Lawrence Freedman's Strategy is clearly a bid for the high shelves, a kind of summation, almost an apologia pro vita sua, a reflection on a vocation. It is a behemoth of a book. The grand design seems to follow Clausewitz's dictum (is there a glimmer of humour here?) that the best strategy in war is to be very strong, first in general, then at the decisive point.

It is less a history than a bestiary, or an encyclopedia. The philosopher Gilbert Ryle used to say of himself that he was "philosophically eager". As a student, unbidden, he acquired a reading knowledge of Italian and a modest grasp of Italian philosophy, much to the surprise of his tutors. As a don, he taught himself German and browsed contentedly for a while in the rarefied fields of phenomenology and theories of meaning. One outcome of this browsing was an unwanted series of lectures on "Logical Objectivism: Bolzano, Brentano, Husserl and Meinong", known in Oxford as "Ryle's three Austrian railway stations and one Chinese game of chance". It might be said of Freedman that he is strategically eager. Contrary to expectation, perhaps, Strategy does not concern itself solely with military strategy – already a vast domain – but embraces almost every sphere of strategic activity known to man, or indeed to beast, for it begins, 2001: A Space Odyssey-style, with an essay on evolution and the strategic behaviour of chimpanzees.

After a brief pre-history, taking in the Bible, the Greeks, Sun Tzu, Machiavelli, and Satan (in Milton's Paradise Lost) – Satan, it is comforting to learn, sadly lacking in strategic sense – the main body of the work is organised into three parts: "Strategies of Force" or military strategy, including nuclear strategy, Freedman's metier; "Strategy from Below" or political strategy, with an emphasis on the underdog, that is to say the revolutionary and the dispossessed; "Strategy from Above" or corporate strategy, a melange of cultural change and social theory. A short concluding section considers the possibilities of strategic theory in the light of contemporary social science; more simply, how we might think about strategy now.

This is an epic undertaking, of considerable intellectual ambition. It displays the familiar Freedmanian virtues: clarity, economy, proficiency, sagacity – a sort of professional sympathy, almost a delicacy of feeling for the subject, a compound of deep immersion, practised exposition, and a certain practical wisdom in it; a determination to recognise its limits, yet give it its due. In strategy, everything is connected. Freedman shows us how.

He has a profound understanding of the fundamental issues. Strategy is defined here as the art of creating power, a difficult art to master. "While it is undoubtedly a good thing to have," as Freedman sensibly remarks, "it is also a hard thing to get right." We catch the echo of Clausewitz, still the pre-eminent authority, nearly two centuries after his death. "Everything in war is very simple," Clausewitz said, "but the simplest thing is very difficult." Freedman counsels caution: "The world of strategy is full of disappointment and frustration, of means not working and ends not reached."

His watchword is modesty. Strategy is more a coping mechanism than an assertion of total control. It may be little more than a dignified way of "muddling through". In the early years of the second world war, Winston Churchill had a strategy of KBO – keep buggering on. In all environments, military, political or corporate, Freedman emphasises the incremental, the provisional, the aberrant and the contingent.

Strategy, therefore, starts with an existing state of affairs and only gains meaning by an awareness of how, for better or worse, it could be different. This view is quite different from those that assume strategy must be about reaching some prior objective. It may well be more concerned with coping with some dire crisis or preventing further deterioration in an already stressful situation. So the first requirement might be one of survival. This is why as a practical matter strategy is best understood modestly, as moving to the "next stage" rather than to a definitive and permanent conclusion. The next stage is a place that can be realistically reached from the current stage. That place may not necessarily be better, but it will still be an improvement on what could have been achieved with a lesser strategy or no strategy at all.

This is also a book about knowledge – relevant knowledge – and about how that knowledge is packaged and presented, acquired and applied, used and abused. In other words, it is about the relations between theory and practice, and about theories as a form of practice, as Freedman himself puts it. "Strategy provides a way into a whole range of discourses: abstract formulations about what it means to act rationally and postmodern musings on domination and resistance; propositions on causation and insights into the working of the human brain; and practical advice on how best to catch enemies in battle, undermine rivals in elections, and launch a new product into the market.Strategists have addressed the efficiency of various forms of coercion as well as inducements, human nature under stress, the organisation of large groups of people on the move, negotiating techniques, visions of a good society, and standards of ethical conduct." This is nothing if not a capacious view of the field; and it serves to underline another of Freedman's cardinal propositions – that strategy is not simply a matter of organised violence, or coercion, but is intimately bound up with intuition, deliberation and persuasion. Rationality, therefore, is not enough. Rational choice is wishful thinking. The hero of this book may be Thomas Schelling, presented as the subtlest of strategic thinkers, coiner of "the rationality of irrationality" and "the threat that leaves something to chance".

Freedman's generous conception of his subject leads him to broach a number of intriguing ideas along the way, as for example the proposition that "liberalism as it had developed through the 20th century could pride itself on creating the optimal conditions for strategy-making", leading us to speculate on strategic theory and practice under different political dispensations or ideological formations. These are suggestive notions; but they are not sufficiently well developed or worked out. Freedman is hot on strategic narratives, "scripts" and stories – an uncharacteristically modish touch – but his own narrative runs on like an express train, with no time for excursions. Theories and theorists whizz by, like railway stations, each one allocated a few pages. Clausewitz himself is dispatched in barely 10 pages. These condensed treatments tend to resolve themselves into summaries, laced with business-like critiques. "Che Guevara may have been an audacious and brave commander, but he lacked political nous and paid a high price for his simplified theory. He never forged effective political alliances and did not appreciate the need for a strong local leader to be the public face of a revolution. Rather, he believed in his own mystique, as if the presence of such a famous fighter would inspire courage and confidence."

Much of the latter part of the book risks losing sight of strategy altogether, as it becomes a series of readings of the work of others, rather than something the author has made his own. The readings range very widely, from Marx to McKinsey, Bakunin to Burnham, Foucault to Ford. (Though not Guy Debord, the strategist of the situationists, a devoted reader of Clausewitz, who devised a board game called "The Game of War".) They are harvested from an impressive array of sources – the American Journal of Sociology rubs shoulders with Playboy and www.marxists.org in the endnotes – though there is inevitably something a little unsatisfying about them. The breadth of the work tends to exceed its depth. Potted Foucault is not why we read Lawrence Freedman.

There is another curious lacuna. Freedman is well aware of the tendency in some circles to turn strategy into a series of technical and practical issues, as he himself remarks; he twice quotes Hew Strachan on the operational level of war as "a politics-free zone". Yet this is in some respects a politics-free account, especially as it approaches the present. There is no mention of Tony Blair, whom Freedman advised on foreign policy, and barely a whisper of George W Bush. References to the Iraq war are few and far between (and cautiously benign). If strategy is "sensemaking", this book makes no sense of Iraq, or Afghanistan, or the misbegotten war on terror. The concluding play on strategic stories is appealing but elusive, because of a signal lack of sustained examples. What stories will be told of the war in Iraq? What story will the Iraq inquiry tell?

· Alex Danchev's On Art and War and Terror is published by Edinburgh University Press.