Fukuyama on the need for a new ideology

Francis Fukuyama, the philosopher who declared the 'End of History' in the 1990s (by which he meant that liberal capitalist democracy had triumphed and there was no longer any reasonable alternative) has published an interesting new essay suggesting democracy and free market capitalism are parting ways, and that we should embrace the former and abandon the latter.
His essay in Foreign Affairs, called The Future of History, looks at the importance of the middle class to liberal capitalist democracy, and how that middle is being squeezed in western democracies by falling GDP, falling output, slower technological innovation, and increased competition from emerging markets. What puzzles him is why, when the liberal capitalist model is so under siege, the Left should have failed to come up with a popular alternative. He writes:

The deeper reason a broad-based populist left has failed to materialise is an intellectual one. It has been several decades since anyone on the left has been able to articulate, first, a coherent analysis of what happens to the structure of advanced societies as they undergo economic change and, second, a realistic agenda that has any hope of protecting middle class society.

The Left, Fukuyama argues, disastrously replaced Marxism "with postmodernism, multiculturalism, feminism, critical theory, and a host of other fragmented intellectual trends that are more cultural than economic in focus....It is impossible to generate a mass progressive movement on the basis of such a motley coalition: most of the working and lower middle class citizens victimised by the system are culturally conservative and would be embarrassed to be seen in the presence of allies like this."
I get his point, but one can overdo the attack on postmodernism and the other -isms of the 1990s. Feminism, for example, is hardly marginal, nor are minority or queer rights. These movements made important advances in the 1990s and 2000s, and have shifted the centre ground. I don't think the working classes and lower middle classes would be so embarrassed by such allies.
He goes on:

when existing social democratic parties come to power, they no longer aspire to be more than custodians of a welfare state that was created decades ago; none has a new, exciting agenda around which to rally the masses.

So what's the alternative? What could be 'an ideology of the future', as he puts it? He writes:

Imagine, for a moment, an obscure scribbler today in a garret somewhere trying to outline an ideology of the future that could provide a realistic path toward a world with healthy middle-class societies and robust democracies. What would that ideology look like?
It would have to have at least two components, political and economic. Politically, the new ideology would need to reassert the supremacy of democratic politics over economics and legitimate a new government as an expression of the public interest. But the agenda it put forward to protect middle-class life could not simply rely on the existing mechanisms of the welfare state. The ideology would need to somehow redesign the public sector, freeing it from its dependence on existing stakeholders and using new, technologically empowered approaches to delivering services. [I'm not quite sure what this means, to be honest.]
Economically, the ideology could not begin with a denunciation of capitalism as such, as if old-fashioned socialism were still a viable alternative. It is more the variety of capitalism that is at stake and the degree to which governments should help societies adjust to change. Globalization need be seen not as an inexorable fact of life but rather as a challenge and an opportunity that must be carefully controlled politically. The new ideology would not see markets as an end in themselves; instead, it would value global trade and investment to the extent that they contributed to a flourishing middle class, not just to a greater aggregate national wealth.
It is not possible to get to that point, however, without providing a serious and sustained critique of much of the edifice of modern neoclassical economics, beginning with fundamental assumptions such as the sovereignty of individual preferences and that aggregate income is an inaccurate measure of national well-being. This critique would have to note that people's incomes do not necessarily represent their true contribution to society. It would have to go further, however, and recognize that even if labour markets were efficient, the natural distribution of talents is not necessarily fair and that individuals are not sovereign entities but beings heavily shaped by their surrounding societies.

Fukuyama concludes that a genuinely populist left would need to begin by attacking elites:

there are a lot of reasons to think that inequality will continue to worsen. The current concentration of wealth in the United States has already become self-reinforcing: as the economist Simon Johnson has argued, the financial sector has used its lobbying clout to avoid more onerous forms of regulation. Schools for the well-off are better than ever; those for everyone else continue to deteriorate. Elites in all societies use their superior access to the political system to protect their interests, absent a countervailing democratic mobilization to rectify the situation. American elites are no exception to the rule.
That mobilization will not happen, however, as long as the middle class of the developed world remain enthralled by the narrative of the past generation: that their interests will be best served by ever-freer markets and smaller states. The alternative narrative is out there, waiting to be born.

What's interesting about the essay is that Fukuyama, once the champion of liberal capitalist democracy, appears to be coming down squarely on the side of social democracy and against free market capitalism. He's on the side of Occupy, against Goldman Sachs. But Fukuyama neglects to mention the environment or climate change. Most political thinkers or futurologists under 40 would put climate change, and the need for some sort of response to it, at the centre of a progressive ideology.
Perhaps we can try and flesh out the picture a little. I want to draw a contrast between liberal cosmopolitan politics, and civic republican politics - or a contrast between Aristotle and Diogenes.
There are two versions of the state that descendants of Socrates imagined. Aristotle imagined a state where every citizen was educated and trained in philosophy, and deeply involved in the running of the state. The citizen achieves their flourishing (a word Fukuyama employs as the proper end of the state) partly through scholarship, learning, religion and the arts, and partly through politics.
Diogenes the Cynic, by contrast, imagined the individual as a 'cosmopolitan', cut free from the state and become a citizen of the world rather than any particular country. Aristotle's vision of the state involved deeper ties, deeper commitments, and deeper demands of citizens. Diogenes the Cynic' political vision, such as it was, led to a cosmopolitan politics of wider but shallower ties. Aristotle's vision is local and communitarian, while Diogenes' vision is internationalist, individualist and cosmopolitan. (This is not quite fair to Diogenes' radical anarchist politics, but it is true in so far as he was the father of the idea of cosmopolitanism).
For a long time, the UK has been enamoured of a more liberal cosmopolitan vision of politics, embracing free trade, open borders and low taxes. I would suggest the left, and the UK, moves to a more Aristotelian conception of society, which provides more for its citizens in terms of education and housing , but which also demands more of them, in terms of taxes and political participation. It would be a more local vision, in which citizenship means more and costs more. It's not far from what Maurice Glasman envisaged with his Blue Labour project.
There are four important areas for this shift from a liberal cosmopolitan to a civic republican politics: taxes, education, housing and finance.
Firstly, it would demand we all pay our taxes. It would condemn and shame corporations that dodge taxes, just as harshly as it condemned individuals and families who tried to fiddle the system. We will only accept paying higher taxes if we feel the system is fairer, and less easy to abuse. We can already see this shift happening: look at how UK Uncut's campaign last week against corporate tax-dodging garnered support from right across the political spectrum, including front page support from the Daily Mail.
Secondly, education. In place of the knowledge economy, we need to build a learning economy, which creates opportunities for life-long learning, and for life-long teaching, and measures success in human development rather than GDP. The cartels of academia need to be opened up, so that academics connect with wider communities and satisfy the popular demand for learning and ideas. Academics will complain 'this will damage the quality of research we can do'. I don't agree. At the moment, so much academic research is frankly boring and over-specialized. The more academics feel connected to their societies and the concerns of ordinary people, the more they will be inspired to raise their heads from their tiny corner of research and to start to address some bigger and bolder questions.
Thirdly, property. One of the key ways that living standards are dropping is the rising cost of buying a flat or (perish the thought) a house. My parents bought a small house in Islington in the late 1970s for £30,000. Such a house now would cost around £600,000. This is partly the result of banks encouraging buy-to-let speculation over the last 20 years. It is also partly the result of foreign capital flooding into UK property (particularly London), and of foreign bankers working in the City. Housing is so important to individuals' quality of life, that we need to look seriously at limiting the amount of foreign and speculative capital in the property market.
Fourthly, finance. A civic republican society would be very wary of financial interests and of over-leveraged families and societies. It would condemn usury. It would make the point that, if financial interests are allowed to grow too powerful, they becomes a parasite, dictating the actions of the host in their own interests rather than the interests of the host. Rather, an Aristotelian economics would focus on the end of human flourishing rather than the means of the market. That could mean embracing 'national well-being measurements', but readers of this blog will know how little I rate such measurements. I would rather governments focus on a broad range of human and social indicators, particularly looking at quality of life in education, housing and work. The market should support the learning economy - which means giving people more opportunities to learn, study and pursue other interests.
But all of this leaves out the question of how to cope with any major global changes arising from climate change. I think an Aristotelian response would do its best to engage with the international system to mitigate such catastrophic climate change - but it would also prepare for a world where that change happens, and we, as a society, focus on protecting our republic, our citizens, our learning and our values in the midst of a new Dark Ages. Or is that a wretched embrace of a 'Lifeboat Britain' mentality...
To be honest it is hard to plan a coherent politics when one really has no idea to what extent the Doomsday scenarios foretold us by climate scientists are accurate and inevitable.