Since we first prowled the savannahs of Africa, human beings have displayed a few overpowering and ineradicable impulses—for food, for sex, and for drugs. Every human society has hunted for its short cuts to an altered state: The hunger for a chemical high, low, or pleasingly new shuffle sideways is universal. Peer back through history, and it's everywhere. Ovid said drug-induced ecstasy was a divine gift. The Chinese were brewing alcohol in prehistory and cultivating opium by 700 A.D. Cocaine was found in clay-pipe fragments from William Shakespeare's house. George Washington insisted American soldiers be given whiskey every day as part of their rations. Human history is filled with chemicals, come-downs, and hangovers.

Yet in every generation, there are moralists why try to douse this natural impulse in moral condemnation and burn it away. They believe that humans, stripped of their intoxicants, will become more rational or ethical or good. They point to the addicts and the overdoses and believe they reveal the true face - and the logical endpoint - of your order at the bar or your roll-up. And they believe it can be ended, if only we choose to do it. Their vision holds an intoxicating promise of its own.

Their most famous achievement - the criminalisation of alcohol in the United States between 1921 and 1933 - is one of the great parables of modern history. Daniel Okrent's superb new history, 'Last Call: The Rise and Fall of Prohibition', shows how a coalition of mostly well-meaning, big-hearted people came together and changed the Constitution to ban booze. On the day it began, one of the movement's leaders, the former baseball hero turned evangelical preacher Billy Sunday, told his ecstatic congregation what the Dry New World would look like: "The reign of tears is over. The slums will soon be only a memory. We will turn our prisons into factories and our jails into storehouses. Men will walk upright now, women will smile, and the children will laugh. Hell will be forever rent."

The story of the War on Alcohol has never needed to be told more urgently - because its grandchild, the War on Drugs, shares the same DNA. Okrent only alludes to the parallel briefly, on his final page, but it hangs over the book like old booze-fumes - and proves yet again Mark Twain's dictum: "History doesn't repeat itself, but it does rhyme."

There was never an America without chemical highs. The Native Americans used hallucinogens, and the ship that brought John Winthrop and the first Puritans to the continent carried three times more beer than water, along with ten thousand gallons of wine. It was immediately a society so soaked in alcohol that it makes your liver ache to read the raw statistics: by 1830, the average citizen drank seven gallons of pure alcohol a year. In 1839, an English traveller called Frederick Marryat wrote: "I am sure that Americans can fix nothing without a drink. If you meet, you drink; if you make acquaintance, you drink; they quarrel in their drink, and they make up with a drink. They drink because it is hot; they drink because it is cold... They commence it early in life, and the continue it until they soon drop into the grave."

America was so hungry for highs that when there was a backlash against all this boozing, the temperance movement's initial proposal was that people should water down their alcohol with opium.

It's not hard to see how this fug of liquor caused problems, as well as pleasure - and the backlash was launched by a furious housewife with eight children from a small town in Cincinnati. One Sunday in 1874, Eliza Thompson - a woman who had never spoken out on any public issue before - stood before the crowds at her church and announced that America would never be free or godly until the last whisky bottle was emptied onto the dry earth. A huge crowd of women cheered: they believed their husbands were squandering their wages at the saloon.

They marched as one to the nearest bar, where they all sank to their knees and prayed for the soul of its owner. They refused to leave until he repented. They worked in six hour prayer shifts on the streets, until the saloonkeeper finally appeared, head bowed, and agreed to shut it down. This prayerathon then moved around every alcohol-seller in the town. Within ten days, only four of the original thirteen remained, and the rebellion was spreading across the country.

It was women who led the first cry for Temperance, and it was women who made Prohibition happen. A woman called Carry Nation became a symbol of the movement when she travelled from bar to bar with an oversized hatchet and smashed them to pieces. Indeed, Prohibition was one of the first and most direct effects of expanding the vote. This is one of the first strange flecks of gray in this story: the proponents of prohibition were primarily progressives - and some of the most admirable people in American history. The pioneering suffragist Susan B Anthony gave her first public speech demanding a booze ban. The ex-slave and abolitionist Frederick Douglas said: "If we could make the world sober, we would have no slavery." America's greatest Socialist, Eugene V. Debs, said liquor was a capitalist tool to render the workers supine.

The pioneers of American feminism believed alcohol was at the root of men's brutality towards women. The anti-slavery movement saw alcohol addiction as a new form of slavery, replacing leg irons with whisky bottles. You can see the same left-wing prohibitionism today, when people like Al Sharpton says drugs must be criminalized because addiction does real harm in ghettoes.

Of course, there were more obviously sinister proponents of Prohibition too, pressing progressives into weird alliances. The Ku Klux Klan said that "nigger gin" was the main reason why oppressed black people were prone to rebellion, and if you banned alcohol, they would become quiescent. The dry newspaper the Nashville Tenessean wrote: "The Negro, fairly docile and industrious, becomes, when filled with liquor, turbulent and dangerous and a menace to life, proporty, and the repose of the community." And of course there were hints that white women were in greater danger: one Congressman said alcohol "increases the menace of the black man's presence."

This, too, is still there in America's current strain of prohibition. Powder cocaine and crack cocaine are equally harmful, but crack - which is disproportionately used by black people - carries much heavier jail sentences than powder cocaine, which is disproportionately used by white people.

It was in this context that the Anti-Saloon League rose to become the most powerful pressure group in American history, and the only one to ever change the constitution through peaceful political campaigning. They announced their movement "was begun by Almighty God." In fact, it was begun by a little man called Wayne Wheeler, who was as dry as the Sahara and twice as overheated. One of Wheeler's friends said of him: "Like most humourless men, he had to make life into a crusade to make sense of it." Okrent compares him to Ned Flanders, but he was a political genius, maneuvering politicians of all parties into backing a ban. He made them change the school curriculum so children were taught that "the majority of beer drinkers die of dropsy" because it is "a narcotic poison [that will] deaden or paralyze the brain."

Wheeler and the Prohibitionists had a structural advantage over his enemies. As the writer George Ade pointed out: "The Non-Drinkers were organising for fifty years but the Drinkers had no organization whatsoever. They had been too busy drinking." The League succeeded in 1921, when the Eighteenth Amendment came into effect, and it became a crime to drink alcohol anywhere in the United States. They celebrated the arrival of Utopia - and the inevitable dysfunctions of prohibition began.

When you ban a popular drug that millions of people want, it doesn't disappear. Instead, it is transferred from the legal economy into the hand of armed criminal gangs. Across America, gangsters rejoiced that they had just been handed one of the biggest markets in the country, and unleashed an Armada of freighters, steamers, and even submarines to bring booze back. Nobody who wanted a drink went without. As the journalist Malcolm Bingay wrote: "It was absolutely impossible to get a drink, unless you walked at least ten feet and told the busy bartender in a voice loud enough for him to hear you above the uproar."

So if it didn't stop alcoholism, what did it achieve? The same as prohibition does today - a massive unleashing of criminality and violence. Before prohibition, the saloon-keepers could defend their property and their markets by going to the police if they were threatened. After prohibition, the bootleggers could only defend theirs with guns - and they did. As the legendary lawyer Clarence Darrow explained: "The business pays very well, but it is outside the law and they can't go to court, like shoe dealers or real estate men or grocers when they think an injustice has been done them, or unfair competition has arisen in their territory. So, they naturally shoot." Massive gang wars broke out, with the members torturing and murdering each other first to gain control of and then to retain their patches. Thousands of ordinary citizens were caught in the crossfire.

The icon of the new criminal class was Al Capone, a figure so fixed in our minds as the scar-faced King of Charismatic Crime, pursued by the rugged federal agent Eliot Ness, that Okrent's biographical details seem oddly puncturing. Capone was only 25 when he tortured his way to running Chicago's underworld. He was gone from the city by the age of 30, and a syphillitic corpse by 40. But he was an eloquent exponent of his own case, saying simply: "I give to the public what the public wants. I never had to send out high pressure salesmen. Why, I could never meet the demand."

By 1926, he and his fellow gangsters were making $3.6bn (in 1926 money!). To give some perspective, that was more than the entire expenditure of the US government. The criminals could outbid and outgun the state. So they crippled the institutions of a democratic state and ruled, just as drug gangs do today in Mexico, Afghanistan, and ghettoes from South Central Los Angeles to the banlieues of Paris. They have been handed a market so massive that they can tool up to intimidate everyone in their area, bribe many police and judges into submission, and achieve such a vast size the honest police couldn't even begin to get them all. The late Nobel Prize winning economist Milton Friedman said: "Al Capone epitomizes our earlier attempts at Prohibition; the Crips and Bloods epitomize this one."

Occasionally, the alcohol gangs would have "Peace Conferences" in Atlantic City where they would divide up the country, fix prices, and agree to stay out of the other's territory - and violence would go down. But then the police would try to take out one of the many gangs, and war would break out again to seize control of the newly-available territory. This dynamic explains something that might appear, at first, to be a paradox: the more the police try to enforce prohibition, the worse the drug violence becomes. Since Mexican President Felipe Calderon tried to knock out the heads of the drug gangs, 40,000 people have been killed. Each killing triggers a new war for the dead dealer's patch.

Of course excessive alcohol and drug use can cause terrible harm: I have friends whose lives have been ruined by it. But the harm caused by prohibition soon outweighs the harm caused by the drug itself - whether it's alcohol or cannabis or cocaine. An appalled President Hoover soon said in private that prohibition had caused "a complete breakdown in Government" in Detroit with "indiscrimiate shooting on the river." Sound familiar?

One insight, more than any other, ripples down from Okrent's history to our own bout of prohibition. Armed criminal gangs don't fear prohibition: they love it. He has uncovered fascinating evidence that the criminal gangs sometimes financially supported dry politicians, precisely to keep it in place. They knew if it ended, most of organised crime in America would be bankrupted. When Michael Levine, one of America's top narcotics agents, went undercover in the 1980s and 1990s with la Mafia Cruenza, the Bolivian cocaine cartel, he discovered that, as he puts it, "not only did they not fear our war on drugs, they actually counted on it." The cartel's boss, Jorge Roman, told him the drug war was "a sham on the American tax payer" and bragged it was "actually good for business." When Levine told his boss, the officer in charge of the US drug war in South America, about this, he replied: "Yeah, we know it doesn't work, but we sold [the War on Drugs] up and down the Potomac."

So it's a nasty irony that Prohibitionists try to present legalizers - then, and now - as "the bootlegger's friend" or "the drug-dealer's ally." Precisely the opposite is the truth. Legalizers are the only people who can bankrupt and destroy the drug-gangs, just as they destroyed Capone. Only the prohibitionists can keep them alive.

Once a product is controlled only by criminals, all safety controls vanish - and the drug becomes far more deadly. After 1921, it became common to dilute and relabel poisonous industrial alcohol, which could still legally be bought, and sell it by the pint-glass. This "rotgut" caused epidemics of paralysis and poisoning. For example, one single batch of bad booze permenantly crippled 500 people in Wichita in early 1927 - a usual event. That year, 760 people were poisoned to death by bad booze in New York City alone. So many people became partially paralysed by an industrial alcohol known as 'Jake' that a shuffling, stumbling inability to walk was known 'Jake leg.' Wayne Wheeler persuaded the government not to remove fatal toxins from industrial alcohol, saying it was good to keep this 'disincentive' in place.

Prohibition's flaws were so obvious that the politicians in charge privately admitted the law was self-defeating. Warren Harding brought $1800 of booze with him to the White House, while Andrew Mellon - in charge of enforcing the law - called it "unworkable." Similarly, the last three Presidents of the US have been recreational drug users in their youth. If the law was enforced in full, they would all have been ineligible to vote, never mind enter the Oval Office. Once he ceased to be President, Bill Clinton called for the decriminalisation of cannabis, and Obama probably will too. Yet in office, they continue to mouth prohibitionist platitudes about "eradicating drugs", and insist the rest of the world's leaders resist the calls for greater liberalisation from their populations and instead "crack down" on the drug gangs - no matter how much violence it unleashes.

The need to mouth this script can lead even the sharpest brains into unwitting absurdities. Obama recently praised Calderon for his "crackdown" on drugs by - with no apparent irony - calling him "Mexico's Eliot Ness." Yes: he praised an enforcer of drug prohibition by comparing him to an enforcer of alcohol prohibition. Obama should know that Ness came to regard his War on Alcohol as a disastrous failure, and he died a drunk himself - but drug prohibition addles politicians' brains just as drugs addle a chronic addict's.

By 1928, the failure of alcohol prohibition was plain - yet its opponents were demoralised and despairing. It looked like a fixed and immovable part of the American political landscape, since it would require big majorities in every state to amend the Constitution again. Clarence Darrow wrote that "thirteen dry states with a population of less than New York State alone can prevent repeal until Haley's Comet returns," so "one might as well talk about taking a summer vacation of Mars."

Yet it happened. It happened suddenly and completely. Why? The prohibitionists made a serious miscalculations: they reacted to their failure by demanding the laws be tightened even more. Misdemeanours were turned into felonies - and it threw up a series of judgements shocked America. For example, one 48 year old mother called Etta Mae Miller with ten children was given a life sentence - for selling two pints of liquor to an undercover cop.

But the biggest answer is found in your wallet, with the hard cash. After the Great Crash, the government's revenues from income taxes collapsed by 60 percent in just three years, while the need for spending to stimulate the economy was sky-rocketing. The US government needed a new source of income, fast. The giant untaxed, unchecked alcohol industry suddenly looked like a giant pot of cash at the end of the prohibitionist rainbow. They needed it. Could the same thing happen today, after our own Great Crash? The bankrupt state of California is about to hold a referendum to legalize and tax cannabis, and Governor Arnold Schwarzenegger has pointed out that it could raise massive sums. Yes, history does rhyme.

Many people understandably worry that legalization would cause a huge rise in drug use - but the facts suggest this isn't the case. Portugal decriminalized the personal possession of all drugs in 2001, and - as a study by Glenn Greenwald for the American Enterprise Institute found - it had almost no effect at all. Indeed, drug use fell a little among the young. Similarly, Okrent says the end of alcohol prohibition "made it harder, not easier, to get a drink... Now there were closing hours and age limits and Sunday blue laws, as well as a collection of geographic prosecriptions that kept bars or package stories distant from schools, churches and hospitals." People didn't drink much more. The only change was that they didn't have to turn to armed criminal gangs for it, and they didn't end up swigging poison.

Who now defends alcohol prohibition? Is there a single person left? This echoing silence is suggestive. Ending drug prohibition seems like a huge heave, just as ending alcohol prohibition did. But when it is gone, when the drug gangs are a bankrupted memory, when drug addicts are treated not as immoral criminals but as ill people needing healthcare, who will grieve? American history is pocked by utopian movements that prefer glib wish-thinking over a hard scrutiny of reality, but they always crest and crash in the end.