It started as a fishing hamlet, grew rich on tobacco, became a magnet of Empire and then sank into decline. Sarah Gracie on the new Glasgow, now up there with NY and Rome
"No one ever imagines living in Glasgow," complains the hero of Alasdair Gray's novel Lanark. "Not the way they imagine living in Florence, Paris, London, New York. Imaginatively, Glasgow exists as a music-hall song and a few bad novels. That's all we've given to the world outside. It's all we've given to ourselves."

But Lanark itself is just one of the many cultural events that have turned this statement on its head. For Glasgow - European City of Culture 1990, City of Architecture and Design 1999 - must be one of the most contradictory, vibrant and beautiful places in the western world. It is also a place that needs to be visited now, because like the capitals of Eastern Europe, it is in the middle of vertical change and the old moon holds the new in her arms.

Initially, the visitor to Glasgow is struck less by a "dear green place" (the Gaelic meaning of Glaes-cu) than a great grey one - what playwright Liz Lochhead calls the city's "brazen black Victorian heart". Its great bridges, murky stretches of water, incontrovertible warehouses. Its classical West End mansions and opulently unusable civic buildings. And it is for its black Victorian heart that it is known. For without the industrial revolution Glasgow might have continued as a harmless hamlet by the river Clyde, one of the "cleanliest ... and best built cities in Great Britain" as Daniel Defoe found it in the early 18th century.

Instead it became the engine of empire, a vast magnet of manufacture into which poured highlanders fleeing rural poverty, Irish the potato famine, Eastern European Jews persecution. The population shot from under 100,000 in 1800 to more than a million in 1900.

In a way, it still hasn't recovered from this accelerated history (the decline of manufacturing was as swift as its rise, with only 15 per cent of the population now working in that sector) and it has the same bewildering multitudinousness as New York: grief and optimism, self-inventiveness versus the blackest economic fatalism.

It is not an accident that it is one of the most creative places on earth. For whatever else is crushed, language is a free space, a vibrant democratic right. "I write jingles fer the BBC," says a cabbie. "Div ye want to hear one?" And he sets off, bright as a button, as we rumble along the cobbles of Grand Central in our "fast black" (Glaswegian for cab):

"Gin [if] I had the wings o' a sparrow

Gin I had the airse of a crow

I'd fly over the hooses of parliament

And drop a big shite on the Tories below."

"They took if aff air," he tells me with surprise and indignation of his BBC2 bosses. "And they said they wanted the voice of Glasgow."

"The nearest thing we had to a Tory in power was when Roy Jenkins won Hillhead by-election in 1982," goes the deadpan patter of a security guard at City Chambers, the enormous late Victorian edifice that houses the city council and often serves as a film set for the Vatican and Kremlin. "And that's a bit o' a slur on Roy Jenkins."

He is a little paranoid about showing me the chandeliers in the Banqueting Hall because last week a 2,000-strong crowd led by Tommy Sheridan ("Sheridan the Charlatan"), who founded the Anti-PollTax-League and spent time in Barlinnie, locked the councillors out of their building in protest at the pounds 80m cuts which the council is having to administer. The councillors had to hold their "Fiddler's Rally" (Glaswegian for council meeting) elsewhere. Generally, it is hard to imagine a city less available for urban anomie. You feel that if you went to throw yourself in the dark wastes of the Clyde one night, someone would pop out from under a pier and say: "Hae ye heard the one aboot ... ?"

The city is said to have been founded by St Mungo (Beloved One) in the sixth century. He came north from Stirlingshire in the funeral procession of a holy man and stayed to found a diocese in what were then wild and pagan lands. Like many great benefactors and malefactors of human history, St Mungo had a strong mother. Her name was St Terow, daughter of Loth, King of Lothians, and in the middle ages she was worshipped as fervently as her son.

Her story is strangely reminiscent of modern tales of female suffering at the hands of the legendary "Glasgow hard man". At any rate, she was supposed to have been a beautiful and intelligent woman who converted, against her father's wishes, to Christianity. When he tried to marry her to a pagan, she was cast out of her father's house to become a swineherd. But the pagan suitor followed and raped her. When the wicked Loth found she was pregnant he ordered her to be thrown from the top of a cliff. Magically, she survived. Then he ordered her to be stoned. Again she survived. Finally, he ordered his now heavily pregnant daughter to be set adrift in mid-winter in the Firth of Forth in a boat with no oars and no rudder. But a shoal of fish took pity on her and guided the boat to shore at the site of Culross Abbey. Here, in the snow, she gave birth to St Mungo, whose missions were later to spread Christianity through the Clyde Valley and up into the Picts' land of the north-east.

There is not much left of St Mungo now. The Reformation, in a great storm of rage led by John Knox, who still stands atop his pillar in the magnificent and sinister Necropolis nearby, destroyed any altarpieces that might have borne his image. But his shade may still be sensed in a few broken lintels and acanthus leaves in the vaulted crypt of the cathedral, of which otherwise one might say with Harriet Beecher Stowe who visited it in 1853: "I could scarcely walk the whole length of it ... There is nothing more hazardous to a person's strength than looking at cathedrals."

Little remains of the medieval city except a few street names: Trongate was the weighing station and Gallowgate the site of public hangings. But down the old High Street, past St Mungo's Museum of Religion ("Fort Weetabix" as it is known, after its rusticated blonde sandstone) you come to the 18th-century heart of the city: the Merchant Town. It is so called after the entrepreneurs who opened up the tobacco trade with the New World. At its height, 50 per cent of Europe's tobacco went through the city's warehouses, and on the profits the merchants built great exchanges, hospitals, churches and grandiloquent mansions.

In the wake of the American War of Independence, which punched a hole in trade, the area fell into decline, and until recently was a badlands of decay. Now it is buzzing and a testament to Glasgow's regeneration. SoHo-style warehouse conversions, loft spaces, artists' cooperatives, folk clubs, gay clubs, printing works, chic restaurants and designer bars. It's not hard to see why Glasgow is artistically booming. It's got the same kind of atmosphere Greenwich Village must have had in the 1920s: vistas of magnificent and vacant architecture left for bohemian habitation; a critical mass of creative talent.

One example of the transformation is the new Gallery of Modern Art. Originally built as a mansion for tobacco lord William Cunninghame, it did service as a commodities exchange, and then a library. Now it is a gallery directed by the controversial Julian Spalding. Panned by London art critics, it is one of the most exciting modern galleries outside New York, and for freshness and dynamism of both architecture and display, it beats the Tate hands down. Spalding was allotted a purchasing budget of the annual interest on pounds 3m, which might get you an undistinguished print by Mondrian or a ceramic by Picasso. So he took the decision to buy only works of living artists, before the commodification of fame had set in. In the wrong hands, the scheme might have been disastrous. However, one can only admire the style that has informed the whole project. Halls of dressed granite and sandstone, galleries themed according to the elements, optic fibre escalators, the whole effect is utterly light, fresh and dynamic.

The Spalding treatment is causing trouble in other parts of the city as well. Under siege is the Kelvingrove Museum in the West End, that venerable old late Victorian warehouse, with its vast melange of treasures: Egyptian mummies; Beaker urns from celtic Scotland; stuffed animals from a travelling menagerie; and ancient Norse reindeer combs.

Spalding has declared war on the stuffed birds. It will not be long, one feels, before the ranked cases of fossils from the Cambrian, Permian, Ossian ages, pinned and annotated with such ardent scholarship in letters now faded, will follow them. In their place are exhibitions with names like "Claws" and "Kiddies' Corner": plastic sabre-tooth tigers which roar on request and interactive videogames.

It is sad to think of the wonderful anarchic brew that is Kelvingrove passing away. On the other hand, museum transformation seems to be a necessary rite of passage as the city attempts to throw off the "anxiety of influence" and forge a new identity through a major process of renegotiation with its Victorian past.

Whatever Glasgow you go to visit, the depressed reaches of the Clyde by Greenock or Dumbarton, the Manhattanesque buzz of the Merchant City, the grandeur of late empire architecture or the faint tracery of the celtic Church in Scotland, one thing will be constant, and that is the pungent vitality of the people. Former Glasgow Herald columnist Jack Maclean, known as the "Urban Voltaire", who may be found propping up the bar of the Babbity Bowster in the Merchant Town, puts it as follows: "Glasgow has always been no class, and plenty of style." That beats all class, and no style. And perhaps it goes a long way to explaining why the city has vanquished other contenders - Edinburgh among them - to become European City of Design and Architecture 1999.