Hackney, That Rose-Red Empire, By Iain Sinclair

Anyone who has lived in Hackney is accustomed to surveillance. In my own 30 years in the borough, I've been woken by police helicopters circling my tower block, leaving me to wonder, in a state of half-awake paranoia, whether the searchlights were about to shine into my ninth-floor bedroom window. The truth, as revealed by Iain Sinclair, is worse. During an interview with the young film-maker Rob Petit, Sinclair learns of the existence of a secret bunker in Stoke Newington where banks of monitors display the real extent of Hackney's Orwellian ambition.

Virtually every street corner is being filmed. The registration of every car entering the borough is recorded and, if it matches that of a known criminal, sends off the sirens in an exciting chase. "It makes a great movie," says Petit.

Sinclair's book is its own headlong dash through the blighted borough, even as he conducts his own surreptitious surveillance of what he regards as its perennially corrupt council. The author's experiences since moving to Hackney in 1968 will be disturbingly familiar to anyone who has taken the number 253 up Mare Street. Once a garden suburb and a retreat for artists, aristocrats and artisans, utopians, spiritualists and radicals, by the late 20th century Hackney had become a fascinating conflation of history and legend. Its toxic allure inculcates creativity.

No one else could have chronicled such topographical schizophrenia. Sinclair's beautifully packaged book is a labour of love and hate, "more a way of life than a serious project". Written in a stop-start prose that reads like literary ECT, its urgent text is tailored to the author's pathological twitch. Dissertations on Edward Calvert, engraver to William Blake, give way to Orson Welles's mythic production of Herman Melville's Moby-Dick at the Hackney Empire – the rose-red auditorium of Sinclair's title – before segueing to the fate of Jayne Mansfield's white mac – left behind in the Black Bull pub, to be picked up by gangster Tony Lambrianou – then descending into secret tunnels beneath Victoria Park. Along the way, there are walk-on parts for Joseph Conrad, Astrid Proll and the Mole Man of Dalston. Sinclair himself is in the process of unblocking a sacred Roman well in the basement of his house.

Sinclair's skittering style is, in his own phrase, subject to "arbitrary jump cuts of consciousness". It is an extended Burroughs cut-up, cyclical and prone to hypnotic repetition. His Hackney is forever elusive, even as it is exposed by its artists, actors and activists. He seeks testimony from writers such as Patrick Wright and film-makers Paul Tickell and Chris Petit (father of Rob), taping interviews as flash-bulb glimpses of experience. My own former street, Beck Road, gets a mention as the residence of Genesis P Orridge – a man whom, I recall, was once questioned by a pair of policemen about a CS gas canister sent by post from East Germany. On arrival, the junior officer also wondered if a Tibetan flute, made from a human thigh bone, might not be investigated as a potential missing person.

Hackney's shadows allow for all kinds of subversion, and perversion. When I moved from Beck Road to Hoxton in the early Eighties, the National Front still campaigned in the market, a race memory of Mosley's Blackshirt riots. Then Jarvis Cocker moved in at one end of the street, and the artist Gary Hume at the other. Now the bars are filled with nocturnal immigrants.

As Sinclair says, "once a street is noticed, it's doomed". For him, the dubious emblem of gentrification is the elusive Tony Blair, his sometime neighbour in London Fields. The former PM's presence is a sort of running illusion, as the author tries to find someone who saw the Blairs in the borough. Sinclair is able, like a city seer, to see into the future as well as past, and the cash cow-albatross of the 2012 Olympics looms over the text. Quite what the world will make of Hackney when it arrives on its doorstep is another matter.

Philip Hoare's 'Leviathan, or The Whale' is published by Fourth Estate