As an economic model neoliberalism died on 15 September 2008. Alan Greenspan’s words in the subsequent House Committee hearing were prophetic: ‘I found a flaw’, he said: ‘A flaw in the model that I perceived [to be] … a critical functioning structure that defines how the world works… That’s precisely the reason I was shocked, because I’ve been going for 40 years or more with very considerable evidence that it was working exceptionally well’ (October 2008). Neoliberalism told us that the market was self-regulating; that the self-interest of the deal participant was a better policeman than the regulator. It created a dominant finance sector and told that sector to enrich itself – and that sector has now crashed the world economy.

We are left with what Nomura economist Richard Koo calls a ‘balance sheet recession’ – in which fiscal stimulus, zero interest rates and a $6 trillion global money printing operation can only keep the patient alive. The Western elite can’t address this prolonged stagnation because it can’t bear to do any of the things that would end the depression: write off the debts, inflate them away, or step back from globalisation to protect their own populations from its depressive effect on living standards. So they’re left staring at the old model: and not only is the dynamo of it knackered, it is rapidly losing social legitimacy. All attempts to make the old model work without solving the global imbalances on which it rests lead to the policy of austerity: not just fiscal austerity, as in Britain and southern Europe, but a long-term strategy of reducing the wages, welfare benefits and labour rights of the workforce in the West.