"Those who would meanly and coldly forget their old mother could not be expected to be faithful to their young bride." So Senator Carl Schurz, as the first German-born American elected to the US Senate, defended his multiple identities in 1872. What was more, he had a clear response to the canard of "my country, right or wrong": "if right, to be kept right; and if wrong, to be set right."

Such questions of identity, affiliation and assimilation are behind Tim Soutphommasane's intriguing treatise, which urges liberals to support a conception of citizenship in which strangers "share a commitment to and special concern for their country and fellow compatriots". Forget cosmopolitanism; embrace patriotism.

The work adds to a growing literature addressing the conundrum of how to foster national identity in an age of mass migration  the challenge of which is only heightened by radical Islam and the "war on terror". President Sarkozy responded to the threat of multiculturalism by banning the niqab; Australia witnessed the birth of Pauline Hanson's nativist One Nation party; and the UK has had its perpetual symposium on Britishness.

Soutphommasane's book begins with a familiar demand for the left to engage with the virtues of patriotism. George Orwell is invoked, and Soutphommasane then aligns himself with the school of liberal nationalism. For years now, the likes of Michael Lind and David Miller have argued that "liberal goals cannot reliably be achieved except in societies whose members share a common national identity". And that identity is not simply inherited, but rather shaped and reshaped by a process of inclusive, interpretative debate.

However, where Soutphommasane thinks the liberal nationalists have gone wrong is in failing to frame their argument in the language of patriotism and civic virtue. Mind you, not any old patriotism. Soutphommasane is not interested in "constitutional patriotism", which is too transactional in terms of citizenship rights. Nor does he want "republican patriotism", which can elide into blood and soil nationalism.

Instead, he argues for a turn to what Billy Bragg would call progressive patriotism. This conscious celebration of a more cohesive narrative of cultural identity would take place in parliaments, schools, civil bodies and the media. In policy terms, Soutphommasane suggests a hearty focus on the teaching of national history in schools  although this should be carried out in a reasonable rather than emotional way, giving full expression to "emotional generosity" (good luck with that on a Thursday afternoon with Year 10). And when it comes to managed migration, he rightly argues for a policy of acculturation to national culture alongside the accommodation of minority perspectives in public institutions and practices.

It is all sensible stuff. But liberal nationalism with a culturalist turn demands some heavy lifting  a lot of critical dialogues, minimising moral disagreements, and searching for common ground. This patriotism cannot rely on instinct or emotion. And the book itself is not without its challenges. Here is Orwell describing Englishness: "It is somehow bound up with solid breakfasts and gloomy Sundays, smoky towns and winding roads, green fields and red pillar boxes. Moreover it is continuous, it stretches into the future and the past, there is something in it that persists, as in a living creature." Soutphommasane writes: "By replacing 'unconditional' modes of national identification with 'post-conventional' processes of identity-formation, constitutional patriotism brings about the 'rationalisation of collective identities'."

Perhaps an unfair comparison, but it does highlight two criticisms. The first is the lack of particularity: for a thesis so rightly concerned with the intimacies of national identity, this is a broad-brushed work of political science that seeks to impose the policy solutions of Canada and Australia on Britain. In particular, it fails to deal with the issue of welfare and identity in the context of mass migration  the question of migrant need versus indigenous contribution, of diversity versus solidarity.

Secondly, Soutphommasane overlooks the current state of the United Kingdom. Orwell spoke of Englishness as distinct from Britishness. And any question of cultural patriotism needs to be interwoven within our debate about Scottish independence.

That said, this is a worthy contribution to current thinking on liberal nationalism, identity and migration. It marks another welcome rejection of the "community of communities" multiculturalism of the late 1990s, as we rediscover the ties that bind in a liberal polity. And it's encouraging to see that Labour party policy supremo Jon Cruddas has been drawing on Soutphommasane's work in his own meditations on national identity. But Dr Soutphommasane could really do with making his case as punchily as Senator Schurz.

Tristram Hunt is MP for Stoke-on-Trent Central

It is telling that it has been a film-maker who has given us a fresh picture of what it means to be British. When politicians have tried to call up a sense of British identity they have been almost comically inept. Margaret Thatcher premised her market revolution on an image of the country as it might have seen itself in the 1950s, while Tony Blair always seemed to be on the brink of addressing us as fellow Americans. By presenting an inspiring vision of Britain that is rooted in present realities, Danny Boyle has achieved what no politician has yet seriously attempted.

Boyle's magnificent Olympic ceremony has given Labour an opportunity to rethink what positive value national identity might have in Britain today. Labour has never been an anti-patriotic party, but the discomfort of much of the left intelligentsia with the prejudices that often go with patriotism has allowed British identity to be largely defined by the right. Orwell tried to define a patriotism of the left, but that was more than 70 years ago; other, more recent, attempts have proved unsuccessful.

Tim Soutphommasane's defence of multicultural patriotism has been taken up by a number of Ed Miliband's advisers. John Cruddas  Labour's most gifted thinker  was among those who invited Soutphommasane to speak to a policy group during a recent stay in London, when he also met the Labour leader. The 29-year-old Australian is attractive to Labour for several reasons. Born in France of Laotian and Chinese parents, he has none of the baggage that many promoters of patriotism carry with them. Rightly, he sees that nationality is a work in progress rather than a settled condition bequeathed by history. But can his theories be applied in Britain? And do they answer Labour's needs at the present time?

It is hard to avoid having doubts about the exercise. This is hardly the first time Labour has tried to redefine a classic conservative theme and claim ownership of it. Think of Blair, who started wresting law and order from the Tories soon after he became shadow home secretary in 1992. In electoral terms it was a winning strategy, but Blair benefited from an economic bubble. Does it make sense to focus on questions of national identity when the most challenging issues faced by the next Labour government will be those that come with zero or negative growth? Some who are close to the Labour leadership apparently think so.

Academic debates about citizenship and multiculturalism have been going on for a quarter of a century or more. The vast changes that have taken place in the world during that period are significant by their absence from the literature, and in this regard Soutphommasane's study is a standard example of its genre. China is mentioned in the course of a sentence, and Russia and India  two radically contrasting experiments in marrying democracy with nationality  are not discussed at all. The longer history of the type of liberal nationalism that Soutphommasane favours is touched on only in passing. Mazzini is cited briefly, but France  an exemplar of the modern democratic nationalist project  is considered mainly in the context of Sarkozy's problems with the burqa.

Where the book stands out is in its nuanced treatment of liberalism, and it is this that accounts for its relevance in Britain. Soutphommasane is right in thinking that liberal values  however they are defined, which certainly shouldn't only be in terms of market choice  need to be embedded in a shared political culture, with a history and a sense of its own identity. But as he makes clear, the liberal tradition remains the starting point. Over the past few years new currents of thinking have developed that are hostile to liberalism. Wisely, Cameron and Miliband have kept Blue Labour and Red Toryism at a safe distance from any position of influence. Liberalism may have its problems as a universalising theory, but British society  for all its anxieties about crime and immigration  is as deeply liberal as any in the world. A party that turns its back on this fact ceases to be electable.

Soutphommasane is less convincing when he suggests that the nation-state is the sole legitimate vehicle for liberal values. He is aware that national cultures commonly rest on mythic versions of history. "An account of patriotic deliberation would be fatally weakened," he writes, "if it does not address this problem of myth." What is needed, he tells us, is patriotic self-criticism: "In most cases, the repudiation of a national myth would not constitute a repudiation of the national project." It is an unconvincingly formulaic response. Violence and exclusion are not incidental features of nation-building. Pretty well every nation-state in the world has come into being through a process involving war and assaults on minorities. The idea that this history can be peeled away to reveal a "national project" innocent of crime is high-minded self-delusion.

The point has more than historical interest. Reading Soutphommasane, you would not realise that some liberal states have managed quite successfully without having a single, overarching national culture of the sort he advocates. Britain, Canada and Spain are not just multicultural societies. They are also multinational polities. Yet for Soutphommasane nationality seems to be singular by its very nature. He frowns on dual citizenship, writing: "Any need for the expression of multiple cultural affiliations can be done at a level other than that of political membership (that is, within the limits of single-state citizenship)." Reflecting the importance he attaches to the issue, the italics are the author's. But compelling people to adopt a single national identity  however multicultural  is not obviously an advance in liberal values.

This country has been as much shaped by conflict as any other, but the ability to enjoy several national identities is one of the chief advantages of being British today. A new settlement between the country's nationalities should aim to preserve this freedom, not sacrifice it to a theory of nationalism. Insisting that nationality can only be properly accommodated in a single state is unlikely to ease the process. The impact of similar theories in many countries has been to justify secession and promote disintegration.

It may be that this rebooted version of nationalism will go the way of the wisdom of crowds and the social animal  novel-sounding ideas that politicians thirsty for soundbites take up and then just as quickly drop. If so it will be a pity. Multicultural patriotism is the only kind that has a future in Britain, and Soutphommasane raises issues of undoubted importance with which Labour is right to engage. However, unless a Scottish referendum on independence or "devo max" reshapes the political scene before the general election, issues of national identity are not going to be make-or-break territory for Labour any time soon.

The government is floundering because it has run out of options. The much-touted cabinet shuffle has done nothing to improve the situation. Though Cameron may have hoped to head off his party's restive right, demoting Ken Clarke and Baroness Warsi will not appease the neo-Thatcherites who seem bent on a rerun of the Conservative civil war that helped propel Blair into power. Nor will it do anything to diminish the mounting threat to the Tory leader from Boris Johnson. But if the government is reaching a point from which it can no longer recover, the fundamental reason is that it has lost credibility on the economy. With the coalition too fractured and fragile to change direction, Cameron can only hang on in the hope of something turning up. As long as Miliband and Balls can avoid destructive internal wrangles and being distracted by lesser issues, this strategic impotence on the part of the government is Labour's opening to power.

The Olympics have left us with a sense that Britain is one of the better places in which to live. It is a feeling that could soon vanish without trace if the country enters an era of more or less permanent austerity  a realistic scenario that Miliband and his advisers show no sign of having confronted. Their reluctance to address the prospect is understandable, but fine talk of a new patriotism will count for nothing if the next Labour government lacks a strategy for dealing with the shrunken and enfeebled economy it will surely inherit.

 John Gray's The Immortalization Commission is published by Allen Lane.