can play the internship game. Like other interns Perlin describes, I too have used up all my savings in the absence of a salary. While my granny might have envisioned me putting down a deposit on a modest London property, I decided to put my stake in internships, hoping that they would be an investment for the future and bring security in the end. Every stint has involved a mixture of hope and despondency, a feeling of progress tempered by the frustration of not being able to become a "proper" adult. Perlin incisively documents this "prolonged adolescence" experienced by many interns.

This is not to say that all internships are worthless. It is possible to learn a lot and grow in confidence. But the dishing out of "little indignities and pointless errands" is often prevalent. Perlin gives many telling examples which ring true for a veteran intern. Having deigned to ask my name, the editor at one magazine then dispatched me to fetch her lunch (a joyless fat-free repast which I placed meekly on her desk, my mind seething with invective).

Full of restrained force and wit, this is a valuable book on a subject that demands attention. While the intern explosion is "symptomatic of a drastically unequal, hyper-competitive world in the making", Perlin has some hope for a more equal future with legal protection and improved rights for interns. Beyond legislation, an entire ethos must change to counter complicity in a system that is corrosive and unfair.

Anna Winter has been an intern at various newspapers and magazines.

Three months ago the Mail on Sunday unearthed a small but potent landmine of a political story. In early February, the newspaper reported, at the Conservatives' annual Black and White Party, a lavish London fundraiser from which journalists are barred, a selection of prestigious internships had been auctioned off to party donors. For between £2,000 and £4,000, wealthy Tory supporters were able to secure a week or a fortnight's work experience for their children, at employers ranging from City firms to Tatler magazine to the PR company Bell Pottinger.

Since the Mail on Sunday story, internships  who gets them, whether they should be paid, whether they hinder social mobility  have become a significant British political issue: dividing the erstwhile Downing Street honeymooners Nick Clegg and David Cameron, and fascinating a media in which well-connected twentysomethings on work experience, sometimes frighteningly eager, sometimes staring out of the window, are increasingly ubiquitous.

Yet strikingly, almost everyone involved in the controversy seems to agree on one thing: that a few days' vaguely defined work as an intern is now a crucial early building block for a desirable, decades-long white-collar career. As Ross Perlin puts it in this timely and clear-sighted book, the first on the internship boom, "In much of the developed world, the subtle, relentless pressure to do an internship is now simply part of being young."

His preface offers an overview: "Interns . . . shuttle coffee in a thousand newsrooms, Congressional offices and Hollywood studios . . . deliver aid in Afghanistan . . . build the human genome, deliver the weather report on TV . . . Internships have spread to virtually every industry and almost every country, while internship-related businesses and campus career offices also proliferate, hawking internships, organizing internship fairs."

Perlin's energetic exploration of this world is mostly confined to America, with a few British detours, but the questions he asks are profound and wide-ranging. Why has there been such an explosion of them? What exactly are the social implications of their "curious blend of privilege and exploitation"? And, most interestingly perhaps, what does the intern boom tell us about the modern workplace and modern capitalism?

He begins at Disney World in Florida. Thirty years ago, faced with a local labour shortage that threatened to undermine its plans to expand the immense theme park, Disney contacted American universities to see if they would be happy to lend students as temporary workers. The universities, writes Perlin, "were strongly supportive . . . stressing only that Disney should handle housing and provide some sort of classroom experience". Out of this usefully flexible arrangement  for the company at least  has grown one of the biggest internship programmes in the world: 8,000 students a year from America and abroad, working for stints of up to seven months as everything from costumed cartoon characters to monorail drivers. Disney does pay; but only "near minimum wage", and interns work almost full time, "without sick days or time off, without grievance procedures, without protection against harassment or unfair treatment".

Disney interns are also required to live in gated company compounds, with the rent deducted from their pay. Perlin sneaks into one, and finds barrack-like apartment blocks where tired interns live two to a room and "regular searches . . . are conducted" by the company to root out anything that breaks the compound's many rules. Like the immigrant construction workers who live in similar camps in Dubai, the Disney interns, you realise, are really a permanent low-cost workforce.

That the notoriously hard-nosed Disney company has such an attitude to interns may not come as a complete surprise, but Perlin quickly shifts his focus to employers you might imagine would be more enlightened. "Recent cases of intern abuse in [reputedly liberal] Oregon," he writes, "involved a solar panel company, an organic farm and an interior design firm." The American Cancer Society "offers scores of unpaid internships . . . while paying its chief executive a salary of $1.2 million". In law, in politics, in entertainment conglomerates  in many of the most glamorous parts of the economy for ambitious young people  hungry, exploitable interns proliferate.

One consequence has been to make possible the kind of multi-tasking careers now enjoyed by media celebrities. Perlin quotes John Stossel, a well-known rightwing American broadcaster: "I've employed interns my whole career. They've done most of the research for my books and most of the research that won me Emmy Awards. I asked my TV bosses to pay for the research help, but they laughed at me, saying, 'You think we're made of money?'"

This book is important because Perlin has spotted that the internship phenomenon is a symptom of broader changes in business and the psyche of the middle-class worker. The increasingly entrepreneurial mindset of young professionals, seeing themselves as brands that require investment, such as unpaid work, to get established; the assumption of most companies that, executive salaries aside, labour costs should be ruthlessly minimised; the vogue for things being given away or done for "free", in business strategies and even political programmes such as Cameron's Big Society  all these trends may make the internship the quintessential modern workplace experience.

Half a century ago it was very different. "Almost no one worked for free in the offices of mid-century America," points out Perlin. Instead, there were paid apprenticeships and structured training programmes, sometimes oppressive and stifling compared to the open-ended experiences of the luckiest or most able of today's interns, but more egalitarian: parental financial support or personal connections were much less essential for the aspiring young professional. The supplanting of this system by internships started in late 19th-century medicine  would-be doctors were "interned" for a year or more within the walls of a hospital  then spread through the expanding bureaucracies of American government in the 30s, and into the private sector during the 50s and 60s.

Perlin tells this story briskly, with a touch of the faintly fogeyish longing for older versions of America that has often characterised writing by young American leftists over the last 20 years. But he does concede that internships (he has done them himself) can be useful: "Even if their exact content often remains murky, [they] signal a go-getter applicant, already fluent in office culture . . . internships are a 'test-drive' for both the intern and the employer." With so much white-collar work changing so fast and unpredictably, thanks to digital technology, it can be argued that an on-call army of millions of keen, pragmatic, all-purpose office juniors is just what a modern economy needs.

Yet the social costs are considerable. Besides the exploitation, boredom and cynicism that blight many internships  trying to look busy for days on end in return for a line on your CV  there is also their infantilising quality. Perlin interviews many serial interns: deep into their 20s, and already burdened with debts from university, they are still not earning, still without a solid career trajectory, still living with their parents, still only semi-adult. The steep rise in youth unemployment across the world since the financial crisis has made the job prospects of these perpetual interns even worse.

Occasionally, Perlin's cataloguing of such hardships feels too conscientious. His quietly furious paragraphs become choked with multiple examples, and for all his hostility to the internship culture, the obsessive, workaholic American impulses that often drive it  when I was a student at Berkeley in the 90s, I remember peers routinely sending out 50 internship applications  seem at work here too. Meanwhile, the book does not say quite enough about those the internship game excludes: the young people who cannot afford, or do not have the confidence or the contacts or the parental backing, to take part. The growth of internships has almost certainly contributed to the narrowing class composition of many professions, not least newspaper journalism.

However, as a portrait of how white-collar work is changing, this book is thought-provoking and at times jaw-dropping  almost a companion volume to Naomi Klein's celebrated 2000 exposé of modern sweatshops, No Logo. Britain, Perlin warns, is "about five years behind" the United States in the development of its intern culture. This could be over-cautious: 10 days ago a survey of British companies by the pollsters YouGov found almost a fifth admitted to taking interns on as cheap labour. Eventually the boom may become a bubble and burst, as the sheer ubiquity of internships makes them yield diminishing returns, in CV terms, and shrewd would-be professionals find more effective ways to spend their early 20s. Or perhaps, as Clegg argues, the internship system can be reformed, to make it more inclusive, and more concrete in its rewards. But both these scenarios feel quite remote. The world this book anatomises, like so much of current office life, feels as if it will get a lot crueller before it gets kinder.

Andy Beckett's When the Lights Went Out: Britain in the Seventies is published by Faber.