In a little-noticed document published last Wednesday, the Catholic bishops of England gently point to a route out of the UK's current economic and political troubles. Choosing the Common Good struggled to catch attention because it calls for a renewal of British moral culture on the basis of two ancient but time-worn principles: the common good and civic virtue. Just a few days before the Catholic bishops issued their 10-page summary of Catholic social teaching, Harvard's fashionable Professor Michael Sandel was in London's East End in a workshop with London Citizens, applauding our efforts to secure a living wage, a cap on interest rates and safer streets.

Virtue and the common good are two ideas Sandel is eager to revive. He has led the challenge in recent years to the myth that we enter the public square as unfettered individuals, shorn of other loyalties; and to the lie that the state is neutral in moral matters.

In his wildly popular justice course, and the book accompanying it, Sandel argues that the renewal of our politics depends on taking moral and spiritual concerns seriously, and bringing them to bear on civic concerns. There is a hunger, he says, for a "public life of larger meaning", one that is more capacious and faith-friendly than our liberal individualism envisages. Barack Obama's election campaign exemplified this "new politics", one that does not chase value-laden institutions from the public square but welcomes them on equal terms in a culture hospitable to the disagreements that arise between them.

The Catholic bishops say there are huge reserves of generosity and goodwill in the British people; the question is how to activate these virtues to renew the state and the market – as Obama did. The answer is that both need to be more accountable to "civil society", that place where rooted institutions of the sort that make up London Citizens – churches, mosques, schools, associations, trade union branches – foster civic virtue and the habit of working with others for the common good. The candidates who in this year's election show they get that point will discover that people care about politics after all.

Austen Ivereigh works for London Citizens. His book, 'Faithful Citizens: a practical guide to Catholic social teaching and community organising' (Darton, Longman & Todd) is published later this month. www.londoncitizens.org.uk