It's the climax to the world's most popular children's film. After a perilous journey to the Emerald City in order to beg an audience with the almighty and all-powerful Wizard of Oz, Dorothy Gale's dog Toto snatches at the heavy velvet curtain to reveal an old man pulling on a couple of levers and shouting into a megaphone. Despite his humbug, he is not all bad. He dishes out a few medals and educational diplomas and is willing to share the benefits of his technical superiority, offering Dorothy and Toto use of his hot-air balloon so that they can fly back to Kansas.

In some ways, this is the parable behind John Darwin's much anticipated and very long history of the modern British Empire. The "luxuriant myth" of current views, he argues, is that Britain was a hegemonic imperial power. But Darwin pulls back the curtain to reveal no master ideology; no logic to the structure; and nothing inevitable about the extraordinary rise of the great Victorian empire. Rather, it was unplanned, messy to look at and always divided domestic opinion. Successive governments, he shows, were dragged into empire by a "chaotic pluralism" and were never strong enough to impose any system of their own.

Darwin is no bogus Professor Marvel, of course, having written authoritatively on the British Empire for a number of decades. He has specialised in imperial decline and most recently published the impressive After Tamerlane: The Global History of Empire, a breathtaking account of the imperial enterprise since 1405. The academic has also inspired generations of Oxford undergraduates at Nuffield College. Now we get a chance to eavesdrop on all those tutorials and lectures.

The result is a finely tuned panoramic study of the British Empire that grasps a thorny issue: the complex relationship between Britain as an imperial power and Britain as a world power, and how those tensions were understood at the time and resolved (or not).

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For despite "the real mediocrity of her circumstances", according to Adam Smith, a British world system did emerge by the 1840s, which was to remain virtually fully functioning until the Second World War.

Darwin's key argument is that the British Empire, the most important bits of which were the metropole, India and the Dominions, was the core of a much bigger British world system whose fate was governed by the global economy and world politics. It could try to influence both; it could control neither. His systems approach sounds very 21st century in some ways, with webs of communication and interdependent global networks. These were essentially naval and military; commercial (including a vast City-owned overseas property empire by the 1860s); and the movement of people.

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But to deliver the goods, Darwin argues, three geopolitical conditions had to be in place: a passive East Asia; a balanced Europe; and a neutral US. Darwin's passive-imperialism thesis is further buttressed with his stress on the limits of British imperial power. Coercion and authoritarianism were of little use. The co-operation of indigenous elites, who saw being part of the empire as serving their interests, was always hugely important.

Patched up after 1942, Whitehall finally had to roll up the maps in the late 1960s, for "the substance of world power had already shrivelled up, leaving only the ghost of the 'British world-system'. It only remained to acknowledge its passing," Darwin observes.

Such sober treatments of the British Empire face an uphill struggle to compete with the flashy gung-ho revisionism from right-wing historians, or the sensationalism of imperial history seen as a series of scandals from the Left. But reading this won't make you feel like you've sat through a Lib Dem conference. The scholarship and the writing are faultless. Expect prose sprinkled with musicality (such as the "long diminuendo" of decline) and delightful details, especially Lord Salisbury's classic definition of the diplomatic arts: "sleepless tact, immovable calmness, a series of microscopic advantages ... serene, impassive intelligence". The imperial politics of the white Dominions might be boring compared with those of Africa or India, but Darwin makes them almost captivating.

The perennial problem with a systems approach is that human agency can be lost, and in this case, it is the unique and particular contribution of British ingenuity, vision and greed; of British blood, sweat and tears (and other fluids I am too Welsh to mention if we let out - briefly - Ronald Hyam's surplus sexual energy thesis).

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For me, Darwin's stress upon the primacy of geopolitics works for the British Empire's decline much more than for its origins, where endogamous factors seem to matter more. Take the naval supremacy that allowed Horatio Nelson to decisively wipe out the Euro competition, thus setting up Britain to be able to take full imperial advantage. Copper-bottomed warships decisively outclassed the French - copper smelted in just one of many grim industrial heartlands through a special technique that had been developed over generations.

As Dorothy would say, there's no place like home.