With regard to the telephone lobsters, the Studio is painting them now and they will be varnished hard by Thursday.’ With this note from John Hill of the London decorating firm Green & Abbott to his client, Edward James, in 1938, we enter an agreeably unhinged world: ‘Surreal Things: Surrealism and Design’, the new exhibition at the V&A, curated by Ghislaine Wood. One of the many versions of the Lobster Telephone, comprising a full-size model of a lobster on the receiver of a Bakelite telephone, designed for James’s home by Salvador Dalí, has been in the Tate collection for a while and is, consequently, well known.

Much of the rest of the exhibition content is less familiar, at least in this country, and it raises fascinating questions about the relationship between artistic movements in the 20th century and the worlds of commerce and fashion. Many contributors to the weighty catalogue discuss the inherent paradox of a movement that was originally committed to Marxism and social revolution turning into a source of ideas for interior decoration, shop-window dressing, advertising, clothing and accessories intended for the upper and middle classes.

The exhibition begins with one of those legendary Parisian art riots, such as the opening night of the Rite of Spring, but in this case the opening night of another Diaghilev ballet, Romeo and Juliet, in 1926. André Breton led a claque of 30 or 40 young Surrealists to protest against the set designers, Max Ernst and Joan Miró, who were members of the movement, for their defection to work for a white Russian reactionary.

The descent of Surrealism into the commercial realm could be counted a failure in that the ideas were diluted, but also a success, in that they reached a wider audience than was likely in the limited context of fine art. The unselfconscious inherent weirdness of commerce was, in fact, the origin of many of the best surrealist ideas, including the massive enlargement of advertising posters, or the depiction in advertising of giant toothpaste tubes or watches replacing buildings in the street. Perhaps none of the interiors designed and constructed by Dalí, Friedrich Kiesler or Max Ernst ever recaptured the unselfconscious strangeness recognised by Louis Aragon and Walter Benjamin in the forlorn covered shopping arcades of 19th-century Paris but, nonetheless, they were precursors of the current mode of installation art. Kiesler’s Surrealist Room of 1942 is recreated, with its changing light effects and sounds of passing trains, and a number of Edward James’ objects and paintings are reassembled as they were seen in his London house, where the lobsters trilled when anyone phoned.

While Surrealism has a distinct historical time frame in the mid-20th century, it can also be seen as extending backwards and forwards in time. The exhibition includes latter day surrealism in fashion designs by Comme des Garçons and Maison Martin Margiela, and the movement is alive and well in other areas. Such a wide ranging subject cannot be caught in a single lobster pot nor, wisely, does the exhibition attempt to do so. Think of it more appropriately in the form of a dreamscape, with its own illogical connections. Think of the secret lives of the objects that have travelled around the world and the stories they could relate, of love, loss and excess, more eloquent perhaps than even Dr Freud’s couch. The last laugh will probably be the gift shop which grows more ingenious with each of the V&A’s major shows. After the ‘Utopia Soap’ offered at last year’s Modernism shop, we expect lobsters with everything.

‘Surreal Things: Surrealism and Design’ is at the V & A Museum, London SW7, until July 22 (0870 906 3883; www.vam.ac.uk)