Britain changed more in the 1980s than in almost any recent decade. The rise of the City and the fall of the unions, the wider retreat of the left and the return of military confidence, the energy of a renewed entrepreneurialism and the entropy of a new, entrenched unemployment  more than twice as high even in the mid-80s boom as when Margaret Thatcher took office in 1979  all make the decade feel like the hinge of our modern history. Graham Stewart argues this emphatically in his conclusion. He compares his chosen period with that traditional whipping boy of 80s chroniclers, the 1970s, "a decade of strife", which "unfolded without actually settling any of [Britain's] persistent problems". "By contrast," he continues, "a Briton gifted with the ability to switch seamlessly from the news of 1979 to that of 1990 would have been astonished to find that  many of the daily staples of the 70s were either no longer major concerns by 1990 or  were analysed and debated through the prism of almost completely different assumptions."

But just because an era is important doesn't mean it is easy to bring to life. The 80s, especially the glossier, more expansive middle and later years, are both relatively recent and pretty familiar to anyone who knows a bit of history: the property bubbles, the beleaguered 1984-5 miners' strike, the 1986 deregulatory Big Bang in the City, the ecstatic 1988 birth of modern British dance and drug culture. And then there is Thatcher herself: so myth-encrusted, so stylised and armoured in her personal presentation from the mid-80s onwards, so much written about, that the historian's gaze often just bounces straight off.

Stewart, who has written previous books about Winston Churchill and has Tory sympathies, makes Thatcher the absolutely central figure of this volume. "No decade had seen Britain served continuously by the same prime minister since William Pitt the Younger in the 1790s," he points out, a little tweedily but tellingly. By the time her crucial ally-turned-enemy Geoffrey Howe resigned from her cabinet in 1990, she was its only surviving original member, "the prime minister who had sacked more ministers than any other in British history". Stewart authoritatively describes the workings of Westminster and how she subverted them, for example in cabinet where her "schoolgirl-swot approach to argument, trumping [ministers'] generalities with a seemingly encyclopedic knowledge of highly technical details  [meant] she was able to imply that she was more on top of their departments than they were".

The first half of the book is dominated by high politics and chewy as a result. Successive sections on "The Joy of Monetarism" and "The Pain of Monetarism" explain with rare clarity the Thatcher government's highly experimental early-80s economic policy, with its ever-shifting blueprint and frequent lab explosions, but nonspecialist readers may find themselves having to concentrate very hard. Whether writing about politics or pop music, Stewart builds up thick, thematic chapters using long, sometimes almost page-long paragraphs, perpetually explaining, summing-up and stitching together anecdotes from the life stories and memoirs of key 80s players. He knows how to usefully fillet a biography: to reveal, for example, that Sir Anthony Meyer, who helped precipitate Thatcher's downfall by standing against her as a "stalking horse" party leadership candidate in 1989, had been "one of only two Tory MPs actively to oppose the Falklands War" seven years before.

Yet the thematic structure of the book means that some of the drama of Thatcher's 80s arc is lost. After efficiently but a little routinely tracing her government's early struggles, and its rescue by a combination of the Falklands, a belatedly recovering economy and the errors of the opposition parties, there is a 100page detour into 80s culture. Attimes, it feels slightly dutiful, a frequent drawback of would-be encyclopedic decade histories such as this, with a few hundred pithy but unrevelatory words per subject, and boisterous movements such as alternative comedy stiffly referred to in quotation marks.

Stewart has more fun with the antiThatcher tantrums of the arts establishment, like many grandees full of disbelief and fury at her success deep into the decade. In 1986 Harold Pinter co-founded a group for dissident leftish writers, announcing to the press: "We're going to meet again and again until they break all the windows and drag us out." In 1987 voters gave her a third term with a massive Commons majority.

"This book," writes Stewart, "has a unifying theme: the [feelings of] attraction or repulsion  [generated by] Thatcher." That many people  perhaps most people  might have been both attracted and repelled by her and the changes she led goes almost unexplored. Is Martin Amis's gaudy 1984 novel Money, as Stewart interprets it, simply about "the corrupting influence of  the world the Tories were supposedly encouraging"  or are its brash sentences also suggesting that Thatcher's Britain was rather more exciting than what had gone before?

An ambivalence does freshen some of Stewart's judgments towards the end of the book. The Tory "right to buy" policy for council tenants, lauded since by right and left alike as empowering and politically shrewd, also had a "byproduct  to reduce the available housing stock for those on low pay". The malign consequences of this, such as the current financial and social dilemmas around housing benefit, are only beginning to be felt. Stewart also correctly emphasises the slowness of Britain's 1980s economic "miracle": consistently strong growth only arrived six years into the Thatcher government.

Yet he is not prepared to make the bolder reassessment of her revolution that the financial crisis, the bank bailouts, and all the other recent blows to 80s certainties seem to call for. Much of this book reads like it could have been written in 2007. The secondary sources on which it relies are often from the 80s and the years immediately afterwards, when the effectiveness of the Thatcherite national rescue act went largely unquestioned. Stewart suggests that his lack of interviews with 80s protagonists is because of "the possibly unreliable memories of those who shaped the period". Yes, old warriors often spin and forget; but they can also interestingly reflect and think afresh.

He also makes little use of official documents. To his credit, his account seems reasonably consistent with what they are beginning to reveal, for example that Thatcher may have been more prepared to negotiate with Argentina during the Falklands War than was publicly thought at the time. "Her outward display of Churchillian resolve was not the whole story," Stewart writes shrewdly.

In the end, his book feels like a long, well-informed briefing about the 80s  he calls it a "tour d'horizon", a revealingly boardroom term  rather than a vivid evocation of a world. The British 80s were so eventful and important that Stewart's readers will rarely be bored. But they will finish this volume with much the same decade in their heads as they had when they started. The best history books do more than that.

After the Berlin Wall came down in November 1989, Soviet authority unravelled fast. On Christmas Day that extraordinary year, the Romanian communist dictator, Nicolae Ceausescu, and his wife, Elena, were executed by firing squad. By the time the Baltic states agitated for independence soon after, the USSR was a sandpile ready to slide; in 1991, the Russian leader Boris Yeltsin (reportedly inflamed by vodka) officially terminated its existence. Considering the magnitude of what had happened, remarkably few people died during the last days of the Cold War.

The greatest turnaround of the 1980s, unquestionably, was the collapse of Soviet ideology. John Paul II, the Polish-born pope, was unstinting in his role as an anti-communist spokesperson, but he was not the first among the reformers. In 1956, the Soviet premier Nikita Khrushchev had publicly denounced Stalin's "cult of personality" and "executions without trial". With Stalin's unmasking, the die was set for Mikhail Gorbachev's glasnost (openness) in the mid-1980s and the free-market crusades led by Margaret Thatcher and Ronald Reagan.

Inevitably, the Soviet bloc's demise in the 1980s has provoked a nostalgia for the old days of the Cold War. Pre-glasnost East Berlin, with its shadowy Harry Palmer atmosphere, no longer exists. The motto of Russia's dispossessed  "Things were better under communism"  is increasingly heard as the new capitalist oligarchs are puffed up with more greed and self-importance than any Khrushchev-era apparatchik. Beneath the roseate flush of post-Soviet prosperity, it seems, lies a deepening corruption.

Graham Stewart's superb history of 1980s Britain, Bang!, extols Thatcher as the conservative ideologue who sought to demolish Marxist dogma as a matter of urgency. When, in March 1987, she toured Moscow in a cossack-style fur hat, Russians embraced her as an emissary of freedom. To the Soviet army newspaper Red Star, Thatcher was the Iron Lady; she saw herself as a modern-day Boudicca scything her way through Kremlin orthodoxy.

Thatcher's visit to the USSR was well timed. The previous spring, radioactive dust from Russia had settled over the skies of Europe. Moscow's callous disregard for the victims of Chernobyl was indicative of communist obfuscation and lies in general, Thatcher believed. In the Ukrainian flatlands round Chernobyl's wrecked nuclear core, Russians were seen to bear the tale-tale mark of cerium pallor; ecologists predicted the birth of two-headed sheep and other mutated life forms. If this was communism, the Russians could keep it.

As Stewart reminds us, Thatcher was a Conservative MP in north London when, on the night of 13 August 1961, the Berlin Wall went up. Germany was now divided into two, mutually antagonistic Cold War zones. A sense of insecurity infected the highest levels of Westminster; to her Finchley constituents, Thatcher spoke fearfully of Moscow's atomic capabilities and asked how long it would be before a Red Square appeared in democratic Europe. Such were the fear-ridden politics of the age.

Reagan, Thatcher's ideologue in arms across the Atlantic, was no less fearful of Kremlin subterfuge. "My fellow Americans," Reagan announced in a celebrated radio soundcheck in 1984, "I am pleased to tell you today that I've signed legislation that will outlaw Russia for ever. We begin bombing in five minutes." It was the stuff of Dr Strangelove. The USSR, for all its wartime triumph over Hitler, was the "evil empire" for Reagan and Thatcher alike.

To her detractors, Thatcher was a politician who knew the price of everything and the value (like Oscar Wilde's cynic) of nothing. If the 1980s can be summed up, it is as a decade of serious money. In the film Wall Street, Gordon Gekko (played by Michael Douglas) gave us the phrase "greed is good", while Harry Enfield was the builder with "loadsamoney". Thatcher defended the individual's right to make limitless money and emerged as a champion of consumer choice.

At the start of the 1980s, Stewart writes, 70% of Britain's television sets were switched to just one channel (ITV); by the decade's end, terrestrial, cable and satellite television had brought unimaginable choice. To sceptics, the greater choice represented a degradation of quality. For all her defence of freedoms, Thatcher could not have condoned the choice of pornography spawned by the internet. Cyberspace does not make a pretty free market.

Critics of the 1980s often cite increased individualism as a chief failing. During Thatcher's 11-year tenure as prime minister, Britain became less attached to the idea of the Commonwealth and other relics of empire in general. Thatcher, unlike the Queen, did not always care to value the often affectionate and loyal relationships between Britain and its former colonies (as she did not value much that could not be measured and accounted for). She mistrusted what she saw as demanding Commonwealth countries; the acronym CHOGM  Commonwealth Heads of Government Meeting  stood for "Compulsory Hand-outs for Greedy Mendicants", she liked to say.

Throughout this carefully researched history, Stewart conjures the urban decay and collapsed industries of early-80s Britain. Coventry, notably, was on the point of disintegration with its theatres and social clubs closed down; in their great song Ghost Town, the Specials communicated a spirit of hopelessness in the recession-hit Midlands. Like the Beat and the Selecter, the Specials were a mixed-race "2 Tone" band who played a post-punk version of Jamaica's speedy, jazz-tinged ska. In the 1960s, ska had been a genuinely Commonwealth music that brought together the poor whites and poor blacks of Britain's inner cities. In many ways, says Stewart, the 1980s were the most "significant period for protest songs" since the 1960s; Band Aid's 1984 Ethiopian famine appeal anthem, Do They Know It's Christmas? encouraged a belief that music might save lives even.

Looking back on the 1980s, the decade seems impossibly remote. The baroque shoulder pads, the Sloane Ranger fashions, the striking miners and the moral panic attendant on Aids (Cardinal Basil Hume's "moral Chernobyl") seem like the trappings of an exotic era irretrievably gone. And yet the decade's influence is apparent everywhere we look, not only in the death of communism, but in the number of privately owned homes, the company sponsorship of the arts and in the still kicking spirit of private enterprise. Rarely has history seemed so close to us, yet so far.