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The 20th century, as Eric Hobsbawm has recently reminded us, has been an "Age of Extremes". Few encapsulated these extremes more than Willi Munzenberg. Born into a desperately poor and unstable working-class family in Thuringia, Munzenberg rose to direct a multinational media conglomerate for the purposes of communist disinformation and propaganda. At its height his empire comprised at least two daily newspapers, one weekly and countless magazines; the total circulation ran to many millions. Munzenberg controlled film distributors and theatre companies. Some of the most famous names of European literature, including Heinrich Mann and Romain Rolland, were at his beck and call. Yet after more than 15 years of faithful service, Munzenberg ended his days as a wretched fugitive in the south of France, on the run not only from the advancing German army but from his former masters in the NKVD as well.

At one level, Stephen Koch's book is part of the continuing campaign to rescue Willi Munzenberg from his postwar obscurity. As such, it falls a little between two stools. Thanks to the efforts of Harold James, Christopher Andrew, and others we already know quite a lot about Munzenberg's role in the dissemination of communist propaganda during the Weimar Republic and the early years of the Third Reich. As for the general framework of European and American intellectual collaboration with the Stalinist regime it is difficult to compete with David Caute's masterly The Fellow-Travellers (1973) in which Munzenberg's role is fully acknowledged. Stylistically, too, Koch compares unfavourably with Caute: one reads of a "brotherhood of loathing" between Hitler and Stalin; and a policeman in Berlin is described as a "cop".

Such infelicities apart, Koch succeeds admirably in his stated aim of providing a "study of the links between the Soviet secret services and the larger intellectual life of the West". At this level, Double Lives is a substantial and well-documented contribution to our understanding of direct Soviet manipulation of western intellectuals in the 1930s. For it was primarily through Willi Munzenberg that Soviet intelligence "ran" the heterogeneous collection of writers, actors and journalists sympathetic to the communist cause; his chequered career forms an Ariadne's thread running through much of 20th-century European politics. Munzenberg was thus, in Koch's words, "one of the unseen powers of 20th-century Europe, (a) largely covert but major actor in the politics of the 20th century".

The trial of two Italian anarchists, Sacco and Vanzetti, was the occasion of Munzenberg's first great coup. It was Munzenberg who mobilised bien pensant opinion on behalf of the accused, at least one of whom - Sacco - was almost certainly guilty. He also oversaw the activities of the "Defence Fund", ensuring that nearly all the donations were siphoned off to the Comintern. When the two were finally executed, Munzenberg arranged for the news to be flashed across Europe. The resulting riots were probably the first display of the kind of anti-Americanism that has since become so familiar. Several years later, Munzenberg was instrumental in organising the Amsterdam "World Congress against War" of 1932. Rather than focusing on the growing Nazi threat, the congress - following Soviet instructions - concentrated on vilifying their "social fascist" rivals on the left: the SPD. Although these affairs were entirely communist in conception and execution, they were successfully presented as "independent" events in order to attract "uncommitted" literary and artistic celebrities. Occasionally, however, the cloven hoof was exposed. At one conference Gustav Regler delivered such a rousing speech in defence of the Soviet Union that the crowd broke into a spontaneous rendition of "The Internationale". On going backstage he was confronted by Johannes Becher, later prominent in the German Democratic Republic, hissing "You've ruined everything! You've given us away!".

But it was after he moved to France to escape Nazism that Munzenberg really began to excel himself. From his Parisian base Munzenberg now began to operate, in the words of a contemporary, with all the "calm and intensity of a chess master walking from board to board, playing 20 games at once". When a lone cretinous Dutchman burned down the Reichstag in February 1933, the stage was set for Munzenberg's most audacious sleight of hand. In a clumsy attempt to pin the fire on the communists, Hitler had ordered the trial of Georgi Dimitroff, a very senior Bulgarian member of the Comintern, along with three lesser figures. But even before the Nazi show trial could go ahead in Leipzig, Munzenberg had turned the tables by instigating a "counter-trial" in London for which he appropriated "independent" intellectuals such as H. G. Wells and Stafford Cripps. Almost overnight, the Nazis were arraigned before world public opinion, accused by the Munzenberg press of having set the fire themselves. In fact, most scholars now agree that the fire was the sole work of Marinus van der Lubbe, a former communist, but the myth of Nazi involvement has been impossible to eradicate.

Koch adds, or revives, another twist to this story. Taking up and considerably expanding a claim first made by the German communist Ruth Fischer - and later confirmed by high-level defectors from postwar Bulgaria - Koch maintains that the whole event was the beginning of a covert co-operation between Hitler and Stalin which culminated in the notorious pact of 1939. According to this view Stalin's aim was to redirect Hitler westwards; Hitler's aim was to gain Soviet help in discrediting his rival Ernst Roehm, leader of the paramilitary Sturmabteilungen (SA). This theory seems rather farfetched. Yet there is a certain amount of circumstantial evidence in its favour. The Munzenberg-inspired Brown Book of the Hitler Terror and the burning of the Reichstag fingered the SA as the chief culprits. It was the same book which first launched the canard that Roehm and van der Lubbe had been sexual partners, thus making Roehm's homosexuality a public issue. Finally, Dimitroff's confident, almost cocksure manner throughout the Leipzig trial suggests knowledge of a secret deal. Whether Koch is right or not, the subsequent acquittal and release of Dimitroff still awaits a satisfactory explanation.

Munzenberg's next task was the journalistic and literary scaffolding of the new Popular Front strategy. The old "social fascist" rhetoric was dropped, to be replaced by the language of anti-fascist solidarity. This dramatic volte face alone gives the lie to the sentimental - but widespread - notion that Munzenberg was somehow his own man, an independent spirit loyal only to the international communist cause. In fact, Koch shows him to have been entirely subservient to Stalin and thus to the aims of Soviet foreign policy. Munzenberg was well aware of the enormity of Stalin's crimes: he had personally witnessed the use of slave labour in the construction of the White Sea Canal, during which about 100,000 prisoners died. He was fully cognisant of the betrayal of the German communist party to serve the ends of Soviet foreign policy. Yet he never broke with Stalin of his own volition. Instead, Munzenberg fell foul of the very same purges his media conglomerate had sought to obscure. After a miraculous escape from Moscow he managed to prolong his usefulness by helping the Spanish Republicans pay for Soviet arms.

By 1937 the writing was on the wall. Having been expelled from the German communist party on trumped-up charges, Munzenberg soon moved into open opposition. Back in Paris, he metamorphosed into a genuine leader of German emigre anti-fascism and - as these people often are - a highly effective anti-Stalinist. His new journal, Die Zukunft, was the intellectual forerunner of Encounter and other cold war publications. Munzenberg thus became in Koch's phrase, "mongoose to his own snake".

So if Munzenberg was an apologist for the Stalinist terror, he was also among its greatest victims. His closest professional associates, Karl Radek, Heinz Neumann and countless other German communists, were either shot or worked to death in the camps. His sister-in-law, Margarete Buber-Neumann, was imprisoned in Karaganda. She would almost certainly have perished there had she not - in a typically Machiavellian Stalinist manoeuvre - been handed over to Hitler in 1940. After spending the war in the relative safety of Ravensbruck concentration camp, Buber-Neumann fled when the gates opened in 1945, remaining just one step ahead of her Soviet liberators until she reached sanctuary in the West. But by then Munzenberg was already dead: his own flight from the advancing Wehrmacht in June 1940 ended in the south of France, where a NKVD assassination squad finally caught up with him.

The legacy of Willi Munzenberg has proved enduring. He may not have decisively shaped the world we live in, but he certainly helped to shape our perception of 20th-century history. Outside of the scholarly world, the belief in the innocence of Sacco and Vanzetti or of Nazi involvement in the Reichstag fire remains unshakable. Stephen Koch's book thus serves to remind us not only of the extraordinary resilience which the "big lie" has enjoyed in our century, but of Willi Munzenberg's role in the formulation and dissemination of such lies.

Brendan Simms is a fellow and director of studies in history, Peterhouse, Cambridge.