The acknowledged classics of French literature crossed the Channel at widely differing speeds. Rabelais, for example, took almost a century and a half to be translated; whereas John Florio's version of Montaigne's Essays came out only 11 years after the Frenchman's death. The earliest recorded English translation of Racine's Phèdre (1677) dates from 1776; whereas the immigration of Laclos's Les Liaisons Dangereuses was fast-tracked (French 1782, English 1784), no doubt because of its saucy reputation. On the other hand, Stendhal's Le Rouge et le Noir (1830) had to wait until 1900 to find Anglophone readers. Balzac's Le Père Goriot (French 1834, English 1860), and Flaubert's Madame Bovary (French 1856-7, English 1886) were rather quicker. But with the exception of Laclos, none of these writers could ever have set eyes on an English edition of his text. It was the norm for death to precede translation.

All this makes Voltaire's Candide even more of an extraordinary case. It was written between July and December 1758 and published simultaneously in Geneva, Paris and Amsterdam in January 1759. That year no fewer than three English translations appeared, shortly followed by the early version that is now most often read, by Tobias Smollett. This formed part of a 25-volume edition of Voltaire's works "translated from the French with Notes by Dr Smollett and others" and published between 1761 and 1765. Even the British acknowledged Voltaire as Europe's most famous public intellectual, and his Candide as a prime example of literature as news. This philosophical tale may be described as an attack on Leibnitzian optimism – and, more broadly, on all prepackaged systems of thought and belief – a satire on churches and churchmen, and a pessimistic rumination on human nature and the problem of free will. But it was no fable inhabiting some make-believe or symbolic location; rather, it was a report on the current state of the world, deliberately set among the headlines of the day.

Thus, the naive Candide and his philosopher-master Pangloss get instructively caught up in the Lisbon earthquake, an event of such destructiveness – 30,000 dead – and of such philosophical and theological aftershock as to make 9/11 look like a minor incident. This disaster had occurred as recently as November 1755; while the Inquisition's response to the calamity, that of an auto-da-fé designed to prevent further earthquakes (the heretic-hunt sweeps up Candide and Pangloss) took place in June 1756. Even more recent was the incident Candide witnesses in Portsmouth harbour: the execution of Admiral Byng for cowardice in the face of the (French) enemy at the battle of Minorca. This had taken place on 14 March 1757, just over a year before Voltaire started writing his novel. Equally of the moment was the question of the Jesuit missions in Paraguay – and whether the priests, by wielding civil as well as religious authority, had created an earthly paradise or yet another squalid terrestrial dictatorship. Voltaire's text also contains allusions to Farinelli (the greatest castrato singer of the day), to Charles Edward Stuart (the Young Pretender), and to contemporary books and theatrical productions. In the novel's second edition of 1761, Voltaire sends Candide to his own verse tragedy Tancrède, which had come to the stage in September 1760 – and which gratifyingly reduces the novel's protagonist to tears. Candide even finds room to reply to the many scurrilous attacks made by various fools, scoundrels, and critics on Voltaire himself. To the novel's first readers, then, it would have felt, in its punch and immediacy, like a politico-philosophical strip-cartoon.

This effect would have been emphasised by the novel's mode: that of the extreme satirical picaresque. It is not – does not try to be – a realistic novel on the level of plot: the narrative proceeds by means of incredible coincidences and enormous reversals of fortune; characters are left for dead, and then improbably revived a few pages later when the argument requires their recall. In this genre, the participants are even more subject than usual to the whims of the puppeteer-novelist, who requires them to be here to demonstrate this, and there to demonstrate that. They have opinions, and represent philosophical or practical responses to life's fortunes and misfortunes; but have little textured interiority. Candide, the innocent of all innocents, is a kind of pilgrim who makes a kind of progress as a result of the catalogue of calamities inflicted upon him by the author; but those around him, from the deluded Pangloss to the disabused Martin to the doggedly practical Cacambo, remain as they are when first presented. Pangloss, despite relentless evidence against his Leibnitzian view that the world demonstrates a "pre-established harmony", is defiantly foolish to the end: "I have always abided by my first opinion . . . for, after all, I am a philosopher; and it would not become me to retract my sentiments."

While a lot of the contemporary references have faded and fallen with time (many readers will need a footnote to be told that the Lisbon earthquake was a real event), the novel itself remains as fresh and pertinent as ever. Most of us come into this world as innocent and hopeful as Candide, even if most of us discover, slowly or quickly, that there is no pre-established harmony to life. The same established religions are still hawking the same nostrums as a quarter of a millenium ago; while their clergy continue to provoke scandal. Where Voltaire has men of the cloth consorting with prostitutes and acting as pandars, our world has its sadistic nuns and paedophile priests; where Voltaire has Cunégonde's brother condemned to the galleys for bathing naked with a young Turk, we have imams urging the murder of infidels and homosexuals. And while Voltaire's satire on religion inevitably took the spotlight, his analysis of the other powers that control the world – money, rank, violence and sex – still applies. At the end of their South American adventures – having inspected the Jesuit missions and stumbled into the perfect society of El Dorado – Candide and Cacambo approach the town of Surinam. By the roadside they see "a negro stretched out on the ground with only one half of his habit, which was a pair of blue cotton drawers; for the poor man had lost his left leg, and his right hand." They enquire what has happened: "When we labour in the sugar-works," the man replies, "and the mill happens to snatch hold of a finger, they instantly chop off our hand; and when we attempt to run away, they chop off a leg. Both these cases have happened to me, and it is at this expense that you eat sugar in Europe." The developed world's economic exploitation of poorer countries continues to this day, and Voltaire would have found a richly illustrative cast in Russian oligarchs, British bankers and American militarists. How little fictional invention he would have needed to work in a figure like Silvio Berlusconi.

But we wouldn't still be reading Voltaire just because he was right then, and would be right again today. As the sugar-worker's tale shows, it is the manner of Voltaire's being right that keeps him alive. Just as it's a fair bet that Borges's famous summing-up of the Falklands war – "two bald men quarrelling over a comb" – will outlast in the public memory details of the actual events, so the four crunch words used by Voltaire to characterise Admiral Byng's death have endured better than the actual rights and wrongs of the matter. Voltaire's treatment of the case has a sharper edge to it because during his two-year exile in England (1726-28) he had known Byng as a young navy captain; 30 years later, despite their two countries being at war, he intervened (even taking an affidavit from the opposing French admiral) in an attempt to save the Englishman from execution. In the novel, Candide, having tired of the wit and corruption of France, arrives at Portsmouth on a Dutch ship from Dieppe. "You are acquainted with England," he says to his travelling companion Martin, "are they as great fools in that country, as in France?" "Yes, but in a different manner," replies Martin, citing the two countries' current squabble over "a few acres of snow" in Canada. As their ship docks, they observe a kneeling, blindfolded figure on the deck of a man-of-war. Candide enquires about the matter. He is told that an English admiral is being punished "because he did not put a sufficient number of his fellow creatures to death"; the court has found that in an engagement with the French admiral, "He was not near enough to his antagonist." "But," Candide replies, with an innocent's logic, "the French admiral must have been just as far from him." True, comes the reply, "But in this country it is found requisite, now and then, to put one admiral to death, pour encourager les autres."

I leave that last phrase in French because it has become absorbed in that form into our national glossary. And with an almost Voltairean irony, its first subsequent recorded use in an English context came in a despatch from that great and successful opponent of the French, the Duke of Wellington. The history of the novel's other world-famous phrase, which serves as the book's conclusion – il faut cultiver notre jardin – is more peculiar. According to the Oxford English Dictionary, it didn't come into written use in English until the early 1930s – in America through Oliver Wendell Holmes and in Britain thanks to Lytton Strachey. But a long, unrecorded history of its oral use and misuse can be deduced from Strachey's announced desire to cure the "degenerate descendants of Candide" who have taken the phrase in the sense of "Have an eye to the main chance." That a philosophical recommendation to horticultural quietism should be twisted into a justification for selfish greed would not necessarily have surprised Voltaire. A century after his death, the centennial commemorations were sponsored and organised by Menier, the famous chocolate manufacturers. Flaubert, always alert to the corruption of art by commerce, remarked in a letter: "How irony never quits the Great Man! The praise and the insults continue just as if he were still alive."

It is a common complaint that satire is "negative", that it only attacks people, and "fails to make a case" for any alternative system. There are two answers to this. The first is to point to those characters in Candide who at various times succour and protect the novel's innocents: Jacques the Anabaptist, Martin the Socinian, Candide's sturdy servant Cacambo, and the old woman (originally a pope's daughter) who serves Cunégonde. The first two belong to minor heretical sects (Martin believes that God has absconded); the second two evince little interest in anything but the day-to-day means of survival. Together, these four exemplify the virtues of work, charity, loyalty, moderation and practicality. Such virtues may not always protect against the world's fanaticism, but they offer the best chance of reaching what Voltaire and the French Enlightenment argued and fought for: freedom, toleration, justice and truth.

The second answer is to say that, true as all this might be, it is as utopian – and therefore irrelevant – as El Dorado. The world is not reformed by the end of Candide, and cultivating one's garden protects no one from an army of Bulgars. Satire is not about "finding a solution", doesn't spring from a worked-out strategy for the micro-managed moral rehabilitation of humanity; rather, it is the necessary expression of moral rage. Satirists are by nature pessimists; they know that the world changes all too slowly. If satire worked – if the hypocrite and liar, publicly chastised, reformed themselves – then satire would no longer be needed. "But to what end," Candide muses, "was the world formed?" Martin replies: "To make us mad." Satire is one response to, and outlet for, this cosmic madness. When Candide and Cacambo stumble into El Dorado, they are at first astonished by what is there, from the gold and diamonds lying around in the dust to the courtesy and generosity of the civilisation; next they notice what is not there. This perfect land contains no conniving priests or disruptive monks, no law courts, no parlement, and no prisons. Voltaire does not mention the fact, but we can also be sure that satire does not exist there either. It would be strictly meaningless, like blaspheming against a dead god. But we are still far from living in El Dorado, and shall have need of Candide for some centuries to come.

Voltaire's Candide, translated by Tobias Smollett and illustrated by Quentin Blake, is published in a limited edition by the Folio Society (£195).