This is, in one sense, a dismaying Big Bang of a book: a chronicle of capitalism's frailty and foulness that digs far beyond its tax haven title and indicts the system that renders such crookedness not merely possible, but entirely predictable. It's not the banks or the hedge funds or the tame solicitors. It's the politicians as well, our politicians. It's not just the Cayman Islanders or the Swiss or the Panamanians. It's London and Washington, the OECD and the World Bank. It's the whole damned thing.

Prepare to be just a little disappointed as well as outraged, however; for, in another sense, Nicholas Shaxson has provided a slightly damp squib. He's lit his bonfire of the vanities and poured liquid anger on the blaze. Yet, as the flames roar higher, he doesn't quite know what to do next. The diagnosis is awful, the prognosis alarming: but his prescriptions won't keep you warm.

What happened 60 years ago, as the world that John Maynard Keynes believed in  a world where the nation, and national boundaries, offered economic control and fiscal discipline  fragmented in the wake of war? The United States had a generous Marshall Plan that burrowed its influence deep into the policy-making and recovering bourses of old, battered Europe. The City of London, seeing its imperial glories fade, used the leftover connections of empire to construct a web of influence and cash around the globe (with the Bank of England playing head spider). The Swiss, sitting pretty, had lessons of neutrality, secrecy and cupidity to impart to a wider audience. Enter bright sparks who might have invented spaceships or life-saving drugs, but in fact invented the eurodollar market  a continent of opportunity without actual territory or policing, because it existed somewhere over there, somewhere offshore. And, of course, enter the tax havens that helped make the whole edifice possible: enter anywhere where transparency lay covered in mists and democracy was up for sale to the highest bidder: enter the havens of opportunity.

Shaxson, a seasoned financial journalist with a talent for asking awkward questions, details how lousy things happened, and why, with a sigh and a neat turn of phrase. If you want to understand how Jersey or the Bahamas work, this is the textbook you need. If you seek to grasp the intricacies of multinational life  run companies in high-cost countries, pay taxes in mini-statelets that don't trouble HMRC  then, again, the basic formulas are all on display. But such treasure islands, with attendant trove studies, seem only symptoms of something far more intractable: basically, a way of doing business that no one  from WikiLeaks to the Oval Office  can reform or replace because no one has the resolve or the means, because there is (literally) no alternative.

Whatever became of the coalition's zeal to bring bankers to heel? The same thing that wrecked Gordon Brown's supposed plan to close global tax loopholes  and brought all parallel efforts to dust. Simply, the threat to scarper offshore if too many displeasing measures are inflicted. Simply, the impossibility of getting international action in a world where Delaware, with its own idiosyncratic tax regimes, is also a fine US state and home to Vice-President Biden (pictured), and the Corporation of London waves Vince Cable bye bye. Simply, the glum fact that the havens of globalisation serve the rich and the west, not the poor and the south, so that leaders signing up for change must also destroy the structures that made them, and paid for their election.

Maybe, straying into the jargon of the investigative reporter, Shaxson makes the conspiracy seem too vast and all-encompassing. Many of the outrages he broods over  say, the Bank of Commerce and Credit International debacle  are so long gone that they lack immediate force. Too many of his witnesses, from Grand Cayman to St Peter Port, are either anonymous or whistleblowers stuck in a shrill, single groove. Really, we're talking about a universal way of business life here, about a system so entrenched, so formidable in the lobbying, so familiar in its assumptions, that even 2008 can't blast it away.

But at least, thanks to Shaxson, the dimensions of the problem are clearer than they were. At least waving a fist at Fred Goodwin seems puny now.

What to do? Alas, Treasure Islands isn't much help here. Prioritise "leadership and unilateral action"? Dream on . . . "Confront the British spider's web"? "Rethink corporate responsibility"? Somehow you can only see pot-holes along this rutted rhetorical road. Somehow you finish reading Shaxson much more depressed than heretofore. At least one change he champions is coming to pass  reform of the libel laws may set us free. Think hope and freedom of information the next time you're in St Helier, having a curry at the New Raj  with the broadcasting empire HQ of Mr Richard Desmond just upstairs.

Peter Preston's novels include 51st State (Penguin).