At the Museum of the Jewish People in Tel Aviv, the novelist Adam Foulds could be one of the exhibits. Going back there for the first time since his gap year, he finds it forces him to think again about who he is

The sea front is dazzling: a flat bright sheet of blue Mediterranean water and a stretch of sand dotted with militarily fit, caramel-coloured bodies, the different shapes of the elderly, tottering children, racing dogs. Here and there amplified music hangs the way it does in large open spaces, in faint, static clouds. From somewhere I can't locate, I catch the sweet tang of marijuana smoke. This is where Israel comes to relax, to be worldly and modern and sensual. Automatic weapons hanging from the shoulders of an occasional uniformed soldier recall the wider context of the scene.

I am in Tel Aviv to visit the Museum of the Diaspora, now called the Museum of the Jewish People, which is, I suppose, one of the few museums in the world in which I could be an exhibit. I first came here 20 years ago, but I have passed through Israel more recently than that after five shocking days in the Occupied Territories with the Palestine Festival of Literature. The reality of life on the other side of the separation wall, unknown to most Israelis, is for me now a dark backing to the glossy mirror of summertime Tel Aviv. That knowledge, and the excruciation that I feel at the unresolved conflict, complicates my feelings about being here—although perhaps it shouldn't. I've come for the story of the Diaspora, the story of the Jews outside Israel.

Removed from the hot and noisy city, on the campus of Tel Aviv University, the museum feels as though it could be outside Israel. It is a place apart—plangent, outmoded.

In the early Nineties, when I made my first visit, I was in my gap year, working and studying on a kibbutz near Jerusalem for the six months that constitute the only time I've spent outside the Diaspora. The visit was part of an educational programme that included trips to Yad Vashem, the Israel Museum, the Tower of David and Masada. We were all of us young. Some, like me, were just travelling in a meaningful way, connecting with our heritage. For others, Russians mostly, it was serious: they were planning to stay, preparing to make a life in Israel. After the blank years of Soviet cultural repression, which had disconnected many of them from Jewish tradition, they were discovering a new personal history.

A lot has happened since then. It was at the kibbutz that I watched live footage of Yitzhak Rabin and Yasser Arafat shaking hands, presided over by a smiling Bill Clinton. Then Rabin was assassinated. There have been 20 more years of Israeli occupation and settlement and the several hundred suicide-bombings of the second intifada, the Iraq war, the Iranian president Ahmadinejad's energetic Holocaust denial and nuclear programme, the rocking of brutal tyrannies in Egypt, Libya and Syria by bloody conflicts. And I, a distant speck in the geopolitical scheme of things, have lived 20 years of my life. Through all of that the museum has remained unchanged. Plans are under way for its renewal but, as it stands, the Museum of the Jewish People is a time capsule of one version of Jewish history. The story it tells has shortcomings, but it remains powerful and, in certain essentials, indisputable.

For this second visit, I am a party of one. I have arrived at opening time when the museum is pretty much empty apart from a group of schoolchildren, seven-year-olds in bright yellow polo shirts being arranged cross-legged on the floor by their teacher, ready for their early induction into Diaspora history. I feel a twinge of affectionate sympathy for them: I know the weight that will shortly be settling on their small shoulders. The Jewish world has for some time been committed to teaching children about the Holocaust both as a proper memorial and to inculcate vigilance. What you have drummed into you as a Jewish child is that it has happened once and can happen again. You are introduced at an early age to some of the most horrifying crimes of violence and degradation ever perpetrated. Inevitably, they haunt you. More than that, they come to structure your imagination and moral understanding. You grow up asking questions about how you might have acted in the ghettos or camps, or who among your friends could be trusted to hide you in their attic if push came to shove. Moreover, you are left with the conviction that, in extremis, this is how humans are: a little hyperinflation, some food shortages, and man will be a wolf to man. This is what these seven-year-olds are about to learn—and who is to say, as the bodies pile up in Syria and the Congo and elsewhere, that it is wrong?

I leave them behind and head off with my guide, accompanied by a photographer from the Orthodox world of Bnei Brak. Bearded, in black trousers and a white shirt with traditional fringes hanging at his waist, he doesn't speak much English, and I have forgotten most of the Hebrew I once knew. Still, in broken phrases of each other's languages, we make ourselves understood as he arranges me in front of the first display. The museum begins with an enlarged replica of the bas-relief from the Arch of Titus in Rome that depicts the sacking of the Second Temple in Jerusalem in 70AD. Roman soldiers carry away the seven-branched candelabra, their triumphal banners cutting the air at tilting angles. It is with this moment, and the forced exile of the Jewish people from ancient Judea, that the tragic narrative of the Diaspora begins. (For many centuries, in remembrance of this catastrophe, the Jews of Rome refused to walk under the Arch of Titus. In the late 1940s it was graffitoed in Hebrew, Am Yisrael Chai, "The people of Israel yet live".) The displays culminate with the image of the candelabra as the symbol of the modern state of Israel, a putative end to exile.

This long looping return through time and space, lasting nearly 2,000 years, is a singular phenomenon; I know of no other history like it. The firm spiritual and cultural fidelity of religious Jews to Israel throughout that time is extraordinary. Whether it was to a religious, immaterial notion of the Holy Land, or to the actual physical place, or both, this consistent orientation kept the connection intact. I know it myself from the synagogue liturgy I used to hear as a child. I was brought up attending synagogue. I had a bar mitzvah and went to Sunday school and latterly my father, after a long career as an accountant, became a rabbi. But I am not religious and never really have been. For me, synagogue was just a part of the pattern of family life. I am what many Jews are today, a secular intellectual with a liking for certain foods as well as a particular feeling for Jewish art and comedy (an essential part of Jewish culture, not well represented in this sombre museum) and for Jewish writing, the novels of Saul Bellow and Philip Roth, Bernard Malamud and others.

Their example was important to me when I started writing fiction seriously. Of course they are great writers with universal appeal from whom anyone can learn a great deal, but for the Jewish reader they offer something more. With them, I experienced the thrill that many members of minorities feel when they first find their world fully reflected back at them—when the African-American woman reads Toni Morrison or the lesbian reader discovers Radclyffe Hall's "The Well of Loneliness". It can be an elating moment, ratifying your experience, newly legitimising your life. That sensation is, it seems to me, the essence of identity: unstable and complicated as it may otherwise be, that involuntary and often happy sense of recognition is the thing itself. It can be triggered by very small things. I remember reading in Philip Roth somewhere that the housework of his parents' (my grandparents') generation was its golden age. I knew exactly what he was talking about. Certain small, fastidious living rooms in London flats came back to me with their polished photo frames, antimacassars, brushed sofas, pristine carpets, carefully arranged tchotckes and sweet, pervasive smell of Pledge.

That synagogue liturgy I mentioned comes from the Sabbath service. My secular and religious worlds coincide when I find Saul Bellow quoting it in his great novel "Herzog".

"Ma tovu ohaleha Yaakov …"

"How goodly are thy tents, O Israel …"

Moses Herzog then meditates: "The children of the race, by a never-failing miracle, opened their eyes on one strange world after another, age after age, and uttered the same prayer in each, eagerly loving what they found." There’s an apt ambiguity here. Remembering Israel, the Jewish children love the place they find themselves in. Out of these many unpredictable situations come the myriad experiences and affiliations of the Diaspora, among them Bellow's own love for Chicago, Gustav Mahler's for the Austrian countryside and Bob Dylan's for Woody Guthrie.

That these relationships to other places and people were vulnerable is well known. In the context of the museum, it's an inevitable thought that Bellow and Dylan were lucky to be American and that Mahler, although the object of anti-Semitism, was lucky to have lived and died long before the Nazi regime that would have killed him. It is a central truth here that Jewish people have been subject to a phenomenally virulent, often murderous racism, in part mandated by Christian and Islamic scripture and tradition. At the physical heart of the museum is a circular space the whole height of the building. In heavy half-light hangs the Pillar of Remembrance, a large sculpture consisting of a string of glowing lights contained within many iron cages. It seems to me it can be experienced in two ways: the light resists, shines through the cages, or the cages contain and crush the light, visibly multiplying as the eye discerns layer after layer. The Holocaust has its own museum at Yad Vashem. Here, the Holocaust is memorialised as one among other outbreaks of murder—in medieval Britain, Spain during the Inquisition, 19th-century Russia and so on. This is a gloomy place to be, an oppressive place about oppression.

"History is a nightmare from which I am trying to awake." So says Stephen Dedalus in James Joyce's "Ulysses"—a great work of Diaspora literature, by the way, with its wandering Jewish Odysseus, Leopold Bloom—and truly I would like to awaken from this room. My own Jewish identity is at times evident to me, at others invisible. I live a lot of my life without thinking about it, without fixing any identity for myself, whether Jewish, male, British or whatever, indeed dissolving it when I write and consciously resisting the clichés of group identity. It is painful to be returned to crude affiliation, to general type, by the violence and hatred of others, to have fabricated for you a grotesque identity and to be reminded that you can be killed for it. In Britain and North America, this happens infrequently. It is a more regular experience for Jews in France or Sweden or Hungary. Contemporary anti-Semitism, globalised, metastasised, is strong. If you doubt this, just Google the word "Jew". One thing you'll come up with is a message from Google itself: "We apologise for the upsetting nature of the experience you had using Google." The internet is full of anti-Semitic conspiracy theories: that Jewish people were behind 9/11, that they are planning or carrying out genocide, that they manufacture diseases, and on and on. Most of these have their origins in pre-Nazi anti-Semitism. At the turn of the last century, members of the Russian secret police perpetrated a hoax that has proved successful beyond their wildest dreams. "The Protocols of the Elders of Zion" purports to be minutes from meetings of Jewish elders discussing their secret conspiracy for world domination through a variety of wicked means, including moral corruption, financial control, war, and ultimately the complete destruction of civilisation.

Quoted approvingly by Hitler in "Mein Kampf", the "Protocols" is now of great significance in the Middle East, having run to over a hundred editions since 1943 in Turkey alone, where it remains a bestseller. It is cited in the Hamas Charter and has been referenced by the Grand Mufti of Jerusalem, the Saudi Education Ministry, the Palestinian Authority and others. In Egypt, it formed the basis of a 41-part TV series, "Horseman Without a Horse", aired repeatedly since 2002. The Holocaust made anti-Semitism something of an anathema in western Europe after the second world war but it remains disturbingly present. For example, in seven European Union countries surveyed by the Anti-Defamation League in 2009, around 30% of people thought Jews were responsible for the financial collapse the previous year. Similar surveys over the last several years show that 30-40% of people in the European Union think that Jews hold too much power in business. (What is this power? Why is it too much power? What do they think Jews use this power for? And why is it different if a business person is Jewish rather than, say, French?) One final, striking statistic: in 2011, 11.5% of Irish people would have chosen to refuse Jewish people Irish citizenship.

Diaspora Jewish identity is in part a reaction to the weird and hateful versions of Jews invented by racists, the demonic, conspiratorial, vampiric "Jew" that exists in their imaginations, hook-nosed and depraved, with a long, tentacular, manipulative reach. The reaction is also to the anti-Semites' subsequent threatened and executed acts of violence, whether it be the million and a half Jewish children murdered by the Nazis or the three children and the rabbi shot dead at a Jewish school in Toulouse in 2012.

I stand, paying my respects, thinking these thoughts, but I needn't think them here in particular. The Pillar of Remembrance feels recognisable as a dark place I carry inside myself. It can be ignored. It is always there.

It's a relief to move on to the endearingly outmoded displays on family and religious life with their plaster-cast models of studious children, festive meals and rites of passage. The coherence of Diaspora life that kept it robust enough to survive for 2,000 years is located here, in piety, recitation and repetition, the daily prayers, the dietary restrictions, the bar mitzvahs and marriages under ceremonial canopies, the funeral rites. For many who define themselves as cultural Jews, this raises a question. How can this identity be preserved in the absence of religious observance? The museum doesn't have an answer. I walk through the dimly lit displays among new arrivals at the museum, drifting between wall displays and glass cases. In a later gallery, I see celebrated Jewish contributors to science, music and literature. I watch the faces of Saul Bellow, Nelly Sachs, Nadine Gordimer and other Nobel literature laureates flash up on a screen. Leonard Bernstein waves his baton, Freud looks grave, Kafka haunted, and Einstein turns his dopey face to yet another camera. Figures from the great flourishing of assimilated, post-Enlightenment Jewish life, they are almost all of them non-religious. Consequently they disrupt, even terminate, the story that the museum tells.

The museum of the Jewish People unfolds a narrative of redemption through the return to Israel. This reflects the understanding at the time of its establishment in the late 1970s, and the thinking of its founders, among whom Abba Kovner was highly influential. Kovner had formed a Jewish partisan group to fight against the Nazis in the Vilna ghetto during the second world war. In a pamphlet he printed at the time, he implored "Let us not go like lambs to the slaughter!" After the war, he fought with the Haganah against the British in Palestine, and he joined the Israeli army following independence. He wrote poems and polemics that called for revenge for the Holocaust. He was fiercely defensive, a true and urgent, blood-and-fire voice for fortress Israel. He helped found several Holocaust museums. In one of the final galleries, I come across an interactive display that reflects the Kovner version of the need for Israel. It offers a variety of historical contexts illustrated with illuminated transparencies of scenes from around the world. You can choose to stay or to move to Israel by pressing one of two faded, much-pressed brass buttons. If you stay in post-war France, for example, text appears that tells you that you prosper, life is comfortable but your children lose their identity and become indistinguishable from other French people, they become "strangers". If you choose to move, to make aliyah (in Hebrew the verb means "to ascend") to Israel, you will live a life of perpetual danger, but "This is not a station any more: this is home." At the time of the museum's opening some people thought that Israel could indeed offer an end to the Diaspora for everyone. Since then, not only has the Diaspora continued to exist, it has grown. Many Israelis have become yordim, they have chosen, that is, to "descend" from the Holy Land. I think of all the English-speaking people with whom I first visited the museum 20 years ago, and who intended to immigrate to Israel. Not one, to my knowledge, has stayed.

The renewed museum needs to find a way to engage with the Diaspora as a permanent part of Jewish life. Beyond that, it needs to find ways to value it, to see Einstein, Dylan and co as more than a blazing historical dead end. And beyond that even, it could start to explore how the Jewish Diaspora can be understood as a kind of vanguard of modern living. At least since Leopold Bloom, Jews have been seen by some as exemplary moderns: urban, cosmopolitan, intellectual, adaptable. In many cases, they were forced into this position by being forbidden to own land and barred from the guilds of traditional craftsmen. They had to be urban, in business, and were naturally international according to the pattern of Jewish dispersal from ancient Israel. Now the world at large shares more and more of this way of life. Personally, I would also like to see the new museum opening out to a vista of other diasporas and recognising that, in some essentials, this is a shared experience among many different peoples. Without diminishing the uniqueness of the Jewish story (as if that were possible), there should be room here to consider the diasporas of the Irish, Africans and, dare I say it, Palestinians—all peoples that have found themselves, for economic or other reasons, far from their cultural homes, keeping alive their language, their sense of identity and tradition while living among majority communities that were sometimes indifferent, rarely welcoming and often hostile. In the 20th century they were often to be found in the same poor neighbourhoods as the Jews, on the Lower East Side of Manhattan or in the East End of London.

It may well be that the museum considers this beyond its scope. In 2005 the Israeli Knesset passed a law establishing the museum as the national centre for Jewish communities in Israel and around the world, and that may precisely define its remit. But I don't see that the loving elaboration of one identity precludes engaging with others, particularly as the renewed museum promises to celebrate the multiculturalism of Jewish diversity. A larger vision may yet be disclosed than Jewish exile, persecution, religious fidelity and a final, flamboyant cultural flourishing when eventually the Jews break free from the ghettos and into a golden age of artistic, scientific and intellectual achievement, a vivid sunset at the end of the Diaspora story. Perhaps it will come. The team at work on the renewal have so far only hinted at what they are planning.

It is one of the most traditional presentations in the museum that brings the single true revelation of the visit. My time here has forced me through all the usual complexities and inner conflicts of Jewish identity, a turbulence of familiar thoughts, but this really pulls me out of myself. The gallery is a twilit archipelago of glass display cases containing models of synagogues from around the world, most of them destroyed during the second world war. It is slow going walking from one to the other, peering down to see the miniature details of vanished places. My religious photographer arranges me looking sombrely into each case as I walk around. He backs away and his shutters click. As I stare in at the models, the guide reminds me that many of these synagogues, including the famous Altneuschul in Prague, were built with lowered floors. In another of the abasements forced on Jews by the majority Christian populations, synagogues were not permitted to be built to the same height as churches, hence the sunken floors within. An image of the Diaspora there, for sure: an impoverished, constricted exterior and an expansive inner life.

The model that strikes me most is ablaze with such inner life. It is a replica of the painted ceiling of a Polish wooden synagogue. Hebrew text from the Kabbalistic mystical tradition divides colourful, gorgeous images of nature and fantasy. This, I realise, is the deep culture that produced Bruno Schulz, one of the great Polish modernist writers. His writing is lyrical and impassioned, obsessively elaborating a personal mythology. He also produced deeply unrabbinical visual art that is full of pathos and comedy, magic and eroticism. His work is more and more popular today, celebrated by Aleksandar Hemon, David Grossman, Nicole Krauss and Roberto Bolaño. During the war, he survived longer than he might have because a Gestapo officer employed him to paint a mural in his home. In 1942 another Gestapo officer, who had argued with Schulz’s protector, shot him. At the time of his death, Schulz was working on a novel, now lost, called "The Messiah". This synagogue ceiling is painted with a vision of the Messianic age. Savagery is turned into friendliness, nature into paradise. A bear offers a pineapple. A lion holds a bunch of flowers. It is full of images of outlandish, extravagant hopefulness. There is no fear, no separation.

My visit is not yet over. The photographer isn't happy with some of the shots he got at the start of the tour and he wants to go back and reshoot them. Now, a few more people are wandering among the exhibits. Back at the Arch of Titus frieze, we see some orthodox teenage girls, dressed in long swaying skirts and long-sleeved shirts that ruche up over their wrists. They laugh and talk and walk off. This inspires a thought in the photographer that he struggles to express. "You see the life," he says. "It's not just…" He gestures around. "There is Jewish life. For these girls, you see, not just the old synagogues." I pose again in front of the Roman soldiers looting the ancient temple; he gets the shots he needs. We shake hands and leave. He goes back to the certainties of his religion and I leave with my questions, my happy recognitions, my heavy history and ambivalences.

The museum has a catchy tag line: "You are part of the story." I know I am. But how? My Diaspora identity, to be always asking.

The Museum of the Jewish People is open Sunday, Monday, Tuesday, 10am-4pm; Wednesday and Thursday, 10am-7pm; Sunday 10am-4pm; bh.org.il