In this respect it reminds me of the situation in the early 1970s. After the Second World War there was a well established consensus about how to run the economy. It was based on Keynsian economics and it consisted of the belief that you need a free market economy but the state should manage and improve the free market because it doesn't do everything well. So the generation that emerged from the war used the power of government to build roads, houses, universities and hospitals. It also consciously increased spending whenever there was a threat of a 1930s style slump and aimed to cut back on spending whenever inflation increased. The result was highly successful economic growth, low inflation, very low unemployment and the establishment of a strong welfare net. Unemployment in the UK for instance was below 500,000 for the vast majority of this period, often going down to levels like 2%.
But then around 1970 it all started to go wrong and a lot of people have struggled to understand why. For me there were two prime reasons. Firstly a lot more economies became a lot more international, not least because of a heavy dependence on imported oil from the Middle East. This made it hard to boost an economy. If you print money to put your own people to work then you don't get inflation because they have made products and services which they can then spend that money on. If you print money and it is spent on Japanese televisions and Saudi Oil then you get inflation without bringing unemployment down. So individual governments found it much harder to manage their economies and inflation in the UK rose to 27% and unemployment eventually reached 3 million.
The second problem was that the state had tried to do too many things that it wasn't good at and the free market genuinely does do better. That began to produce a drag on the economy. The left really struggled to analyse either of these problems properly. As a result Thatcher and Reagan dominated intellectually and some of what they did to deal with too much being run by the state actually worked. For example a state run British Telecoms offered us landline telephones. A de-regulated telecommunications sector combined with a technology boom linked to the emergence of powerful computers created mobile phones, laptops and a video games industry. Technology didn't wipe out jobs - it changed them and it created them.
So a bit of extra free market was actually very healthy for the country. What wasn't healthy in the long run was the way the conviction grew that it is only the free market that can do anything well. There are still things it does very badly. Like regulate and control the banking system. Thatcher removed far too many of the state controls over banking and introduced a culture that allowed individual bankers to bet billions on financial products that were so complex that they didn't even know what they were buying. The extreme freedom that the financial market was permitted came desperately close to destroying the entire financial system and driving us all into dire poverty.
Intellectually the right have no explanation for this. They have been brought up in an era where the solution to every problem was to de-regulate and to reduce the size of the state. How can they even begin to analyse a problem which was caused by an absence of regulations and a weak state? Free market ideology has over-reached itself very badly. Too much of the free market got out of control. A huge failure of private sector banking regulation was the clear trigger of the 2008 crisis. The dramatic slowdown that followed then caused a problem over government finances. Recession caused a slow-down in tax receipts - not least from the banking sector - and an increase in benefit payments to those out of work.
Struggling with this problem has been the dominant issue since the crisis. Since the right don't understand the cause they can only offer solutions to the symptom. They believe that making cuts in the government budget and asking banks to keep higher reserves will get us back on track and it will all be OK. But what if there is a more fundamental problem. What if an out of control world economy has a tendency to wild booms and busts and it is a matter of time before the next one comes along? When finance can move across the world in milliseconds markets can easily panic. Predicting the next panic isn't easy. I would go for US balance of payments problems or Chinese capital movements but will probably be wrong. Predicting that there will be another panic and that the world economy is in a very fragile state to deal is, however, a pretty safe bet. Or rather we are all placing a very large bet on it not happening and are facing a horrible situation if the bet loses.
What is needed to get us out of this mess is to use the best of the post war Keynsian methods and the best of the free market approach. Keynsian demand management worked very well when we had nation states - so now that we have a world economy it needs managing internationally. We have some of the early tools for this - we just aren't using them very well. For example one of the reasons the world economy didn't collapse in 2008 was a conscious co-ordinated effort by national banks from across the world to make money freely available. They drove down interest rates to nearly zero and have held them there for 7 years. And they also printed truly astonishing amounts of money. In the UK £375,000,000,000 of money has been pumped into the economy. This action by the Bank of England dwarfed the government's austerity programme and is the reason why we have a growing economy. In the US there was under $1,000 billion of money in circulation before Quantitative Easing. Afterwards there was $4,000 billion. No inflation resulted from printing this money because it was done to counteract a downturn. The intervention of the state resulted in a rapid recovery of the economy. The state saved the private sector from disaster.
The world needs to apply such policies more consistently and to adopt co-ordinated economic action more coherently. We also need co-ordinated action on a whole series of other problems - not least the environment and on issues of war and peace. It is of course extremely difficult to achieve such co-ordination but it is not impossible. Essentially we have entered a new period of economic history. Either we will move forward into a world which has increasingly effective international economic management or countries will compete with each other to cut their costs and succeed in driving the world economy back into recession.
And our government's response to this challenge? To hold a referendum on pulling us out of the EU, to roll back the state and to tell the banks that their problems are all over now and they can get back to business. It is just possible that this approach might not be quite as successful as they hope!