It is more than 90 years since the world first glimpsed Gatsby and the green light, more than 160 since Moby Dick surfaced to lukewarm acclaim and a century since the birth of Saul Bellow, yet the literary world is still besotted by the coming of a Great American Novel whose rapture will render all else somehow irrelevant.

This obsessive search in the manner, say, of a sailor searching for a whale would surely prompt Bellow's Augie March to declaim: "Enough already." There are already enough GANs to fill a hangar and there must be reasonable expectations, despite the death of Updike and the self-imposed silence of Roth, of more to follow.

Benjamin Markovits has not quite produced a GAN but he has used its most conspicuous characteristics to conjure up something entertaining, insightful, humorous yet of serious purpose. This is a very good novel.

Markovits, who spent some of his childhood in Texas, now lives in London and has become assimilated to such an extent that he was named one of the best British novelists by Granta two years ago. In a knowing yet beguiling manner, he exploits much of the GAN formula. There is the individualistic opening sentence: "When I was young I was never much good at telling stories." This the come-on used by such seducers as Holden Caulfield, Nick Carraway or Augie himself. Similarly, Markovits has created an affecting narrator in Greg Marnier, a drifter with undeniable intelligence and resilient innocence.

The sense of place and time is all-pervading. This is Detroit during the presidency of Barack Obama. The subject matter ranges from the state of the nation, through the reality that commercialism seeps through every American dream, to race, the issue that dominates the US today. At one point in a big, adventurous novel, a character remarks that someone is trying to make "a racial thing" out of an incident. Markovits points out with both delicacy and brutal violence that race is as integral to the American landscape as oxygen.

The setting of Detroit is crucial. It was seen as the first "black city" and it has failed spectacularly in the 21st century, its economy broken by the demise of American manufacturing, its viability further eroded by "white flight", its inner-city streets dilapidated and deserted, resembling something from a dystopian set.

Markovits uses as his central narrative device a scheme to repopulate central Detroit with mostly white people. There are numerous allusions to the Pilgrims coming to America but You Don't Have To Live Like This can be viewed, crudely but certainly, as a Western. Greg Marnier and his fellow incomers are the cowboys and the black families of Detroit can be viewed as the Native Americans who are rightly suspicious of influx. In any sort of colonialism, good intentions do not preclude bad results.

Markovits thus invests his novel with contemporary issues, excellent reportage (the aluminium scam at the centre of the novel is both absurd and a matter of fact) and an examination of how a nation remains hopelessly, grievously divided. It is told in the extraordinary voice of Marnier, who may not be the greatest hero in American fiction but is almost certainly the only one who has ridden into the action from a post teaching in Aberystwyth.

Marnier is a fine creation. A Southerner, he heads north in search of meaning and identity after finding that Yale and Oxford may have honed his intelligence but did not sharpen his financial prospects. He speaks too much but listens well. He is acute on the character of others and bemused and often confounded by his own. "It became clear to me I was not coping too well," he remarks at one stage of a novel that stretches somewhat languorously to almost 400 pages.

But he keeps the story moving in a series of dramatic set pieces that gain a momentum that is powerful, threatening. Marnier, a virgin at 19, a naif in his mid-thirties, is the ideal chronicler of the clash between incomer and settler, the reality of money infecting every ideal and the seeming inability of the races to co-exist, most bluntly depicted in a failed relationship that shows the narrator, essentially decent and tolerant, shares many of the failings of his fellow Caucasians.

The Detroit experiment of bringing in new blood to invigorate a stagnant city is doomed to failure from the outset. The Western analogy is made plain when Marnier's first purchases are a handgun and a shotgun, as if he is going sit alongside the driver of a stagecoach instead of living in a city street. His concern is understandable but it is a major, undeniable indication that in the purchasing of real estate most buy into the notion that black equals threat. Marnier, intelligent if feckless, makes genuine attempts to integrate but his relationships with African Americans end badly. Even an encounter with Obama ends with Marnier receiving a bloody nose in a makeshift basketball match during an informal presidential visit to Detroit.

Marnier, too, is a victim of other slights, other unintended injuries, but he endures. There is therefore the merest glimmer of redemption in Markovits's novel.

The words of title - You Don't Have To Live Like This - can be interpreted variously as an observation, a remonstrance or an exhortation to change. The temptation is to view it as the last. After all, in the history of the besieged Western enclave - if not always in the Great American Novel - hope is always the last thing to leave town.