How different things looked in 1900 and 2000. The end of the 19th century was drowned in fin de siècle gloom. The end of the 20th century was, on the contrary, exuberant. President Bush Sr triumphantly announced in 1991 that a "new world order" was coming into view in which "the principles of justice and fair play will protect the weak against the strong [and] freedom and humanity will find a home among nations … Enduring peace must be our mission." As the world was entering a new century of supposed peace and prosperity, I was hitting my half-century, a point of some pride and much foreboding. Melancholic retrospection and hopeful planning was the order of the day – for the world and me.

Globalisation, neoliberal economics and humanitarian cosmopolitanism were the contours of the new age. Economic interdependence, global communications, free trade, population and capital flows were bringing the world together, undermining the omnipotence of sovereignty and nation-state. A global civil society of multinational corporations, as well as international and non-governmental organisations, were to create the transnational solidarities necessary to protect against global risks.

Globalisation went hand in hand with the rise of neoliberal capitalism. The WTO and IMF imposed globally a model euphemistically known as the Washington consensus: pressure was put on developing states to deregulate and open their financial sector, privatise utilities and reduce welfare spending. These policies would, it was argued, unleash the economic potential of the developing world, hitherto blocked by inefficiency, corruption and socialism.

In the absence of a blueprint for this new arrangement, cosmopolitanism, a Greek philosophical idea revived by Kant in the 18th century and Kelsen and Habermas in the 20th, was presented as the world's destiny. Cosmopolitanism is globalisation with a human face. It promises a morally guided legal and institutional framework, the weakening if not abolition of the state form, and the strengthening of international institutions and civil society.

Iraq and Afghanistan were the last wars before this pending union of humankind. The end of history was therefore the triumph of historicism: nothing outside or beyond the dominant order could be used to criticise or resist it. Cosmopolitanism – bound by international law and human rights – was apparently here to stay; its principles could no longer be challenged. The only task left to politics was redistributions of power and wealth at the margins.

This was the great utopia at the end of the 20th century, a liberal fantasy as comprehensive as anything Christianity or Marxism had ever imagined. Embarrassingly, despite routine denunciations, it was accepted by people on the liberal left, like me. If the world cannot be changed, the argument went, the left should concentrate on small-scale projects, moral concerns and the protection of vulnerable identities. Multiculturalism could replace radical change, membership of Amnesty that of political organisations.

At the end of the first decade of the millennium, every aspect of this fantasy has been reversed. If this was a new world order, it was the shortest in history. "New deadly challenges have emerged from rogue states and terrorists," wrote Bush Jr in 2002, 10 years after his father's announcement. "We will not hesitate to act alone, if necessary, to exercise our right of self-defence by acting pre-emptively." Enduring peace became perpetual war. History returned with a vengeance.

Let me mention the recent signs of this "bonfire of falsities": 1. The Iraq and Afghanistan wars have left a bitter taste of political and moral decadence. The continuous shifting of the ground for war (from self-defence against terrorists to the threat of WMD to humanitarianism, regime change and, with Obama, just war) has revealed a hegemonic power intent on war at all costs but uninterested in its legality or legitimacy despite the cosmopolitan rhetoric. Military might and technological brilliance, the signs of brutal sovereignty, have fully returned but are proving impotent against low technology and strong ideology.

2. The promise that market-led growth based on unregulated foreign investment and fiscal austerity would inexorably lead the global South to western economic standards has come to be seen as the greatest deception of our times. The gap between the North and the South, and between rich and poor, has never been greater. More than a billion people live on less than $1 a day. According to a 2006 UN report, average life in sub-Saharan Africa is less than half that in Northern Europe. Instead of equalising, globalised capitalism has led to the "bottom billion". The beginning of the end of neoliberal idolatry can be timed accurately: 15 September 2008 and the demise of Lehman Brothers. Greedy banks, conniving governments and economic "science", the witch medicine of our age, are still in mourning but reality has caught up with their convenient fantasies.

3. The former socialist countries moved fast from command economies to klepto-capitalism and from state oppression to market decadence without passing through a humane social and political order. The western panacea has been found inappropriate for many people at the heart of Europe.

4. Until recently, the western consensus was that torture takes place in exotic and evil places. This consensus has now dissolved. Torture returned to western camps and prisons, to Guatánamo Bay and Abu Ghraib, and has been extensively outsourced. It has become a respectable topic for "practical ethics" and jurisprudence conferences, where the "ticking bomb" hypothetical offers legitimacy and reveals the ugly underbelly of this new world order.

5. Old Europe, the willing minor partner in the cosmopolitan plans, has become seriously ill. Liberalism and social democracy, the proud social models it created, have atrophied as they converged towards the economics and politics of neoliberalism. The European Union has been emptied of political imagination and institutional will, as the sad shenanigans over the referendums and the Lisbon treaty attest. The current travails of Greece, Spain and Ireland are further evidence. The downgrading of Greece's credit rating by three unaccountable private companies which follow neoliberal orthodoxy is leading to externally imposed austerity, serious deterioration of living conditions and social unrest. These were the companies giving Lehman Brothers a top rating just before its collapse.

The response of governments to the end of neoliberal hegemony is still timid and uncertain. But people around the world have started reacting, as strikes in France, Greece and India, the Latin American popular movements and the reaction of youth to ecological catastrophe indicate. The great monotheistic religions have taught us that the messiah and the angel of history do not send a party invitation before arriving. Their lesson is invaluable. The return of history means that we can believe again in radical change even if we do not know when or how it will happen. The 21st century brings the age of western empires and cosmopolitanisms to closure.

The left is the main hope against an endgame of xenophobic, securitised, apocalyptic barbarism. But this is not the New Labour or German SPD nominal "left" nor that of departed "communism". New forms of socialism, new types of political subjectivity and solidarity are emerging in Latin America, in the ecological movement and in the ghettoes of our great cities. What the decade taught me was to expect radical change and to try to imagine a renewed socialism in which freedom cannot flourish without equality and equality does not exist without freedom. The new decade's resolution: one should become more radical as one grows older alongside the 21st century.