In 1920, Detroit was the fourth biggest city in America. Its population had doubled in a decade. Migrants, many of them African-Americans from the rural South, were drawn by its pioneering car factories with their unprecedentedly high wages. The manic, mechanised, overcrowded metropolis of General Motors and Ford also drew journalists and writers. In 1934, Anne O'Hare McCormick of the New York Times wrote about Detroit's "democratized luxuries, with gas stations on every corner, chain stores, moving-picture palaces … as truly a world capital as any city on earth … Paris dictates a season's silhouette, but Detroit manufactures a pattern of life."

The city is still doing that, yet nowadays the pattern is different. Detroit has so much vacant land, writes Mark Binelli, "all of Paris could fit" into its empty spaces. Modern Detroit is world-famous not for its mania but for its entropy: derelict skyscrapers, collapsing houses, abandoned husks of businesses and civic amenities, all of them slowly sinking into what he calls "urban prairie", a post-human landscape of returning wild plants and animals. As decay often is, this Detroit is intensely photogenic – beautiful, apocalyptic Detroit "ruin porn", a phrase used by local critics of the phenomenon, Binelli included, has become an internet craze, a colour magazine staple, a coffee-table book mini-genre.

On these urban ghost-hunting expeditions, it is sometimes barely mentioned that the city's decline since the mid-20th century has also been a social disaster, slow-motion but seemingly inexorable. And sometimes not so slow-motion: since 2000, a quarter of its populace has departed, mostly to less blighted nearby settlements. For those who remain, life in Detroit can be dire. In 2008, writes Binelli, the city had "the highest murder rate in the country" and "90,000 fires", many of them arson. Detroit was "the most [racially] segregated major metropolitan area in the country … The school system remained the worst … The most recent mayor, Kwame Kilpatrick, had just begun serving a three-month jail sentence … following a sex and corruption scandal." As 2008's global economic slump has lingered, Detroit has suffered further. Unemployment in the city may be close to 50%. Already-low property values have plummeted. Public spending cuts, driven by the dwindling population and shrinking inhabited area in a downward spiral – vicious, but bureaucratically logical – have left Detroit with services so threadbare that long stretches of street lights have been turned off.

For a currently declinist, anxious America, and pessimists across the western world, Detroit stands as a cautionary tale, its rise and fall an ideal subject for any nonfiction writer with some historical skills, a bit of courage and street wisdom, and a few gothic adjectives at their disposal. For the first few chapters here, it seems almost too ideal. Unlike many of Detroit's recent explorers, Binelli has local roots. He writes for Rolling Stone magazine, and uses a busy, knowing prose. Initially, this volume reads less like a book than a good book proposal, authoritative but self-conscious, switching restlessly between past and present, scene-setting and summary, energetic promotion of the topic at hand and world-weary commentary on rival Detroit portraits.

Binelli then traces the city's ascent, from its foundation in 1701 as a French fur-trading post, well situated between two of the Great Lakes, to the self-mythologising "Motor City" of Detroit's brief heyday. Again, the tone is too quick and breezy: "… After an eventual negotiated peace with [chief] Pontiac, nothing much interesting happened in Detroit for the next thirty or so years …" In modern nonfiction, the slick, conversational, summarising style of Malcolm Gladwell's influential bestsellers has a lot to answer for.

The book handles Detroit's decline better. In 1967, after a final, unsustainable manufacturing boom based on war production, the city suffered riots, "at that point, the worst in US history". Forty-three people died, nearly 3,000 buildings burned, and soldiers with tanks were sent out on to the streets, where gun battles took place that seemed a terrifying echo of what was happening in Vietnam. For some of Detroit's critics, many of them relatively prosperous white people who have left since, 1967 is the city's point of no return, the moment when black Detroit unthinkingly trashed its own backyard. But Binelli tells a more nuanced and persuasive story. Both white flight to suburbs beyond the city limits and the decay of the local car industry, he writes, had begun a decade or more before the riots. Despite – or perhaps because of – a reforming 60s mayor, the white, liberal Jerry Cavanagh, compellingly portrayed here as one of a succession of charismatic but seemingly doomed civic leaders, African-American grievances had reached boiling point. To this day, when many older black Detroiters talk about 1967, writes Binelli, "The word uprising replaces riot."

The city is now 85 per cent African-American, "run entirely by a black political elite". Binelli is a 42-year-old Italian-American with left-liberal leanings, and is firm but fair in documenting this elite's shortcomings and extreme administrative challenges. Yet he is more interested in portraiture than polemic, and the book's second half settles down into a series of delicately-drawn studies of life among the ruins. Defiant, isolated homeowners sit on their porches, surrounded by grassy emptiness, as if Detroit is turning into the rural South many of its original inhabitants came from. A bare-bones fire service is doggedly maintained in Highland Park, "the Detroit of Detroit", a separate, even frailer settlement surrounded by the city. Firemen work from tents and a trailer, set up inside a warehouse in an overgrown industrial park, "the former site of Chrysler's world headquarters".

Binelli is a diligent meeter and listener. One neighbour in the raw inner-city street he moves into for research (nowadays he usually lives in New York) turns out to be Derrick May, the legendary co-inventor of Detroit techno music. In the late 80s May's speeding but skeletal sound – perfect, Binelli points out, for a night drive through a half-abandoned city – briefly made him a star in Europe. But Detroit techno has long since become just another dance music genre. Invited over by May to watch one of the city's huge, unobstructed sunsets, Binelli finds not an Ibiza-style Bacchanalia but May and friends sitting on folding chairs on the pavement, drinking from plastic cups. "Only in Detroit … could twilight at the edge of an eight-lane boulevard strike anyone as a relaxing proposition." The rush-hour road is virtually unused: "Occasionally, a single car would seem to float past."

Of course, in cities one person's entropy is often another's opportunity. In recent years, Detroit's great, grey semi-vacuum has begun to suck in artists, activists, foodies, urban farmers, film-makers, even a few corporations, all of them attracted by its cheap space and gritty aura. Binelli, aware of the possibilities of revival they bring, and his own hipster tendencies, tries hard not to sneer. But an encounter with a longstanding black resident reveals underlying tensions. Detroit's famous ruins, she tells him, have left "scars" on locals: they are a daily reminder of the city's failures. Meanwhile some of the gentrifiers act, she says, "like they're out on the frontier and they can do anything … [But] Detroit isn't some kind of abstract art project." Binelli's achievement is to make that vividly apparent.

• Andy Beckett's When the Lights Went Out is published by Faber.