The Great Exhibition, which opened in London in 1851, might have been designed with Charles Dickens in mind. Here, under the sparkling glass panes of the Crystal Palace, you could find the whole of human life, teeming, sparking, rubbing along and tumbling about. “The Great Exhibition of the Works of Industry of all Nations” wasn’t just an event for the aspiring middle classes, although there was plenty of improving content if you liked that sort of thing. Mr H Stodhert of Bath was on hand to present his “model of a plan for removing the sewage of London without disturbing the present arrangement of drains”. Frederick Bakewell, a physicist from Hampstead, exhibited his prototype fax machine. Meanwhile Mr Charles Copland, an importer of Chinese goods, was showing a pair of chopsticks and tea caddies, and from Africa’s Gold Coast there came a large silk-cotton horse-cloth “worn by the king’s favourite son”. Mechanical birds sang in artificial trees and a travelling piano designed “for gentlemen’s yachts” obligingly folded itself up before expanding again to full size. And when a visitor wanted to “retire” there were flushing lavatories available for the price of a penny. Charles Kingsley, one of the 6 million people to attend the exhibition, wept when he entered the Crystal Palace, declaring that it was one of the “proofs of the Kingdom of God”.

Not everyone was sobbing, or at least not from happiness. A teenage William Morris was so repulsed by the braggy capitalism on display that he was sick in the bushes. It was an attitude quite possibly shared by the hundreds of labouring men and trades unionists who arrived on special excursion trains from the north and Midlands. Other visitors, such as the charity school children who were marched around and told to keep their sticky fingers off the exhibits, were more likely to agree with Charles Dodgson, still some way off becoming Lewis Carroll, that being at the Crystal Palace was like entering “a sort of fairyland”. And then there were all the other humans on display. Duchesses peered at bored schoolchildren, and lace-makers gawped at stockbrokers. Everyone stared at Queen Victoria, who made multiple visits, bursting with pride at the way her Albert’s plans had come to such spectacular fruition. It would not have seemed odd if revolving cohorts of visitors had been put on display with a label explaining where they had come from and how they fitted into Britain’s vastly expanding vision of itself.

Counterintuitively, Dickens was not especially keen on the exhibition. “I don’t say ‘there’s nothing in it’ – there’s too much,” he told a friend on 11 July. Later, and unconvincingly, he added that “I have a natural horror of sights, and the fusion of so many sights in one has not decreased it.” Perhaps his touchiness is explained by the fact that he was himself part of those “sights” since the exhibition contained stone statues of Oliver Twist and Little Nell, two of the most popular characters from his early novels. However, in this sparklingly informative book, the Dickens scholar Robert Douglas-Fairhurst argues that, whether he could quite bear to admit it or not, Dickens’s writing was indelibly marked by the Great Exhibition. It was nothing short of a turning point, setting him on the path to becoming one of the great social documentarians of the 19th century.

Before 1851 “Boz” was a jaunty boulevardier who told linear stories of jeopardy and redemption about children – a bit like the abandoned adolescent that he had himself once been. David Copperfield, Oliver Twist and Martin Chuzzlewit all tended towards the picaresque, with plots that could be resolved, folk-tale style, by the arrival of a fairy godmother or the trouncing of a wicked stepfather. From 1851, however, Dickens began writing a different sort of novel. In Bleak House, started in the autumn just as the exhibition was coming to its triumphant finale, Dickens expanded his view towards a profound realisation that human life is also social life. Individual characters, no matter how compellingly odd or disarmingly sweet, are always part of a dense nexus of human relationships and their consequences. From now on the main aim of his art would be to show how the most disparate and far-flung people are actually bound together in ways that no one, least of all they themselves, could ever have anticipated.

Most strikingly, the social landscape of Bleak House is so vast and various that it is beyond the reach of a single narrator. Instead, the storytelling is divided between Esther Summerson, a young woman whose life until now has been one of utmost sequester, and a nameless narrator who is usually described as “omniscient” but is actually studded with blind spots. At first it appears as if there can be no connection between such wildly disparate characters as orphaned Esther, bored society woman Lady Dedlock, Jo the crossing sweeper, Krook the rag-and-bone man whose jumbled shop is a parody of the Crystal Palace, or Mr Bucket, that harbinger of the dawning surveillance culture, a professional detective. Yet over the course of 1,000 pages Dickens pulls the narrative threads together until all these characters start to act on one another. It is the literary equivalent of a butterfly flapping its wings and causing an earthquake on the other side of the world. As Douglas-Fairhurst puts it with his unerring, joyful precision, Bleak House’s “narrative heartbeat is not just that our individual stories have points of connection. It is that we are all parts of the same story”.

It was a lesson that Dickens learned throughout 1851, not just by watching as the extraordinary Crystal Palace was elevated on a muddy Hyde Park, but by deepening his own engagement with the social world around him. This was the year when he moved forward with “The Guild of Literature and Art”, a cooperative benevolent society that would encourage authors to take out life insurance, to protect themselves in this most precarious of professions. Dickens also continued his involvement at Urania Cottage, the home for “fallen girls” that he had set up with the philanthropist Angela Burdett-Coutts. His great idea was that, once suitably reformed, these girls would be sent out to Australia to start new lives as respectable servants and, eventually, wives. It was an option that he would take with his own youngest son, born this year. Edward, who while not exactly “fallen” was hardly particularly promising, would be sent at the age of 15 to farm in New South Wales. Dickens’s view of human life now extended around the world, yet in the character of Bleak House’s Mrs Jellyby he created the warning picture of the philanthropist who finds it easier to love through a telescope, helping the children of Africa while her own run around in London uncared for and half-starved.

This knowledge – the acquiring of it, the writing of it – took a toll on him. Dickens turned 40 in the early weeks of 1852 and everyone was surprised to learn that he wasn’t older. His hairline was receding, the colour was “grizzling”, he wore a flannel belt to protect his kidneys and a straggly moustache covered the mouth he had always been so proud of. He no longer dressed as a principal boy, with a velvet dandyish swagger, but nor had he quite found a style which suited the éminence grise that he was on his way to becoming. People who had known him slightly for ages did not always recognise him. While this may have been a relief – one of the reasons he did not go more often to the exhibition was perhaps the fatiguing business of being jostled by fans – it also quite possibly dented his ego. Even in his current elevated position, Dickens feared that he was never far from obscurity.

Douglas-Fairhurst suggests that the character of Nemo in Bleak House – the penniless law copyist who fades away to become “no one” – was a shadow ego that Dickens had created for himself. Dickens had also started as a lowly law clerk and knew from his brief trauma in a bottling factory how easy it was to slip out of your allotted niche and into a placeless state. It was that personal knowledge combined with a new awareness of how vast and impersonal the world really was that had turned him into a sadder, wiser chronicler of the modern condition.

• The Turning Point: A Year That Changed Dickens and the World is published by Jonathan Cape (£25). To support the Guardian and the Observer buy a copy at guardianbookshop.com. Delivery charges may apply.