Violence and unfettered capitalism are destabilising the world.
Fascism is back on the streets, clawing at minorities with bloody nails. The biggest danger, however, comes not from the sad, sick outcasts who are sniping at society from the gutter. There are three threats: street fascism, state fascism and the fascism of credal fanatics. The first is the feeblest. Its recrudescence ought to alert us to the menace of the others.

If we want to contain fascism we have to begin by recognising it for what it is: not just the delusion of a lunatic fringe, but a habit bred by the kind of societies we live in. It is a way of feeling and doing: you know it by the smell of its fear, the stamp of its heel. It cannot be countered by rational argument or repressed by force. Like the dinosaurs, it dies only when the environment changes - the economic climate, the moral ecology. It starts on fringes and in slums but does not stop there: that is how it grew, historically, after the First World War, among demobbed soldiers and victims of recession. A generation later it almost took over the world. Now the same transformation could happen again.

Fascist political strategy works by making disorder worse and cashing in on the reaction. The "white wolves" slaver at the prospect of heavy- handed policing and an over-responsive press. At every bombing, officious bobbies force bystanders off the streets and oblige innocent businesses to close, while newscasters sow fear and advertise violence. Street fascism is not like ordinary thuggery. Instead of the buzz of local notoriety, the gangs are secret. Instead of the thrill of face-to-face terror, they long to be universally feared. This is an important distinction: if fascist cells were like other hoodlums, who flash their savagery and swagger through their neighbourhoods, they would be caught at once. Everyday gang violence has to be brazen to be effective. The bomb kit, however, empowers political hooliganism with a method which is more sly and satisfying to its practitioners.

Furtive hooliganism has the potential to take power through the momentum of terror. The Irish experience shows how effective criminal talents can be in a political cause. The mobsters of the IRA fouled the streets with fear and the Government and security agencies over-reacted in the classic way. The thugs proved that violence could change the way the country was run. They began their job in a laborious way: killing their hate figures, members of the "Prod" elite. They have been able to expand into more effective ways of hurting their enemies: wrenching away their power, savaging their pride and threatening their identity. The fascists in mainland Britain have smaller, cheaper weapons than their Irish exemplars: but all terror- groups start small. Nowadays, an arsenal of everything from poison gas, through Kalashnikovs to homemade atom-bombs, is little more than a mouse- click away.

Compared with the world's successful terrorists, the nail-bombers have a narrow "sea of support" to swim in: but no one should underestimate the potential of racism to mobilise masses, or the power of envy to arouse the poor. Elite opinion hurries our society towards multi-culturalism and moral relativism: stragglers are left, resenting blacks and Asians, mistrusting "alternative lifestyles" and misunderstanding gays. At present, in most of the pluralist West, we are trying to construct just societies by privileging some of the deprived at the expense of the rest. This is creating a constituency for fascism.

So is our economic system. Every time we let the wealth gap widen, we alienate more of the poor, and accelerate the politics of the down escalator. The macro-economic lurches of capitalism elbow losers off the sidewalk. If we want fewer fascists, we must have fewer human failures: les enrages hate society, or select victims for hatred, not usually because they are naturally vicious but because they crave success. In fascist gangs, scum rises to the surface, but we have to recognise that a lot of misdirected, unrecognised and under-exploited talent finds a home in extremist groups.

The fascism of the white underclass is only a small part of the problem. Fascism is not just a white vice: you can and do have black fascists and Islamic fascists. Nor is it just a secular perversion: religious fundamentalism has much in common with it and can edge into it. The "classic" fascism of the pre-war world has been mistaken as anti-religious. Nazis denounced traditional religion precisely because they were in competition with it. Nazism was a new paganism which worshipped blood and soil, a new liturgy with its rituals and chants, a new mysticism with its racial avatars, a new millenniarism with its prophecies of a 1,000-year Reich. Japanese militarism expressed itself in the language of Shinto, with appeals to the sun-goddess and imperial divinity. Franco in Spain showed that fascists and religious traditionalists could be crowded into the same cause. Peron in Argentina combined the rhetorics of fascism and social Catholicism: the voters never spotted the contradictions. Some of the most threatening forms of quasi-fascism today are sanctified by ayatollahs and tele-presbyters. Radical Protestant sects in the "moral majority" proclaim gospels of social discipline and moral uniformity. Some of them supply armed militias or mobilise voters for the extreme right. Like fascism, fundamentalism demands a closed mind and the suspension of critical faculties. It attracts the desperate and the dim. The huge allegiances it commands are proof of the strength of revulsion from moral chaos. When fundamentalists get power, they usually use it to persecute everybody else.

Nor is fascism just a movement of the socially excluded: the biggest threat today is "institutionalised fascism": the "law and order" current in the political mainstream, governments' lust to manipulate opinion, and the state-sponsored or state-exploited rise of nationalism, which feeds on inter-communal hatred. Inside successful democrats, demagogues itch to get out. The moral effects of modern progress have been disappointing. The liberal analysis, which blames barbarism on misery, has been challenged by pessimists who regard human nature as incorrigible. A powerful wave of conservative social philosophers has made us aware of how little politically engineered change can do for society. The most widely familiar form of the debate is trivial: sterile political cross-banter about whether unemployment is responsible for crime and whether the underclass is genetically doomed. At a deeper level, however, the drift of opinion has dangerous implications. Those who begin by deprecating change may end by indicting it. When we lose faith in freedom, we may get fascism instead.

At some levels of government policy- making, we are getting it already. Fascists maintain that violence in the people's interest need not be constrained by law: Nato says the same thing about Kosovo. Whether the blasts are made by smart bombs over Serbia or nail-bags in Brick Lane, you can hear the same evil echoing in the explosions. Every time Jamie Shea goes on the air or Blair and Clinton moralise about their bombs, the gutter-fascists get a lesson in how to justify violence. We already victimise the vulnerable. Refugees are locked out, asylum-seekers locked up, innocent mental patients restrained. Embryos, for extermination and experiment, are the "persecuted minority" of legislatively licensed inhumanity. The sanctity of life, a principle which is our best protection against the ultimate tyranny of the all-powerful state, is widely despised; for human life is regulated by laws of supply and demand, and is cheapened by glut. When we stop striving for life, we license to kill. Looking back from a violent future, the massacre of undesirables will be seen to have started in our own times with the unborn, the elderly, the afflicted and the terminally ill. Death is an attractively cheap way of disposing of the criminal, the unconforming and the otherwise unwanted.

The authoritarian right will start the new millennium with a near-monopoly of moral absolutism. It will have the advantage of the appeal of certainty in an uncertain world. In Europe and North America, political toughs are prospering from public anguish over insecurity in the streets. Copybook- conditions for a fascist revival exist all over the world: frustrated nationalisms, corrupt economies, deracinated populations, discredited ideologies, impover- ished classes. Even in more privileged countries, we depend for survival on rapid revolutions in values and on a pace of change forced by breakneck technology. This is unsettling to most people and bewildering to many. Our complex societies struggle to cope with rising expectations, gigantic and intractable collective projects, and gooseflesh-fears of crime and violence. In these circumstances, it is tempting to predict what will happen: order and social control come to be more highly valued than freedom. Baffling demographic imbalances, unfamiliar ethnic mixtures and terrifying external threats encourage people to turn to "noisy little men" with loud solutions - which include "final solutions". In recoil from the problems of pluralism, people demand uniformity. Trapped in "future shock" by the fear of unprecedented, uncontrollable change, voters reach for deadly certainties, "men of destiny" and prophets of order. A crash programme to a worldly utopia leaves bodies strewn in the streets. We have constructed our society with spaces for fascist cells. We have encouraged the bombers. Now we have to start sweeping up the shrapnel and soaking up the blood: we shall be doing so for a long time.

Felipe Fernndez-Armesto's book 'Millennium' is being made into a television series for CNN and BBC.