'As a visionary, I am all for compromise.' So says Roger Allam as Philip Madras in Peter James's production of The Madras House at the Edinburgh Festival (Lyric, Hammersmith, from Wednesday). This electrifying play, an Edwardian disquisitive pageant of sex, shopping and social embarrassment was just what the Harley Granville Barker season needed after the mezzo success of the previous week's The Voysey Inheritance.

The debate is strung across four generous acts in Denmark Hill, Peckham and the Oriental rotunda of a Bond Street fashion house. The collapse of Communism and the perennially unresolved hostilities of the sex war lend the play a new urgency, and Barker bites back at himself whenever the question of idealism comes up. The drapery firm is the subject of an American buy-out, and the business transaction brings back to England Philip's father, the exotic Mohammedan, Constantine Madras, who defends polygamy by attacking the 'industrial seraglio' of the fashion trade.

This brilliant dramatic exposition of a double-edged feminist theme is pinned down in a series of gripping duologues, a scene probing the unfortunate pregnancy of a live-in employee (Suzanna Hamilton), and the marriage of Philip himself. Peter James and his designer Pamela Howard extend the mannequin parade of the third act into a recurring dream-like tableau of girls in birdcage corsetry smacking of both functionalism and danger.

The heart of the play is powerfully articulated by Roger Allam as Philip, Even Matheson as Jessica, his wife, Sam Kelly as an irascible partner in the firm, and a flurry of admirable actresses (Helen Ryan, who played Jessica in the 1977 National production, Frances Cuka, Alexandra Mathie). The one weak link is John Hallam as Constantine. Hallam is a good actor, but he does not bring to the stage a world of sighs and sensuality. He looks like a touring version of Jon Pertwee as Doctor Who.

In the first act of this comedy by Harley Granville Barker, there is a wonderful moment when the entire Huxtable household is struck dumb - an awkward silence stifling every feeble attempt at polite conversation. It is the calm before the storm.

For the next three hours, a spate of words spills over the stage as the principal characters take it in turn to, deliver long speeches on an amazingly wide range of topics.

Packing into one play almost as many ideas and opinions as some dramatists would confront in a lifetime, Granville Barker held remarkably enlightened views for his time.

So little happens while so much is being said that the play is, rarely staged, but it is the kind of play to which the Festival can do justice and, happily, that is what is achieved by this revival. It confirms the importance of at least one of the playwrights on which the Festival has been focusing.

If the C P Taylor half of the programme is not living up to the highest expectations, perhaps Brian McMaster should have chosen another Scots playwright for such extensive study - one who has been consistently neglected by the Festival.

Seeing such a substantial example of Edwardian theatre as The Madras House, I was reminded of two other plays from that same decade and of the different way similar themes were tackled by J M Barrie - in What Every Woman Knows and The Admirable Crichton.

It would be fascinating to see revivals of them which were as well acted and produced as this, in which the high-minded Philip Madras is particularly well portrayed by Roger Allam, and the elegant trappings of the Edwardian rag trade are displayed to good effect.

From the highly effective opening scene when the models step out of their showcases, to the interludes in which a chorus of petticoated women seem to haunt and mock the pompous men who would exploit them, the production is brightly animated.

Fashion is used as a metaphor for the exploitation of women and the way they are seen by men as decorative objects of desire. But the arguments spread out in all directions and there are some brilliant character studies - not least by Helen Ryan, Jim Hooper and John Hallam.

The usually dogsbody work of scene-shifting becomes a prominent feature of Peter James's cleverly conceived production of The Madras House - much the best contribution so far to Edinburgh's Granville Barker retrospective. At the start, you are confronted with the sight of mannequins unfreezing in illuminated shop windows and descending to become a line-up of petticoated, corseted young women who embark on circus tricks. At the end of each act, these, semi-undressed figures re-emerge like half-joky, half-baleful spectres, and set about humping the scenery on and off in a frankly disgruntled manner, at one point even converting the activity into a contemptuous send-up of an erotic display.

Scarcely the sort of thing you would expect from a drama written in 1909, and indeed there is nothing like it in Barker's stage directions. The idea works well, though - not simply because the play deals, in part, with the fashion industry's exploitation of women. Worrying at the topic of women's economic, dependence on men from a number of angles, this proto-feminist drama strains to go beyond the mahoganied confines of Edwardian realism. Its four acts are strikingly unpropelled by plot (in the first, the protagonist, Philip, declares his intention of leaving the family drapery business for worthy drudgery at the London County Council; in the last, he confirms this decision). Instead, they present conversational variations on a theme, and offer a look at different layers of oppressed female society.

Impressively, James loosens the play's metaphorical corsets even further. He dispenses with period, clutter and gives the hero's oddly picaresque progress through the different echelons of society a spooky, dream-like quality: the same set of actresses crops up in new roles in each segment, doubling too as the scene-shifters. This subliminal effect of recurrence helps highlight the cross-class parallels, say, between the six unmarried daughters of the prosperous draper Huxtable, who are declining into a middle age of rigid respectability, still leashed to their father's ungenerous purse strings; and the closely monitored sales assistants in his drapery firm, who are forced to live in and conceal that they are married if they want to keep their jobs. Well might Philip's father, Constantine, a convert to Mohammadanism who now lives in an Arab village, refer to the clothing industry as "an industrial seraglio".

"Europe in its attitude towards women is mad," contends this revenant, whose superior, silkily insinuating manner is well conveyed by John Hallam. At the fashion show in the third act his adopted cultural perspective allows him to cut through many of the western hypocrisies towards women represented with affable, near-obliviousness by the burly American businessman State (Bill Bailey, spot on). This character sees no contradiction in the male-run garment trade capitalising on the Woman's Movement and any future economic independence. To his rhapsodic way of thinking, conducted mostly on the High Ground, the link with them would be strongly philanthropic. There is a pointedly comic moment when State suddenly realises that his spoutings have detained one of the poor models. All conventional politesse, another man rushes to get her a chair. "Thank you... but she can't," hisses the camp manager, "not in that corset." The play emphasises, though, how Constantine's alternative to this society is more loathsome: polygamy and the relegation of women to veiled perpetuators of the race.

Roger Allam brings out well the sexless, kindly priggishness of Philip, another of Barker's "worms", though his performance comes unstuck a bit in the awkward last act discussion with his wife (Eve Matheson), which, Barker extensively revised for a.1925 revival. This production opts for the 1910 text. A line from the revision, where the wife says "but you can't think for us", pinpoints a slight source of audience discomfiture with the play. It is crusadingly feminist, but, at times, it gives a faintly Philip-like impression of delivering a well-meaning, yet smug lecture to the ladies on how to liberate themselves. Here, too, James's subversive chorus of female scene-shifters is useful, their mocking presence piercing through any pomposity.

With Barker, the result (with one rehearsed reading still to come) is to endorse existing opinion: that he was a dramatist of genius who lost it all when he abandoned his life in the theatre. William Gaskill's opening production of The Voysey Inheritance - a sumptuous revival of an already popular play - offered no surprises. Its successor at the Lyceum, The Madras House, is full of them - from the situation of an unmarried mother openly bringing up her child (this in 1910) to the play's power to enthrall an audience for a full three hours without the help of a plot.

Edinburgh debate about Barker has centered on his claims as the first British Chekhovian which certainly embrace his sub-textual skills. But where Chekhov invariably introduces a well-articulated narrative, if only off-stage, Barker disdains this safety-net. Instead, he employs what Peter James aptly terms a "thematic collage" - a technique that, as James's production of The Madras House compellingly demonstrates, can be made to work in time - through contrast, ironies, echoes, and the sense that the subject is larger than the lives of any particular group of characters. To that extent, this play about the fashion trade relates to directly revolutionary work such as Babel's Marya.

Through the linking figure of Philip Madras (like Edward Voysey; another son clearing up the mess left by his father), Barker examines the world of Edwardian women, showing that their options are limited to buying or being bought. You never discover what happens to the unmarried mother; nor the fate of the Bond Street store under its new American proprietors. What you do get is the electrifying sensation of a society on the brink of momentous change, as expressed through characters whose vitality owes nothing to theatrical stereotype apart from their ability to break out of it.

James's most obvious contribution is to have released this prescient work (our first sex-and-shopping masterpiece) from period clutter, and intensified its argument by doubling the grand ladies of the Huxtable and Madras households with the corseted models who form a mute and increasingly ominous chorus line. Innovations aside, this is an ultra-sensitive event in every detail, from the single outburst Roger Allam allows himself as the rationalising Philip, to the hilariously orchestrated responses of the Huxtable daughters to their dragonishly complacent mama (Frances Cuka).

Where a good production of The Voysey Inheritance advances like a river in flood, reshaping the profile of its hitherto safe banks (that is the professional middle-classes), Granville Barker's other best-known play, The Madras House (Royal Lyceum), resembles a sequence of great lakes, through which the action proceeds, past superficially similar shores. Young Phil Madras is the affable, slightly priggish, emotionally restricted hero through whose eyes we see the changing landscapes of that Edwardian terra incognita, the Woman's Question.

At the start Roger Allam's Phil is determined to sell the family business, a distinguished fashion house founded by his father, in order to stand for election to the London County Council. At the end of the fourth act he holds to his decision and has perhaps become marginally more broad-minded. The main plot is nothing more, but within each act he is involved in smaller, independent plots that present women in different states of subservience to man.

Peter James's enjoyable production (due at the Lyric, Hammersmith, next Wednesday) illumines the purpose of the play through inspired scene-changing. Mannequins in petticoats step down from shop windows and perform circus tricks at the start of the play, tossing handkerchiefs, balancing plates and, in the centre of the line, emphatically lacing one of their number into a corset. The girls reappear as Phil's six unmarried cousins, kept idle in the parental home at Denmark Hill; then as the underpaid workers in the family business, living on the premises under the stern eye of a housekeeper and afraid to admit to marriage lest they lose their jobs.

In the Bond Street act they are mannequins once more, decked in the gaudy finery of the latest Madras collection, too tightly laced to sit down. And at the end of each act they step together onto the stage, disconcerting Phil with their silent presence, and shift the furniture.

This brilliant idea does far more than economise on casting. It places in the forefront, albeit with a comic gloss, the hypocrisies ,of the men's regard for the creatures whose lives they control. The portly American financier (Bill Bailey) who is buying the business rhapsodises over feminine grace but will readily capitalise on the future growth of the Women's Movement. Phil's father Constantine, played with grimly elegant disdain by John Hallam, takes male self-interest to its extreme by exiling himself to Arabia and changing his faith - "A Mohammedan? At your age?"

From Denmark Hill the unmarried Huxtable girls gaze at the fairytale Crystal Palace; the Madras House is described as an Oriental seraglio, and given chairs and a tablecloth to match: Constantine cuts through the hypocrisy and becomes a pasha in all but name.

The first two acts contain the major dramatic interest. Relationships are uncovered and vibrate with potential. The inert future of the Huxtable ménage is caught in the moment when 11 characters stand paralysed by silence. As a contrast to this prospect the pregnant seamstress Miss Yates (Suzanna Hamilton) shows a plucky independence that must have shocked Barker's audience in 19O8.

In the over-long philosophising of the second half the play's interest diminishes but excellent acting all down the line captures the sound and deportment of that semi-feudal age.

The Madras House is sometimes thought of as a play about women's place in society - which is rather like saying that King Lear is about fatherhood. In fact Barker is writing about a civilisation that lives off the exploitation of spiritual values. What is beauty worth? Do men dress women prettily to boost their desire, to prove their status, or both? The play has 25 characters, 17 of them women; and Barker's point is that whether they are marriageable daughters, happy or unhappy wives or mannequins in the fashion house of the title, they reflect the aberrant values of a society that prizes them only for beauty, pleasure or obedience. An American (Bill Bailey), who is buying the Madras House, complacently quotes Goethe about the eternal feminine. But Barker shows that in the real world the feminine represents tradeable values.

A the centre of Peter James's Edinburgh Festival-Lyric Hammersmith production there is a thoughtful, virile performance by Roger Allam of a thoughtful self-doubting man,  Philip Madras, head of the firm. Allam shows that Philip is an intellectual puritan who is uneasy about sexuality (his burns low) and guilty about the guilt he doesn't quite feel. His performance draws the play's themes together: we understand that social values have to do with maturity and give-and-take. The play ends, as so often with Barker, with a dialogue between a man and a woman, both a duel and a duet, about love as it is and as it might be - one of the finest husband-and-wife dialogues in English drama.

The Madras House, first staged in 1910, proves to be by far the most successful of the three Edinburgh revivals. Ostensibly about the Madras fashion business (another family firm), it is really a radical study of the social and sexual double standards affecting women. The six unmarried Huxtable daughters ("prisoners in that chaste fortress on Denmark Hill") are contrasted with their father's female employees, sweating away in Peckham with a mouthful of pins.

Peter James, in his imaginative production at the Royal Lyceum (at the Lyric, Hammersmith, from Wednesday), reinforces this contrast by casting his actresses twice over, on both sides of the social divide. Thus Frances Cuka's wonderfully haughty Mrs Huxtable reappears as the Madras House manageress; while Suznnna Hamilton doubles as a Huxtable girl and a shop assistant pregnant with an illegitimate child. The female characters are deployed as a silent chorus between scenes, shifting furniture in their underwear, mute and resentful.

The wit is more sparkling and the thinking more far-reaching than in Voysey (though Mr James should prune some of the interminable Shavian debates of the last two acts). Roger Allam excels in the pivotal role of Philip Madras, a gentleman with a Fabian conscience. Granville Barker's hearteningly humanist answer to the battle of the sexes seems to be that men and women should meet half-way.

While the plays of C. P. Taylor continue to cause a great deal of unnecessary grief, the Edinburgh Festival's retrospective of Harley Granville Barker is proving a genuinely rewarding experience.

The Madras House (1910) at the Royal Lyceum is less immediately gripping than The Voysey Inheritance, for in this later play the innovative dramatist virtually dispenses with conventional plotting. Instead he concentrates on a particular theme - the position of women in Edwardian society - and works variations on it in the course of four acts.

Baldly described like that, the play sounds a crashing bore, but in the theatre it works magnificently. You cannot help but admire the sheer range of the characters and the depth with which many of them are drawn. Shaw, writing on a similar theme, would fill the stage with talking heads, mostly spouting his own opinions. Barker allows his characters an inner life, and they change in the course of the play.

What plot there is centres on the sale of the Madras House, an expensive London fashion business, and its humbler cousin, a Peckham draper's establishment. Both are family businesses, and few dramatists are better than Barker at bringing extended families to vivid theatrical life.

Although I found myself longing nostalgically for solid, detailed Edwardian sets, there is no doubt that Peter James's witty, sparely designed production gets to the play's heart. It begins with a vision of shop-window mannequins, posing in their underwear; a stylish opening image of women as sexually provocative clothes-horses that is to be explored in the course of the play.

But the mannequins are actually actresses and they come to life, transforming themselves into the six virginal daughters of Mr and Mrs Huxtable for the marvellous first act, which hilariously captures the stifling tedium of respectable middle-class life.

What, Barker implicitly asks, is the role of such women, condemned to leisure and spinsterhood? But just as troubling is the role of ostensibly "free" women, condemned to labour in the drapery business, mere commodities purchased at market prices who are dismissed when they have outlived their usefulness.

In the course of the play the dramatist considers women as both objects of sexual desire and as the targets for capitalism, for, as an American magnate points out, "the middle-class women of England form one of the greatest money-spending machines the world has ever seen".

The play is held together by the character of Philip Madras, son of the founder of the fashion house. His father, a philanderer who also believes that the female sex is "rotting" England's manhood, has solved his women problems by converting to Islam and keeping a harem in Arabia. Philip is a very different character, an idealist with a cold heart, and the play becomes an account of his sexual education as, in the touching final scene, he finally acknowledges his love for his wife and devotes himself to a life of social usefulness.

Despite a few fluffed lines on the opening night, Peter James's production achieves a fine fluency and a real crackle of sexuality as the mannequins shift the scenery between scenes beneath the bewildered gaze of the male characters. Roger Allam is in superb form as Philip Madras, somehow retaining the audience's sympathy while leaving us in no doubt that he can also be a "cold-blooded egotist". And there's especially good support from John Hallam as his exotic, slightly sinister dad, Sam Kelly as the likeable, hen-pecked Mr Huxtable and Suzanna Hamilton as Miss Yates, a remarkably frank and sympathetic  portrait of what Edwardian society would call a "fallen" woman.

The Madras House emerges from this rare revival as a marvellously rich serious comedy that appeals equally strongly to both the head and the heart. It is good to know that it will be transferring to the Lyric, Hammersmith, after its run in Edinburgh.