Gordon Brown isn't all about clunking fists and nail-biting dither. A global financial crisis may be misery for the mortgaged masses, but to the Prime Minister it is a golden opportunity to bulldoze the international order and build a new one to his design.

He was getting unusually enthused about this at a weekend gathering of government chiefs from across the globe, roughly aligned in what used to be called the centre-left. At a plush hotel near Watford more often used by footballers and Wags, the idea was to figure out how "progressive governance" should respond to the challenge of "inclusive globalisation". Pointy-heid language, yes, but this matters to citizens of the world because these are the people who want to create, as Brown put it, a New Global New Deal, and also because, if they fail, someone else will get the chance.

This grouping goes back nine years to Washington, when Bill Clinton and Tony Blair summoned their New Left cronies and invented the Third Way. That still-undefined concept was absent in Hertfordshire. So, too, was talk of socialism, the Left or, indeed, Tony Blair. That reflects the colonisation of the centre-right's ground. It also reflects how the so-called progressives are unnerved by no longer knowing where their enemy can be found. Gordon Brown sees the centre-right leaders in Berlin and Paris as allies in his global ambitions, while neo-cons are stuck in an Iraqi tank trap. No, the new enemy of the progressives was declared by the articulate Dutch Labour leader, Wouter Bos: its name is populism. At the last Netherlands election, centre-left and centre-right were outflanked by populists. Bos's social democrats lost a quarter of their seats and they are now junior members in a grand coalition with Christian democrats.

The setback taught him a lesson. In the midst of grand designs for reforming international institutions, here was someone who realised politics must remain local: all the more so if the issues are increasingly global. Bos reckons that while societies are seeing increasing diversity - of people's interests, ethnicity, religion, education - borders become less relevant to economics, migration, domestic policy-making and values. In all, this means the old levers to help build cohesion in society no longer work and are being "replaced by forces that divide rather than unify".

This chimes with Gordon Brown's mantra that billions of Chinese and Indian people are after your job - so you had better get yourself better trained. The impact of globalisation has spooked workers and governments in many countries, making resentment at free trade an issue in this year's US election campaign. And if globalisation is not exporting jobs, it is importing workers, with progressive governors repeatedly tripping over the issue of migrant assimilation, particularly of Muslims. Britain has so far minimised the anti-globalisation backlash, but if house prices are followed south by employment, expect our openness to Johnny Foreigner to get some of the blame. The challenges this throws up include the need to balance the high rewards (sometimes for failure) to capital, with the falling rewards to labour. As Downing Street is being reminded over the abolition of the 10p tax rate, some leftist leaders will have to dust down their old student rhetoric about income and wealth redistribution.

This summit talk was of global issues, each of which presents domestic challenges, and that is where progressives seemed to have little to say. Gordon Brown finds it hard to articulate convincing domestic policy solutions, which makes it all the more interesting when his cabinet colleagues offer some ideas.

Picking up on the challenges of climate change, ageing populations, the demand for more personal choice, less bureaucracy and devolved power, Foreign Secretary David Miliband previewed the Watford gathering with a call for Labour to fuse the traditions of social democracy with radical liberalism: more individual freedom drives equality, he asserted (without explaining how), while the reduction of inequalities should boost liberty.

It is not obvious what he meant when he said Labour's greatest danger is more the absence of conviction than the absence of pragmatism, but you have to suspect it is a message to his boss.

The thinness of these progressive leaders' domestic agenda leaves the field open for populists to exploit, with simplistic and chauvinist solutions. The answer from Wouter Bos is the need for a progressive political language less about state solutions and legislation and more about empathy, identity, trust and security, with a need to be "more moralist".

For progressives, that stuff brings an audible gulp. But you could also hear the penny drop among those planning Labour's campaign. Don't be surprised if you start hearing about Gordon Brown's New Morality.