"I was very consciously trying to write for an international audience," Kazuo Ishiguro says of The Remains of the Day in his Paris Review interview ("The Art of Fiction," No. 196). "One of the ways I thought I could do this was to take a myth of England that was known internationally – in this case, the English butler."

"Jeeves was a big influence." This is a necessary genuflection. No literary butler can ever quite escape the gravitational field of Wodehouse's shimmering Reginald, gentleman's gentleman par excellence, saviour, so often, of Bertie Wooster's imperilled bacon. But, even in the Wodehousian canon, Jeeves does not stand alone. Behind him can be seen the rather more louche figure of the Earl of Emsworth's man, Sebastian Beach, enjoying a quiet tipple in the butler's pantry at Blandings Castle. And other butlers – Meadowes, Maple, Mulready, Purvis – float in and out of Wodehouse's world, not all of them pillars of probity.

The English butler, the shadow that speaks, is, like all good myths, multiple and contradictory. One can't help feeling that Gordon Jackson's portrayal of the stoic Hudson in the 1970s TV series Upstairs, Downstairs may have been as important to Ishiguro as Jeeves: the butler as liminal figure, standing on the border between the worlds of "upstairs" and "downstairs", Mr Hudson to the servants, plain Hudson to the gilded creatures he serves.

Now that the popularity of another television series, Downton Abbey, has introduced a new generation to the bizarreries of the English class system, Ishiguro's powerful, understated entry into that lost time to make, as he says, a portrait of a "wasted life" provides a salutary, disenchanted counterpoint to the less sceptical methods of Julian Fellowes's TV drama. The Remains of the Day, in its quiet, almost stealthy way, demolishes the value system of the whole upstairs-downstairs world.

(It should be said that Ishiguro's butler is, in his way, as complete a fiction as Jeeves. Just as Wodehouse made immortal a world that never existed except in his imagination, so also Ishiguro projects his imagination into a poorly documented zone. "I was surprised to find," he says, "how little there was about servants written by servants, given that a sizable proportion of people in this country were employed in service right up until the Second World War. It was amazing that so few of them had thought their lives worth recording. So most of the stuff in The Remains of the Day … was made up.")

The surface of The Remains of the Day is almost perfectly still. Stevens, a butler well past his prime, is on a week's motoring holiday in the West Country. He tootles around, taking in the sights and encountering a series of green-and-pleasant country folk who seem to have escaped from one of those English films of the 1950s in which the lower orders doff their caps and behave with respect towards a gent with properly creased trousers and flattened vowels. It is, in fact, July 1956 – the month in which Nasser's nationalisation of the Suez Canal triggered the Suez Crisis – but such contemporaneities barely impinge upon the text. (Ishiguro's first novel, A Pale View of Hills, was set in post-war Nagasaki but never mentioned the bomb. The Remains of the Day ignores Suez, even though that débâcle marked the end of the kind of Britain whose passing is a central subject of the novel.)

Nothing much happens. The high point of Mr Stevens's little outing is his visit to Miss Kenton, the former housekeeper at Darlington Hall, the great house to which Stevens is still attached as "part of the package", even though ownership has passed from Lord Darlington to a jovial American named Farraday who has a disconcerting tendency to banter. Stevens hopes to persuade Miss Kenton to return to the hall. His hopes come to nothing. He makes his way home. Tiny events; but why, then, is the ageing manservant to be found, near the end of his holiday, weeping before a complete stranger on the pier at Weymouth? Why, when the stranger tells him that he ought to put his feet up and enjoy the evening of his life, is it so hard for Stevens to accept such sensible, if banal, advice? What has blighted the remains of his day?

Just below the understatement of the novel's surface is a turbulence as immense as it is slow; for The Remains of the Day is in fact a brilliant subversion of the fictional modes from which it seems at first to descend. Death, change, pain and evil invade the innocent Wodehouse-world. (In Wodehouse, even the Oswald Mosley-like Roderick Spode of the Black Shorts movement, as close to an evil character as that author ever created, is rendered comically pathetic by "swanking about," as Bertie says, "in footer bags.") The time-hallowed bonds between master and servant, and the codes by which both live, are no longer dependable absolutes but rather sources of ruinous self-deceptions; even the happy yokels Stevens meets on his travels turn out to stand for the post-war values of democracy and individual and collective rights which have turned Stevens and his kind into tragicomic anachronisms. "You can't have dignity if you're a slave," the butler is informed in a Devon cottage, but for Stevens, dignity has always meant the subjugation of the self to the job, and of his destiny to his master's. What then is our true relationship to power? Are we its servants or its possessors? It is the rare achievement of Ishiguro's novel to pose big questions – what is Englishness? What is greatness? What is dignity? – with a delicacy and humour that do not obscure the tough-mindedness beneath.

The real story here is that of a man destroyed by the ideas upon which he has built his life. Stevens is much preoccupied by "greatness", which, for him, means something very like restraint. The greatness of the British landscape lies, he believes, in its lack of the "unseemly demonstrativeness" of African and American scenery. It was his father, also a butler, who epitomised this idea of greatness; yet it was just this notion which stood between father and son, breeding deep resentments and an inarticulacy of the emotions that destroyed their love.

In Stevens's view, greatness in a butler "has to do crucially with the butler's ability not to abandon the professional being he inhabits". This is linked to Englishness. Continentals and Celts do not make good butlers because of their tendency to "run about screaming" at the slightest provocation. Yet it is Stevens's longing for this kind of "greatness" that has wrecked his one chance of finding romantic love. Hiding within his rôle, he long ago drove Miss Kenton away into the arms of another man. "Why, why, why do you always have to pretend?" she asks him in despair, revealing his greatness to be a mask, a cowardice, a lie.

Stevens's greatest defeat is the consequence of his most profound conviction - that his master is working for the good of humanity, and that his own glory lies in serving him. But Lord Darlington is, and is finally disgraced as, a Nazi collaborator and dupe. Stevens, a cut-price St Peter, denies him at least twice, but feels forever tainted by his master's fall. Darlington, like Stevens, is destroyed by a personal code of ethics. His disapproval of the ungentlemanly harshness towards the Germans of the Treaty of Versailles is what propels him towards his collaborationist doom. Ideals, Ishiguro shows us, can corrupt as thoroughly as cynicism.

The 1993 Merchant Ivory film version of The Remains of the Day softens the book's portrait of Lord Darlington. Sympathetically portrayed with a stiff-upper-lip aplomb that slowly disintegrates, he comes across as more of a fool than a villain, mo re to be pitied than censured. Ishiguro's novel is less equivocal, its portrait of the British aristocracy's flirtation with Nazism untinged by sentiment. In this matter Stevens is an unreliable narrator, making excuses for his lordship – "Lord Darlington wasn't a bad man. He wasn't a bad man at all" – but the reader is allowed to see more clearly than the butler, and can't make any such excuse.

At least Lord Darlington chose his own path. "I cannot even claim that," Stevens mourns. "You see, I trusted … I can't even say I made my own mistakes. Really, one has to ask oneself, what dignity is there in that?" His whole life has been a foolish mistake, and his only defence against the horror of this knowledge is the same capacity for self-deception which proved his undoing. It's a cruel and beautiful conclusion to a story both beautiful and cruel.

With The Remains of the Day Ishiguro turned away from the Japanese settings of his first two novels and revealed that his sensibility was not rooted in any one place, but capable of travel and metamorphosis. "By the time I started to write The Remains of the Day," he told the Paris Review, "I realised that the essence of what I wanted to write was moveable … For me the essence doesn't lie in the setting." Where, then, might that essence lie? "Without psychoanalysing myself, I can't say … You should never believe an author if he tells you why he has certain recurring themes."

• The Remains of the Day will be reissued by Everyman Library next month.