The teaching of history provides much more than the practical skills which underpin the study of politics and society, it also gives children a vital understanding of their place in the world, argues Antony Beevor Also in tomorrow's Guardian Review: Philip Pullman, Hilary Mantel, Jeremy Paxman and others each choose a news photo that sums up the decade; William Boyd on an episode from Any Human Heart, soon to be on TV; an interview with CJ Sansom, author of Tudor murder mysteries; Mary Beard's review of Neil MacGregor's World in 100 Objects; and much more

Is history as good as finished? Our school system seems to think so. Often it seems that the teaching of history is treated by the educational establishment as the rough equivalent of the teaching of dead languages: an unnecessary luxury of a bygone age, and something the modern world no longer requires. In the most recent debates about the national curriculum, history has been granted the status of an "inessential subject". This is a grave and myopic mistake.

At a purely practical level, history is important because it provides the basic skills needed for students to go further in sociology, politics, international relations and economics. History is also an ideal discipline for almost all careers in the law, the civil service and the private sector. This is because the history essay teaches students to research and assess material, to marshal facts and develop arguments, and to arrive at logical conclusions. The composition of a such an essay trains young people to write reports and prepare a presentation. These are skills that employers say graduates lack.

History is also necessary because it helps to explain current events. How did western culture and western capitalism come to dominate the world? How do cultures rise and how do they fall? We need to know – because otherwise we will not understand the consequences of the rise of China, India and Brazil, the weakening of the United States, the political and economic decline of Europe. History will not give us the answers, but it will certainly help to focus our questions and our understanding of the forces at work in the world today.

Of course history is easily manipulated – though that makes it even more important for us to know what actually happened. We need a knowledge of history to spot the delusions of leaders making false parallels, such as President Bush comparing 9/11 to Pearl Harbor, or Tony Blair talking of Saddam Hussein as another Hitler. The media, too, are responsible for sloppy comparisons that are highly misleading. As voters, and as citizens, we have to be able to see through these dangerous distortions.

Teachers who are responsible for the subject have little time to devote to these questions. Year by year, the hours devoted to the subject have been whittled away. Along with Albania and Iceland, Britain is now one of the few countries in Europe not to require the study of history after the age of 14. Worse, the subject is taught in exam-oriented modules – or, to put it differently, in totally unconnected bubbles of specialist knowledge.

How can a child grasp developments without a timeline? A decade appears to them a very long time, so a century, let alone a millennium, is way beyond their imagination. Some sort of understanding of key events in Britain and the world is thus essential to provide a context and a chronological framework. A friend who taught the history of medicine to graduate doctors told me that she could no longer use terms such as "Napoleonic" or "Victorian". Her highly qualified students had heard of Napoleon and Queen Victoria, but most had no idea in which centuries they had lived.

Besides, history is – or should be – interesting. Though once (not inaccurately) described as "just one damned thing after another", the chain of cause and effect is fascinating, as are the details. Shying away from this, many teachers who lack historical training themselves are naturally defensive, fearing that the subject may be boring to their pupils. Knowing that their only contact with history is through films or television dramas, teachers are tempted to compound the process, even using programmes such as Blackadder to teach the first world war. In an increasingly post-literate society where the moving image is king, the dramatic fictionalisation of history may soon become the predominant form.

Already, television and film have influenced more schools and pupils to choose "Hitler and the Henries" for their exams, simply because they are more comfortable with something they recognise. But as Simon Schama rightly argued in the Guardian on Tuesday, there are many other periods and events that are both exciting and hugely significant. Much more of a story-telling approach is needed to grip the imagination of the young. This should not be difficult. Ever since Edward Gibbon in the 18th century, British historians have usually adopted a narrative drive and broad sweep, in sharp contrast to the often analytic approach in the rest of Europe.

Critics may say that British history is far too parochial and makes immigrants and those from other cultures feel excluded. But if the subject is taught well, it should show all young people how this country, since the very earliest times, has absorbed successive waves of migration. Teaching the history of the British empire links in with that of the world: for better and for worse, the empire made us what we are, forming our national identity. A country that does not understand its own history is unlikely to respect that of others.

I would never argue that historians or history teachers have a moral role. Their main obligation is to understand the mentality of the time and to pass on that understanding: it is not to apply 21st-century values in retrospect. Nor should they simplify for moral effect. It is absolutely right to convey the horrors of the Atlantic slave trade, but the role of African leaders themselves in promoting slavery must also be explained. So must the fact that the eastern slave trade, mainly to the Arabian peninsula, was older and more lethal. Certainly it led to the death of more victims in peculiarly horrible circumstances.

Of course history should never be used to inculcate virtuous citizenship. Yet it offers the richest imaginable source of moral examples and moral dilemmas, which are themselves the essence of great fiction, great drama, and life itself. Without an understanding of history, we are politically, culturally and socially impoverished. If we sacrifice history to economic pressures or to budget cuts, we will lose a part of who we are.

• This is a preview from tomorrow's Guardian Review.

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