So now we know. The aim of the current modernisation of the monarchy is restoration. It hopes to re-establish the kind of support that the monarchy enjoyed before Diana: an "essential", unifying role at the heart of public life. This was more than mere popularity. Mixing the personal and the impersonal, the Royal Family was a symbol of the nation and a substitute for a democratic constitution. Can Britain return to this peculiar form of royal worship?
The brief answer is an almost certain "No". But to be brief is to miss the point. For the monarchy cannot just fail, as if it were a self-contained piece of machinery, or go bankrupt as if it were a "firm" - that fatal conceit of the Royal Family itself. The monarchy is a relationship: between the people and the Throne and between the Crown and a highly centralised state, to whom it provides a historic legitimacy.
Usually we are reminded of the history in a trivial fashion. The current spin draws upon the British dictionary of received complacency to emphasise how the monarchy is an old dog. It has been unpopular before, for example during Queen Victoria's long retreat from public life after Prince Albert's death. Then it bounced back. It is sure to do so again. Far from providing a reassuring sense of history, this is a vacuous cliche. Barring a British recapture of the Suez Canal, the monarchy can never restore its popularity today as it did in the 19th century.
Speaking at Her Majesty's anniversary last November, Tony Blair compared himself to Benjamin Disraeli. But the latter's coup in making Queen Victoria Empress of India, a key move in the 19th century restoration, rested upon the gigantic achievement of the British state. Victoria and her immediate heirs, though immensely popular, remained relatively remote symbols of an overwhelmingly successful world power. They were the figureheads of an empire state: of its army, navy, colonies and City financiers with their global reach; of its aristocracy, civil servants, judiciary, Church and MPs, all with their domestic authority. No such role or restoration awaits today's Windsors.
Not that they seek it. For they have been the beneficiaries of a different kind of renewal. As empire declined, the monarchy was domesticated. It came to be regarded as fundamental to our way of life, not because it represented a society that worked but as its living memory. For nearly half a century - broadly, from the Blitz to the Divorce - the Royals became a consolation for loss. In the process they were transmogrified into the personification of "ordinary" British people.
William Waldegrave, Fellow of All Souls and one-time Cabinet high-flier, expressed and defended this attitude after the impact of the annus horribilis. "By carrying the symbols of our highest traditions", he argued, "its representatives help us to have a vision of what we should be". For him and millions like him, the monarchy not only symbolised our past and represented us in the present, it also embodied our society and ourselves for the years to come. It was an intense, authentic experience, often linked to military service and its sacrifices.
It was also a remarkable construct, one that was intensely political yet presented itself as emotional - a combination later reproduced by Diana. It appealed to the instinctive and organic. Yet it was also the outcome of high artifice that contrived and shaped public consent. And far from being ancient, the monarchy that rested upon such nostalgic populism was a recent, post-war phenomenon. It is this that Elizabeth II wishes to restore.
Its defining moment was her Coronation in 1953. After it, the Queen then led the cult of the commonwealth as a comforter for the loss of empire. When the public grew restless in the Sixties, the Windsors reinvented themselves, this time as a family. The 1969 TV film of royal domestic life was a riposte to the decade. Other countries might riot against their elders and betters, the British shared vicariously in a picnic with theirs.
A decade later Diana married into the family. Her wedding was a further triumph of the royal ordinary and held promise of its renewal down the generations. But despite, or perhaps because of, the public's acclaim, the family despised her. Her husband and his friends made jokes about their mistresses, whose jewellery they wore. She threw up. They proceeded to make jokes about the waste of food. Separation followed, the fate of the many royal brides.
Instead of accepting retreat into internal exile and alcohol, Diana utilised her media charisma to trade on her position as the mother of the future king. She launched an audacious counter-claim upon the crown. Ever since the Coronation, a majority of the public dreamt that the Queen was "on our side" and even "just like us', as against a callous establishment. In her Panorama interview Diana addressed the people over the head of the Queen. She said that the Royal Family belonged, literally, to the cruel, mendacious and old-fashioned "establishment". Far from the Royals representing "us", it was she, Diana, who genuinely spoke for real, ordinary people. Thus the Princess laid claim to the very linchpin of the monarchy's popular support - as she asserted that she now personified the dream. Then she went on to hint that it would be best if Charles stepped aside to let her son be King, and herself therefore Queen-mother-of-Hearts.
To reinforce her claim Diana dismissed the model of the "bicycling monarchy". This too was code. After all, she drove herself to the gym. What she attacked was precisely the European-style monarchies with their written constitutions that do indeed make royalty relatively ordinary. By rejecting the only indisputably viable form of contemporary monarchy, Diana made it clear that she too aspired to traditional, British sovereignty, just like the Queen.
To furious teeth-grinding of the "firm", Diana's bold assertion appeared to work. It did so because she personified what Tom Nairn termed the glamour of backwardness. She was so much more glamorous than them, of course. But it is crucial to see through the apparent modernity of this. Her dazzling command of the spectacle should not blind us to the retrospective nature of her chic. Charles sought a return to the 19th century. Diana wanted to resurrect a 17th-century style of beloved, healing monarchy that cured the distressed through the laying-on of hands.
A cruel battle followed between the two claims to royalty, escalated by Diana. If Charles supported homoeopathic medicine, she stroked lepers and Aids victims. If the Prince declared the need for organic farming, the Princess declared we had to stop sowing land-mines. If Charles got at Diana by throwing a mega-bash for Camilla's 50th, Diana got back at Camilla as she swallow-dived at St Tropez to prove there was no cellulite on her. Then came the crash.
In the week that followed, tens of millions considered their position. In their fight for the succession, Charles and Diana had implicitly presidentialised the throne as it became a secular object of desire. Their fight tangibly alienated many from the whole royal circus. Not least in Scotland, which became the first region of the kingdom to register a republican majority, however momentarily.
Now Charles, the widower, was in full possession of the sons and the prospect of a further quarter-century of Elizabeth II stretched ahead. Would the majority of ordinary folk wish to default back to dreaming about Her Majesty? Leaving aside the two or three million royal groupies, the tens of millions seemed to decide that there was a bit of Diana in each of them, and that this was the bit that mattered. They kept their respect for the Queen. But they put aside old-style deference. They became loyal citizens instead of loyal subjects.
We do not have contemporary language of citizenship in England to describe this process. Instead, a strangely convoluted royal-speak is still needed to describe what happened at the funeral.
It was not a republican event, nor a media stitch-up, nor an establishment- contrived mobilisation of endorsement for the old regime. Instead, a majority re-appropriated the ordinary back into themselves. A week after Diana was buried, a poll found that three-quarters of the public desired a Dutch- style, or bicycling, monarchy. This was a rejection of the kind of monarchy to which both Diana and the Windsors aspired - and to which the Queen aspires still.
Thus only last week, a Royal insider stated: "Britain has no written constitution. In times of crisis the monarchy stands above politics and it is essential it remains a respected force for good in the future". There is, of course, an alternative. That we write down our constitution. It is this, simple, European measure against which the monarchy has set its face and which its current attempt at modernisation seems dedicated to preventing.
So why shouldn't the Queen succeed? For isn't this how we - or they - have always done things: bending with the winds of change, adapting to the public demand and thus preserving their rule?
There are two kinds of modernisation. There is that which adapts to change, in order to preserve as much of the past as possible; and there is that which itself generates change in order to shape as much of the future as it can. Since 1945 the former has been the British way, the latter the European one - setting out its ambitions and explicitly abandoning old-regime sovereignty.
There is no question as to which is the more successful now that European influence has begun to set the agenda domestically. From devolution in Scotland to the forthcoming abolition of hereditary peers, a non-conservative dynamic will be increasingly hard to prevent. The idea that the old-style monarchy can represent the unifying values of British society in such conditions is improbable.
Which leaves open an intriguing question about the modernisation of the monarchy in the era of New Labour. Evidently, both believe they are acting to their mutual advantage. Nonetheless, democrats can ask: who is serving whom? The answer seems to be that, in contrast to a majority of the people, both the Prime Minister and the Palace have embraced the pseudo-modernity of Diana's glamorous backwardness. If so, we had better brace ourselves for the crash.
Anthony Barnett was the founding director of Charter 88 and is the author of `This Time: Our Constitutional Revolution', Vintage, pounds 6.99