The Killer Next Door : THE LIBERTY CAMPAIGN, <i> By Jonathan Dee (Doubleday: $22; 272 pp.)</i>

In his acclaimed first novel, “The Lover of History,” Jonathan Dee explored the societal dilemmas facing the After-Boomers in the twilight of the American Century. In “The Liberty Campaign,” his superb second outing, Dee focuses on the ethical consequences of politically correct Newthink: our modern moral paradox.

The main character and narrator, 64-year-old Gene Trowbridge, is a Rockwellian prototype; an easygoing, reflective fellow whose life seems pleasantly innocuous. As a soon-to-pasture Madison Avenue adman, Gene’s chores are reduced to a farewell tour of long lunches with clients and colleagues. He takes solace that his lameduck work status is tempered by the reflected fame of a son who pitches for the Atlanta Braves.

The story begins on Independence Day, when Gene’s holiday ritual is interrupted by a snooping house hunter, who implies there’s something amiss with Albert Ferdinand, the reclusive bachelor living down the block. Gene’s response is good-neighborhood paranoid; he threatens to call the police. Only then does the quidnunc reveal he’s an investigative reporter for the Long Island daily paper, Newsday.

With his dormant sense of indignation whetted, Gene undertakes his own inquiry. He monitors the enigmatic Ferdinand’s routines, and accordingly adjusts his own nightly constitutionals to force “chance” encounters. Ferdinand proves to be urbane, intelligent, witty and, much to Gene’s surprise, a potential buddy. Clearly some sort of journalistic mistaken identity has occurred.

The Newsday expose runs six weeks later. It alleges that the quiet neighbor is in fact one Captain da Silva, a notorious Brazilian torturer and executioner, an illegal alien who’s been hiding Stateside for over 30 years. Within hours, the neighborhood is teeming with television remote trucks, vying for space with police vans and local busybodies. Ferdinand is under virtual media house arrest.

Indignant as only a WASP can be at the allegations, Gene contacts the obnoxious reporter, who sends him the files from Brazilian and American civil-rights activists documenting Da Silva’s “crimes against humanity.”

As the electronic media interest dissipates--and to the chagrin of his wife, Ellie--Gene quietly takes up the rapprochement with his new friend. He must know the real story. After a fortnight of stonewalling, Ferdinand concedes the newspaper article contains some truths.

Over the fall months, Gene’s moral doldrums are whipped into a mental whirlwind as Ferdinand/Da Silva bares his heart and mind. Ferdinand has no idea that Gene has seen the documents to be used in court. He insists that whatever sins he committed in the war against Communism are a private matter “between me and my God.”

Ferdinand is a figure of dignified pathos as he prepares for human retribution and divine redemption. For Gene, his self-ordained and two-faced role of father confessor just adds to his ethical confusion; he’s a “morally underdeveloped” man bewildered by this world of fanatics who torture, and die, for their beliefs.

As the authorities and human-rights activists close in, Ferdinand appeals to his friend for help--but Gene finds himself paralyzed, unable to act. The innocent-American narrator must make ethical decisions he is utterly unequipped for. The novel’s outcome is resolved without melodrama but with convincing inevitability.

In Gene, Dee has invented a narrator with whom most readers will empathize, and placed him in a situation that is simultaneously real and surreal. His assured use of an older man’s voice, and his mastery of its somber tone, is every bit as mesmerizing as Kazuo Ishiguro’s achievement in “The Remains of the Day.”

That so quiescent a book can contain such a moral minefield is a tribute to Dee’s superb storytelling skill. His trenchant reflection on the influence of advertising in American life and some poignant and deeply pondered passages on aging result in a novel that makes for totally compelling reading. With “The Liberty Campaign,” Jonathan Dee delivers a sublime and inventive tour de force.