When was the last time you were well and truly lost? For those of us who own a smartphone, satnav or laptop, the answer may be quite some time ago. The streets we walk are endlessly documented online, the countryside is comprehensively mapped and even the most winding country lane has had its dimensions captured by the TomToms and Garmins of this world. Even the trusty Ordnance Survey has just announced its presence online. But does this proliferation of digital data mean a golden age of mapping or is it the end of an era for the paper maps that have helped us around the world – and back again – for centuries?

With the increasing technological sophistication of free online applications such as Multimap, MapQuest, and Google's ubiquitous applications Earth, Maps and Street View to help us find our way, wherever we are, the Ordnance Survey has finally bowed to the inevitable and published most of its maps for free online. OS was not only losing its market but also its reputation as the nation's most reliable and innovative supplier of maps. Ever since Gordon Brown's declaration in November that OS material should become freely available, the pressure on the OS to release its data had become irresistible, despite opposition within its ranks. But something had to be done.

The OS has been caught in the classic dilemma of an established market leader that suddenly finds its product caught out by a shift in technology. Stay where you are and risk stagnation, or become just one more online "geospatial application" (the technical term preferred by techies to describe online mapping), and try catching up with rivals like Google, but on a fraction of their resources. The Ramblers Association complain that the OS's most popular maps, issued on scales of 1:50,000 and 1:25,000 (the much-loved Explorer and Landranger maps) are still not downloadable, while bloggers grumble at the exclusion of Master Map, widely regarded as the main OS product, which still costs you at least £500 for standard licensed use. The OS's problems are compounded by state ownership: when politicians get involved, the outcome is predictably fudged, and it has left the OS stranded somewhere between print and pixels.

The controversy also reveals something fundamental about the future of mapmaking. One of the reasons that the OS came to dominate the map market in the nineteenth century was, ironically, its adoption of new technology – in this case, lithography, which replaced the technique of copperplate engraving used since the late fifteenth century. But in the last 20 years the evolution of graphics and software applications have allowed sites like Google to tear up the traditional definition of a map and transform it into an interactive tool way beyond the capabilities of a two-dimensional paper map. Add to this the pervasiveness of electronic mapping technology in Sat Nav and GPS devices, and the OS's online move looks like one further step in the inevitable evolution of cartography: the death of traditional paper maps and domination of geospatial applications.

But for many, the shift from paper maps to geospatial applications seems suspicious and unreliable, a residual hangover from our current generation's uneasy embrace with the web over the last 20 years, rather like people's fears about the imminent demise of the paper chequebook in favour of online banking. Is it safe, most people over 40 ask? But to someone who has been writing on the history of mapmaking from the Greeks to Google Earth, such complaints, and particularly those levelled against online maps, sound remarkably familiar.

The cuddly OS, affectionately regarded for so long as a national institution and friend of the rambler's exploration of the English countryside, actually began its life as a military application. The first great discovery and celebration of the English countryside also coincided with its mapping for military and administrative purposes. When Romantic poets like Wordsworth and painters like Paul Sandby (currently on show at the Royal Academy) extolled the beauty of the landscape, they could only do so because of the work of the beginnings of the OS. Wordsworth penned a poem celebrating Colonel Mudge's trigonometrical survey of Black Comb in the Lake District. For Wordsworth, Mudge was a "bold adventurer", a "geographic labourer". But he was also part of the Department of Ordnance's plan to map the Hanoverian nation-state following the Battle of Culloden in 1746, when the Army realised the potentially disastrous effect of its lack of accurate maps of the area. Even Paul Sandby, the father of landscape painting, owed his fame to the Army and the OS, having been appointed military cartographer and draughtsman to the Survey of the Highlands following Culloden. Until the last few decades, OS maps have continued to omit militarily sensitive locations, a sign that this is a problem that hasn't just affected Google Earth.

Today, mapping technology goes hand in hand with yet another shift in political and economic life. It is no coincidence that geospatial applications have come to predominate our everyday lives just as globalisation seems to define every move we make. As time speeds up and space shrinks in the global economy, electronic communication and transactions are instantaneous, capital becomes ever-more liquid, finance increasingly virtual and labyrinthine. To track such developments, and to physically move with it, we never turn to a physical map. Instead we turn to electronic media. Ed Parsons, geospatial technologist at Google, estimates that approximately 30 per cent of all Google searches are "geographical". No wonder Google is attached to its maps. Its search engine works in tandem with its geospatial application to order global knowledge in a completely new way. Rather than classifying things according to numerical or alphabetical order, Google uses a geographical order. When we ask Google for information, it is increasingly delivered to us based on how near it is to us. We are, says Parsons, the last generation to know what it means to be lost (as long as you've got a phone signal or GPS device to hand).

In this respect Google Earth is part of a long and distinguished tradition. We tend to get the maps our economic imperatives require. When Ferdinand Magellan returned from the first circumnavigation of the globe in 1522, there was an immediate explosion of increasingly comprehensive world maps designed to track his global achievements. Magellan's voyage was strictly commercial, sponsored by the Spanish to capture the lucrative spice-producing islands in the Indonesian Archipelago from the Portuguese. This first moment of western economic globalisation inspired maps which laid the foundation for our current understanding of the shape and scope of the earth. But they were also subject to political manipulation by competing imperial interests, which knowingly placed the islands in their respective spheres of influence in an attempt to achieve economic advantage. Nobody today suggests that this motivation ultimately damaged the subsequent mapping of the globe, even though this seems to be the implication of the OS's concerns about abandoning the nation's mapping to commercial companies like Google.

Interestingly, the economic and geographical imperatives of globalisation may lead to the reduction of the image of the globe itself to little more than an historical curiosity. In the past, we needed world maps to follow the laborious route of seaborne fleets taking months, even years, to reach far-flung markets. Today, Google's increasingly personalised geospatial applications have little or no interest in the globe itself, which has become an almost meaningless logo, the first image you see on Google Earth before hurtling down through the layers to find your street or house. Globalisation is all about abolishing time and distance, of shrinking the earth and celebrating speed (of an internet connection or a trans-continental flight). Its only interest in the globe is to show how it triumphs over its size, an easily surmountable obstacle in the flow of capital invisibly criss-crossing its surface.

Google understands that the web is itself a giant map that we're still surveying, as we "navigate" our way across its unknown continents. Parsons wants a webpage for every place and building on the earth. At the moment, he claims that we're at less than 1 per cent, an extraordinary statistic which indicates how far we still have to go online. But it's not just about tracking webpages. Geospatial applications will ultimately provide every feature (and more) that you see on a traditional OS map: it's simply a question of time and technology. And what we'll get are undoubtedly enhanced images, more interactive and more personalised than ever. Even the graphic screen is likely to give way to different forms of augmented reality, allowing us to hear, smell, even touch what the map shows us.

The nostalgia for the paper map in your hand in front of the landscape rather than the same image on your GPS device or mobile phone only swaps one interpretation of the land for another. The anxieties have always been the same, from when maps moved from stone to parchment, manuscript to print, print to pixel. A map is never inherently "good" or "bad", "progressive" or "conservative". What matters is how it's interpreted and used, whether this happens on a sheet of paper or on a computer screen. And if you still hanker after that old OS map? No problem. Download your map, print it off, and take it with you.

Professor Jerry Brotton presents Maps: Power, Plunder and Possession, BBC Four from Sunday 18 April at 9pm

The British Library's exhibition, Magnificent Maps: Power, Propaganda and Art, opens on 30 April