These are sad days for Spain. There are no jobs and recession has sapped confidence. A proud nation is slipping down the global rankings. Little surprise, then, that Spaniards reach out for something their country is very good at – football. World Cup and European championship victories aside, this largely reduces down to FC Barcelona and Real Madrid. Two superpower clubs, two cities and two styles meet every time 22 men play in what is known everywhere as El Clásico. The world watches, intrigued by the rivalry and dazzled by the skill.

But the simplistic story of opposites is usefully questioned in Sid Lowe's Fear and Loathing in La Liga. These hugely wealthy clubs have much in common. To start with they are owned by their member-fans, or socios, making them much more than toys for billionaire wealth extractors from the Middle East or Russia. Both deliver spectacularly exciting football. Both are famously bad at losing. And both revel in their rival's misery.

Both clubs are also bound up with the idea of a nation. If Real Madrid was once deemed the epitome of Spanish "virility" under General Franco's dictatorship – and had a kind of ambassador role – Barcelona is the "national team" of Catalonia, a nation without a state. Never mind that the stars often come from abroad. Barcelona built its Camp Nou stadium for fans who wanted to watch László Kubala (who had escaped Hungary dressed as a Russian soldier while his wife swam the Danube), and Real Madrid's most legendary team starred Argentine Alfredo Di Stéfano. Leo Messi (pictured) and Cristiano Ronaldo, Argentine and Portuguese respectively, are today's heroes.

Lowe is the Guardian's Spanish football writer, a man with deep knowledge and 135,000 Twitter followers. He is also a proper researcher. He works the pitch, covering all positions – from match-day commentator, to back-room interviewer, to state archive-trawler. His list of interviewees – from Di Stéfano to Cruyff, Zidane and Beckham – is a Who's Who of six decades of football. And his re-runs of past epic matches make you seek out grainy YouTube videos. Was Di Stéfano really better than Pelé?

Yet these clubs will always be greater than their greatest players. Just ask Diego Maradona, a mere bit-part player in the Barcelona story. David Beckham, who epitomises the marketing-led galácticos strategy that brought first glory and then ruin to Real Madrid, is also nothing more than a footnote in a much larger tale.

Lowe is a slayer of myths. In his hands, Barcelona's heroic identity as an anti-Franco club, victim of constant injustice and "fascist" referees, loses much, though not all, of its shine. "We imagine ourselves halting that pack of tanks, responding to their bullets with our anthems and song, laughing in the face of the fascist ire," said Oleguer Presas, the most radical of Barcelona's former players. But did Barcelona, as a city, suffer in the Spanish civil war while Madrid became Franco's capital? Of course not. It was Madrid that held out bravely against Franco's fascist-inspired nationalists for two and a half years. Barcelona fell first. In comparative terms, it barely managed to resist.

Yet nor can Real Madrid fans innocently claim it was never associated with the regime. Franco may have sequestered the club, and its five European Cups in a row, for his own purposes, but the fans did not rebel – unlike those at Barcelona who came to elide their team's losses with Franco's animosity to their language, politics and culture. Polls show the fan base really is politically skewed. Spanish lefties are twice as likely to prefer Barcelona, while voters for the rightwing People's party are three times more likely to back Real Madrid. Both clubs are, of course, far broader than this implies. Spain coach Vicente del Bosque – a former Real Madrid player and coach, but son of a jailed trade unionist – hardly fits the stereotype.

Historic gripes and humiliating defeats form the backbone of the rivalry. Did Real Madrid snatch Di Stéfano from Barcelona's grasp? Yes, though Barcelona played even dirtier to grab Kubala. And the notorious "stolen" games? Poor refeering was indeed a factor, but also both Madrid's patrician expectation of victory and Barcelona's historical sense of victimhood require losses to be explained away. The perceived villainy of referees is not dimmed by time, from that of Emilio Guruceta, whose penalty decision in a 1970 Clásico saw 30,000 cushions hurled on to the Camp Nou grass, to Reg Leafe and Arthur Ellis overseeing the 1960 games in which Barcelona knocked Madrid out of "their" European Cup.

Of the several other books that cover similar ground, Richard Fitzpatrick's El Clásico (Bloomsbury) falls for some civil war myths but is excellent on the clubs' fans – the extreme fringes toy with a real political identity but are essentially based on a shared philosophy of violence. Often there is a telling gap between the players' vision of events and that of the fans or club propaganda departments. Real Madrid players in the 1950s and 1960s didn't think of Barcelona as their biggest rival: that honour was held by Atlético de Madrid. Real's main aim was winning European cups – of which it has nine. The vast majority of native Catalan Barcelona players such as Xavi Hernández or Carles Puyol, meanwhile, are happy to don the red shirts of Spain.

There are conspicuous silences and manipulations in the narratives presented by both clubs. Who knew that Real Madrid was founded by two Catalans, or that former president Rafael Sánchez Guerra was jailed by Franco for "military rebellion"? And why was a recent Barcelona board member also a member of the Francisco Franco foundation? If football is proxy war, then truth is the first casualty. And if politics is a serious business, channelling it through football populism is fraught with danger.

Clásico hysteria reached a crescendo during José Mourinho's three years coaching Real Madrid. Faced with opponents who were, as he admitted, the best club team for several decades, Mourinho (Portuguese and a former Barcelona employee) unsurprisingly played on the clash of cultures. Yet these two clubs need each other. Barcelona boss Sandro Rosell says Catalan independence would not see his club leave the Spanish league. And "If Barcelona didn't exist, we would have to invent them," says Madrid's multimillionaire chairman Florentino Pérez. What you can never do is tell them that it is just a game.