Welcome to Scott-land: Stuart Kelly argues for a reappraisal of a man who forged the idea of a nation

If we wanted truly to celebrate worldwide Scottishness, there is a far more important anniversary that year: 7 July 1814, the day a novel, Waverley, was published. Walter Scott's book did not change literary history, despite being one of the fastest selling books ever (the entire first print run sold out in two days). But it changed the entire world's perception of Scotland, and Scotland's perception of itself. As the German author Theodore Fontane wrote, "What would we know of Scotland without Sir Walter Scott?"

No author – not even Ian Rankin, Alexander McCall Smith or JK Rowling – has ever been as critically acclaimed and commercially successful as Scott. For Mary Shelley, Thomas Hardy, Charles Swinburne and John Buchan there was only one possible comparison. Scott, to them, was the equal of Shakespeare. The Scott Monument, on Princes Street, is the largest monument to an author on the planet, and, more surprisingly, when the project fell short of cash, the workers continued to work for free until the funds could be found.

And no author's reputation has ever sunk so low. It is not just that the author, who was once called "The Great Unknown", since he published his novels anonymously, has become "The Great Unread". There is an active animus against Scott. Edwin Muir called him "the sham bard of a sham nation". Irvine Welsh went further, claiming he was no novelist, but "just an arse-licker to the Prince Regent". Kevin Williamson, Welsh's former publisher, went further still, writing on his blog that Scott "was not a great Scottish patriot nor even a particularly good writer, but a falsifier of Scottish history and a Tory c*** of the worst order". In my new book, Scott-land: The Man Who Invented A Nation I wanted to explore how a writer could be at once so esteemed and despised, so influential and neglected, so ubiquitous and invisible. I wanted to examine how he shaped the Scotland we know today.

Scott's career began with The Minstrelsy of the Scottish Border, where he sought to "contribute somewhat to the history of my native country; the peculiar features of whose manner and character are daily melting and dissolving into those of her sister and ally" by collecting traditional ballads and offering modern imitations of them. With those poems and his subsequent original productions, he created what we might now call a new "brand" for Scotland. Tourists starting coming to places like Melrose and Loch Katrine in greater and greater numbers, attracted by his depiction of a picturesque, Romantic and history-saturated landscape. Sir John Sinclair, the author of The Statistical Account of Scotland, recorded that his coach was the 297th to visit Loch Katrine in 1811, when no year beforehand had more than 100 visiting. Just a generation beforehand, Samuel Johnson had toured the Highlands as an anthropological expedition, to witness a country emerging from backwardness. Now people flocked there.

Waverley did even more to establish Scotland as a place of wonder rather than danger. The novel is set during the 1745 Jacobite Rebellion, and it's difficult to imagine now how radical that was. In the wake of the uprising, tartan and kilts had been abolished by the Dress Act, Gaelic was suppressed and for decades afterwards Scots were thought to be peculiarly susceptible to despotism and treachery.

Waverley rendered Jacobitism "wrong but romantic" to use the words of 1066 And All That. Bonnie Prince Charlie became a naive charmer rather than a scheming and seditious Catholic war criminal. Scott's intention was to secure the new British union: he praised Maria Edgeworth's Irish novels for not indulging in "caricatured and exaggerated use of the national dialect" and thereby to have "done more towards completing the Union than perhaps all the legislative enactments by which it has been followed up". This was not "rebellious Scots to crush", but rebellious Scots to be viewed, with sympathy, from a distance.

Waverley was followed by many other novels, but it was Scott's role as the impresario behind the visit of George IV to Edinburgh in 1822 which changed Scotland forever. Scott was part Peter Mandelson, part Simon Cowell; a politically astute fixer with an eye for what the public can be made to want. The visit was unprecedented. The last member of that ruling dynasty to set foot in Scotland had been "Butcher" Cumberland at the battle of Culloden, the final quashing of the Jacobites. Yet Scott managed to persuade the King – by then a portly, unpopular and divorced monarch – to come. In part this was to bolster royal support in the aftermath of the Radical War and General Strike of 1820. In part, it was to keep George away from the Congress of Verona, where Britain, France, Prussia, Russia and Austro-Hungary were conducting sensitive and Machiavellian negotiations – in the words of John Prebble, George would have been "a peacock among hawks". In part it was to balance the state visit to Ireland: Scotland should not be overlooked. For all these reasons, George came. Scott stage-managed the whole event, even getting the King to wear a kilt. (George agreed on the condition he did not show the royal knees, using pink stockings to conceal his gouty legs.)

It's difficult to recapture how audacious this was. George would wear the "uniform" of the people who had tried to oust his great-grandfather from the throne: like Prince Harry wearing an SS costume. Scott circulated a pamphlet of hints where George was described as the "chief" to the clan of Scotland. He even spread misinformation that George could, legally, be considered the heir to the Jacobite claim to the throne. The visit covered Edinburgh in tartan, last seen as the symbol of an occupying force, put bagpipes and heather on every street corner, and made Highland culture the shorthand for Scottish culture. Even in his day, it was denounced as a "plaided panorama" and "Celtified pageantry". But its legacy is astonishing.

It's why Queen Victoria said that in her heart, she was a Jacobite. It's why nationalists wore kilts. It's why we have a "Tartan Week" in New York.

Almost anything we now consider culturally, even nationally, Scottish has its roots in what Scott did and wrote. From language to dress, from how others see us to how we see ourselves, from tourists to the cash they spend, is all Scott's doing – he was the man who forced the Treasury to allow the Scottish banks to keep printing their own notes, during the financial meltdown of 1825: it's why his face is still on Bank of Scotland tenners. Scott was always the marriage guidance counsellor to the Union, rather than its divorce lawyer. He was adamant that England was putting the Union in peril in 1825, and persuaded a decent outcome.

Scott's complete works appeared in a deluxe edition, garlanded with plates showing places from the books, as they might have been in the past. A bizarre feedback loop happened. The owners of places like Melrose Abbey and Hermitage Castle started to refurbish and renovate the sites to make them look more like the illustrations. Scott's influence over the built environment is phenomenal. It's not just all the Waverley Roads and Abbotsford Drives and Ivanhoe Crescents (just think: how many Hamlet Roads or Prospero Drives or Cymbeline Crescents are there?). It's every house in the Scots Baronial style, modelled on his "romance in stone and lime", Abbotsford – which, when he bought it, was called Clarty Hole. It's the Waverley Pen, Waverley Station, the Waverley Camisole that Sienna Miller modelled, the Abbotsford Arms, the Ivanhoe Inn, the city of Abbotsford in Canada, the town of Ivanhoe in New South Wales. Scott's imagination transformed the country and broadcast the country to the world. His language is around us always: "oh what tangled webs we weave...", "breathes there a man with soul so dead..." – which Donald Dewar invoked, opening the new parliament.

He also, in a way, invented another country. My book's subtitle wasn't "The Man Who Invented Scotland". A surprising amount of English myths of identity begin with Scott. Robin Hood (or Robin of Locksley in the novel) splits the arrow his rival has put in the bull's-eye in Ivanhoe. Sir Walter Raleigh puts his cloak on a puddle to prevent Queen Elizabeth stepping in it in Kenilworth. The "War of the Roses" is a phrase first used in Scott's novel Anne Of Geierstein. Scottish cultural politics is so often so navel-gazingly obsessed with Scotland, it forgets what Scots achieved elsewhere.

Scott won't be popular again – at least, not unless Steven Moffat sends Matt Smith's Dr Who to Abbotsford – but he should, in a modern, sophisticated Scotland, be respected. He was barely mentioned during the 2009 Homecoming, despite inventing the Gathering of the Clans in Edinburgh for George IV. Reading Scott again, I was startled by so many "firsts" he did. Some of them should make Irvine and Williamson blush. Jews (in Ivanhoe), Muslims (in The Talisman), Hindus (in The Surgeon's Daughter) were all empathised with and allowed to be complex, just as he did with the Scottish working classes and the Scottish aristocrats. Bannockburn or Waverley? We can have both. Scott, that most enigmatic, postmodern, patriotic and unionist, proud and humble writer shows us we can be plural, respecting the past while committed to the future.

• Scotland on Sunday readers can get 3 off copies of Scott-land: The Man Who Invented A Nation (rrp 16.99), signed by Stuart Kelly, with free post and packaging in the UK, by calling 0845 370 0067 during office hours and quoting reference Scot7.