Red Or Dead is a masterpiece. David Peace already has a considerable reputation but this massive, painstaking account of the career of Bill Shankly towers above his previous work. It's usual when praising a sports novel for critics to claim that "it's not really about baseball/running/beach volleyball – the sport is a metaphor". Make no mistake, this book is about football. Unremittingly, uncompromisingly about football. It's what Shankly would have wanted. For Shankly, ephemera such as life, love and death could be metaphors for football, never the other way round. Football was the thing itself.

Red Or Dead tells the story of how an unambitous, conservative board of directors, concerned only with ensuring a profit clicked through the turnstiles, inadvertently hired a charismatic, visionary socialist who revolutionised the game and would like to have revolutionised the nation. Inexplicably – maybe he was bluffing – Shankly tendered his resignation in 1974 while still only 60, and at the height of his success. On YouTube you can find a clip of the young Granada reporter Tony Wilson breaking the news to passersby in Liverpool. They're disbelieving and heartbroken. The board too were disbelieving – in the sense that they couldn't believe their luck. In retirement Shankly was cast aside, made more welcome at Goodison Park than at Anfield. He had no role in the future of the club he created. The phone never stopped ringing but it was never the call he hoped for. Peace gives the rejection of Shankly a Shakespearean grandeur. There are echoes of Coriolanus and Lear but also of the experience of every Premier League fan. For of all the forms of love there are in this world there is none so cruelly, gleefully unrequited as the love of a fan for a Premier League club. Fans will go to the grave decked in club scarves, the club anthem their eternal ringtone. Clubs reciprocate that love in ways that make Enron look like the Salvation Army. The Premier League is not a metaphor of a dysfunctional society, it is its fullest expression – a grotesquely overpaid, underperforming elite utterly disconnected from the communities from which its clubs take their names.

Of course, it wasn't like that in Shankly's time. Part of the appeal of Red Or Dead is our collective yearning for those "jumpers for goalposts" days so beautifully evoked in Gary Imlach's book My Father and Other Working Class Football Heroes. Here is Shankly living modestly, close to the ground, working out his strategy with cutlery on the kitchen table, cleaning the cooker to clear his mind. Here he is replying to every piece of fan mail, answering the door to kids who want him to come and referee for them, giving them their bus fare home. Here he stops the team's official bus to pick up hitchhiking away fans, ordering his players to share their sandwiches with them. Is this nostalgia? We live in a country in which huge chunks of the public utilities and infrastructure are run for the benefit not of the nation or the customers but for shareholders slumped in front of Antiques Roadshow. Is it nostalgia to remind ourselves that there was once a man who ran a football club not for the sponsors, not for the board, not for himself but for the fans – or, as he called them, the People? And that this worked?

There have been more successful managers. Shankly's not even the most successful manager of LFC. The difference between Shankly and, say, Paisley or Ferguson is the difference between Jesse Owens and Carl Lewis. Lewis ran faster but Owens ran for a reason. Shankly's reasons could not be more relevant. Red Or Dead is radical not just in the narrow political sense. I can't think when I last came across a serious piece of fiction or TV drama in which the working-class characters weren't busy killing or abusing one another. Peace himself wrote the novel on which the beyond-parody C4 series Red Riding (aka "Gritty Bafta") was based. Here he has changed tack and written a book about what it means to be good, about the sheer work it takes to be good, about the challenge of staying good when the world treats you badly. Like the Book of Job or The Little Princess, it's a game of two halves. Will Shankly retain as an outcast the grace and integrity he showed when he was a deity? There's a heartbreaking scene in a cafe on Eaton Road. It's raining outside. He hands a stranger his umbrella, not out of magnanimity but out of respect for the fact that the man has to go to work whereas he himself has time to sit and wait for the rain to stop.

This is an openly hagiographical work. There are scenes here of Shankly remembering each of his players in his prayers, almost as shocking to the modern reader as Leopold Bloom masturbating must have been to the reader of nearly a 100 years ago. Like most hagiographies, it's monumental. Team sheets, match reports, the full texts of interviews with Harold Wilson and Shelley Rohde, everything is in here. I didn't feel qualified to say whether it was all accurate so I went to visit my friend Peter Hooton – one of the founders of the Liverpool supporters' union the Spirit of Shankly – who said the only mistake he could find was that they keep leaving the "k" out of Kirkby. This level of detail, coupled with Peace's usual schtick of short, repetitive phrases can make the book a tough read. "In the ninth minute, Ian St John scored. In the 72nd minute, Roger Hunt scored. In the last minute, in the very last minute, St John scored again."

When it's good it sounds like Homer. When it's bad it sounds like an infinity of goal alerts. I know that when my dad reads it he will gorge himself on that exhaustive list of remembered goals but others will find it too much. The temptation to skip pages is enormous. I asked Peter, as a football fan, what he thought. He said: "I want to go out and knock on doors like a Jehovah's Witness and read this book to people." Which is surely the point. For a long time now literary fiction has concerned itself with telling it like it is – with power, corruption and lies – or telling it like it was – Tudors. This isn't a book about the way things were or the way things are. This is a book about the way things should be.