Following from my last post, I think it's necessary to explain in a bit more detail what I think was necessary for the individual as a political unit to become current in broader society required.
The basics of it are that it started as basically an elite idea* that was opposed to the increasingly centralized state that began to more frequently use the punishment of expropriation and exile against these elites in the drive towards centralization. These punishments took what was previously hereditary right and property that was tied to a family and expropriated it to the state, to be later converted into private property as the seized lands were sold off (I believe this had something to do with Locke's writing, I never saw in it the fully modern notion of modern private property and see a fairly high degree of communal kinship based thought in his narrative, though with a tendency towards individualism, I think noting these influences is important to understanding Locke, assuming that he means fully modern notions of property and of individualism is something that I think is a misreading of his work). In protest against this, which punished the entire lineage rather than just an individual, the idea of private rights began to take greater hold in elite circles to prevent these kind of intergenerational punishments. This leads eventually to a greater emphasis on imprisonment and execution of individuals rather than full expropriation, or at least I believe it does, my evidence here is admittedly somewhat thin, it's an area I plan to research more eventually (the persistence of these types of punishments in places such as the Hapsburg Empire along with a more personal and patronage links to political power, as opposed to the increasingly impersonal bureaucracies elsewhere in Europe, is a major part of what leads me to think this).
Once this elite idea had taken hold, it was a fairly short step to trying to institutionalize this across the rest of society, which in Europe was already well prepared for this. What is remarkable however is how quickly demands were made for the state to fill in for what was previously provided (such as poor relief, legal courts, law enforcement, etc.) at the village and communal level, either through village and community councils, feudal lords, or other institutions such as guilds. To me, this seems the critical step for institutionalizing the individual as political unit. Where before political identity was always tied to either a patron or to a community, once the state began to supply the security and sense of belonging the individual could flourish separate from his identity as a member of a narrowly circumscribed community based on kinship, place, or occupation. This is the development of the idea of society, which, like individualism, is something we don't really see much of in early political writings, it appears roughly at the same point as individualism (with concepts such as nationalism appearing alongside to drive the process of identity with society).
This is why I refer to individualism and society as two sides of the same coin. They are inseparable concepts. Without a focus on, and allegiance to, a broader society the need for social support and group identification leads to people fracturing back into more primitive groupings such as bands or lineage groups (often in the form of gangs and warlordism, though other forms of self-help organizations not so dedicated to violence can be observed). On the other hand, without the opportunities for gain and social advancement that individualism and markets make possible individuals have little reason to identify strongly with their societies.
This is at the heart of a basic schizophrenia I see in a lot of politics. Ideologues on both the left and right have a tendency to want to form a one sided coin, to either have politics and economics devoted to the betterment of the individual or of society with little attention being paid to the other side. Trying to shave off one of the two faces is impossible, no matter what expedients are used social pressures will always drive the reassertion of the other component, barring expedients strong enough to shatter the coin, breaking society back into its constituent band-like or tribal components. Real political progress is only possible by linking the strengthening of the society as a whole to the additional opportunities this provides to individuals in the long term. Trying to push individual interests at the expense of society is just as destructive as trying to implement social change without explicitly linking this back to how it improves individual lives. What amazes me is that this basic concept seems so infrequently recognize and the emphasis instead placed on an impossible ethic of social responsibility and self-negation (which is more like the kind of band-like or tribal ethic of stasis than it is a modernist political philosophy) or on an ethic of pure individualistic self-help, not recognizing that individual success and merit is impossible without the recognition and participation of society as a whole.
*This reflects of course my current understanding of the subject. It is one I want to learn more about and will confess upfront my limitations in this respect and that what I know about it comes from sources dealing primarily with other issues and the notion of individualism only indirectly. I believe Fukuyama will go into this topic as well later in his book, I believe he attributes it in part at least to Christianity. I am certain this is part of the story, but one I don't know enough about. Certainly the idea of individual salvation had something to do with it, and this was enhanced by the Reformation and the idea that the individual could have a separate relationship with God. I don't know enough about this story to work it into the above narrative, which I regard as incomplete. As I learn more, I may post something updated in the future.