How times have changed. Less than a decade ago, Robert Kagan and William Kristol described the outlines of what they labelled a “neo-Reaganite” American foreign policy. In their book Present Dangers (2000), they explained how American military power should be used to reorder the world: “To many the idea of America using its power to promote changes of regime in nations ruled by dictators rings of utopianism. But, in fact, it is eminently realistic...how utopian is it to imagine a change of regime in a place like Iraq? How utopian is it to work for the fall of the Communist party oligarchy in China after a far more powerful and, arguably, more stable such oligarchy fell in the Soviet Union? With democratic change sweeping the world at an unprecedented rate over these past 30 years, is it ‘realist' to insist that no further victories can be won?”

This “neo-Reaganite” vision is evidently one of those dreams that a sadder but wiser Kagan understands has ended. Hence his new book The Return of History and the End of Dreams. The post-somnambulist Kagan now points out that after the cold war, America pursued “an expansive, even aggressive global policy,” and that “in shaping a world to suit their values, they have compelled others to bend to their will” in ways that make Americans intensely uncomfortable. Iraq is still a mess; China has not collapsed in the face of American hegemony, and indeed is rising at breakneck speed to achieve superpower status, while Russia has recovered and is reclaiming the foreign policy space of the former USSR. The era of American predominance is giving way to one in which the United States has to share power with the likes of China, Russia, India, and the rest. This is the “return of history” to which the book's title refers.

This observation is hardly an original one, though it would have been nice to see some acknowledgment of how American over-reaching in the Middle East - as once advocated by Kagan - has contributed to a coalescence of the “rest” against American power. But the “history” that he sees being revived is not, as one might have thought, a multipolar world of alternately competing and cooperating great powers, but a sharply bipolar one reminiscent of the cold war. According to Kagan, “the global competition between democratic and autocratic governments will become a dominant feature of the 21st-century world”. He sees the world once again riven by a grand bipolar ideological struggle, with China and Russia the standard-bearers for autocracy. His practical recommendation, then, is to unite the democratic world in a grand alliance against the new emerging autocratic axis.

This is a peculiar interpretation of the contemporary world, one that betrays a great nostalgia for the cold war and tries to cram messy reality into categories that simply do not fit. For while it is certainly true that American hegemony is eroding, “autocracy” is not a strong or consistent set of ideas around which the rest can rally, as was once the case with Marxism-Leninism. China, for example, has abandoned any principled belief in communism and has replaced it with a combination of Chinese nationalism and legitimacy based on economic growth. To the extent that there is a principle underlying Beijing's foreign policy, it is an assertion of a right to sovereignty that prevents China from being criticised by foreigners on human-rights grounds.

Russia is a different kettle of fish altogether. Unlike China, its economic growth is not based on broad industrialisation but entirely dependent on high global-energy prices. It is facing demographic decline as its population falls by more than 750,000 people a year. The ideas coming out of Moscow such as “sovereign democracy” are a mishmash of Russian nationalism and boorishness to neighbours such as Ukraine, Estonia and Georgia, ideas that have no traction anywhere beyond Russia's borders. Cooperation between Beijing and Moscow is a matter of expediency, not principle.

Since Kagan's book is obviously targeted at me, it might be useful to respond briefly. Unlike Kagan and other neocons, I never believed that American power would drive global democratisation, nor did I think that the nation-state would soon be supplanted by international law. My 1992 book The End of History argued instead that there was a broad and virtually universal process of modernisation going on, one of whose long-term outcomes was strong demand for political participation and accountable government. China and Russia do represent experiments in authoritarian modernisation, but they both suffer from internal weaknesses with regard to social conflict and legitimacy. It remains the case that liberal democracy is the sole strong source of legitimacy broadly recognised around the world, a fact to which authoritarians from Zimbabwe to Venezuela to Belarus continue to pay lip service.

The dominant reality of today's world is the emergence of a multipolar system, unified by globalisation of trade, investment and ideas. Today's international system scarcely resembles the 19th-century world of clashing European great powers, so enmeshed are its actors in the global economy. It is not nuclear weapons, but the trillion-and-a-half US dollars held in Chinese reserves that creates a system of mutually assured destruction between America and China. Trying to fit the current world into a template defined either by 19th-century Europe or by the cold war does not advance our understanding of it, but rather saddles us with a new and unhelpful set of blinkers.

The Return of History and the End of Dreams by Robert Kagan
Atlantic £12.99 pp160 Buy the book £11.69 plus free delivery

Times Recommends

• The Sunday Times 100 best holiday reads
• What will we be reading this summer: the booksellers predict
• Literary festivals: a survivor’s guide