Two events last week make me wish I could have just a few words with American thinker Francis Fukuyama. The first was Time magazine giving Vladimir Putin the accolade of person of the year. The second was the purchase by the China Investment Corp of nearly 10 per cent of American bank MorganStanley as it announced the write-off of $9.4bn in bad debts. In 1992, I met Francis Fukuyama when he was touring his book The End of History and the Last Man and explaining to anyone who would listen that the world had reached a point where there was no longer any meaningful dispute between Marxism and the market. More particularly, he said, it looked as though Western liberal democracy was becoming ‘the final form of human government’.

It was such an alluring and hopeful phrase, as though a process of evolution was about to reach its happy conclusion. The rest would be simply a matter of management and education. I wonder how he accounts for the state of affairs at the end of the 2007 in which Russia and China appear to be doing rather well without following the example of Western liberal democracy and, indeed, challenge the model with disdain. The Russians, for instance, rather than becoming more democratically inclined have become less so. In a recent poll, just 20 per cent of Russians said they favoured democracy and a market economy.

For a vast number of the world’s people, democracy is an aspiration that comes some way after security and prosperity. The two great powers of the communist era end this year more confident than at any moment since the fall of the Wall. And what is interesting is that their sense of purpose and defiance is accompanied by doubts in the West about the strength of our economies and uncertainty about the direction of our democracies. Forget Islam and Islamism: these are the important undercurrents of 2007.

Within less than a decade or so of the founding of the slightly risible organisation the Project for the New American Century, Time magazine has honoured — even though it says it is not an honour — Putin for making his country ‘critical to the 21st century’. The dollar has collapsed to hover at 50 pence sterling and America’s war in Iraq, which now well exceeds its involvement in the World War II, has cost $600bn, a sum which Nobel Prize-winning economist Joseph Stiglitz believes will reach $1 trillion.

This is a credit-card war. Americans will be paying Chinese banks for years after George W Bush has left office. Even though the current war costs about 1 per cent of America’s annual $13,247bn GDP (Vietnam represented about 9 per cent), it is difficult not to see a plotted story line in this.

The new American President will need to go on a charm offensive that must begin before he or she is even elected. America has to find a way of speaking more quietly while still carrying that big stick and if it is going to persuade the new middle classes of China and Russia that it has a moral leadership to offer the 21st century, it must adhere to the democratic values that it wishes to seed elsewhere and lead rather than follow on climate change. To sound a note of optimism at the end of this rather scratchy, chaotic year, there are definite signs that opinion in both these areas is on the move among Americans. — The Guardian