This is the age of the zombie. The undead maraud around our popular culture. Stick on the telly, and they’re attacking Jon Snow in Game of Thrones. At the cinema, reanimated carcasses lurch through everything from Resident Evil to World War Z. The headlines might burst with blundering boastful strongmen, but our nightmares are full of blank-eyed walking corpses.

Unthinking, unquestioning, neither alive nor dead, the zombie is horrific. It is also us.

Britain in 2018 is stalked by zombie ideas, zombie politicians, zombie institutions – stripped of credibility and authority, yet somehow still presiding over our lives. Nowhere is this more true than in the way we run our economy.

This September marks the 10th anniversary of the death of Lehman Brothers. In autumn 2008, the banks broke, the governments stepped in – and the cast-iron premises that underpin our economic system were exposed as fiction for all to see on the Ten O’Clock News. Yet a decade later, those dead ideas still walk among us.

They form what John Quiggin at the University of Queensland terms zombie economics – dogmas now cracked beyond repair, but which continue to shape British society.

Austerity – the policy that more than any other will define this decade – was lifted by George Osborne straight out of Margaret Thatcher’s handbag. He justified it with zombie rhetoric about how business was being “crowded out” by childcare centres and the rest of the public sector, and how 21st-century sovereign countries could be run just like household budgets. Tax cuts for “wealth creators” and privatisations of the few remaining national assets: all utter zombie-ism.

Quick Guide What is austerity? Show What is austerity? Austerity is how governments across Europe – from the UK to Greece – tried to clear the overdrafts, or deficits, they racked up in the wake of the great financial crisis. How did governments try to achieve this? Their strategy was two-fold. First, cut spending on the public sector, on wages, for instance, or on social security. Second, raise revenue through higher taxes and selling state assets. Greece, for instance, has sold its airports in Corfu and Santorini, among others, to a German company. What was their reasoning? Proponents made a variety of arguments for this strategy. It was said that governments had spent too much money, that everyone needed to tighten their belts. The UK’s then-chancellor, George Osborne, claimed that the public sector was "crowding out" the private sector, taking resources and workers away from businesses. Particularly influential was a paper by two US-based economists, Ken Rogoff and Carmen Reinhart, arguing that once a country’s total public borrowing rose above 90% of its national income, or GDP, growth would slow sharply. Did austerity get unanimous backing? Critics argued that austerity would stop economies recovering from the shock of the banking meltdown and would make teachers and nurses and people with disabilities pay for the excesses of bankers and chief executives. In his book Austerity: The History of a Dangerous Idea, political economist Mark Blyth showed that austerity had been tried before in the 20th century – everywhere from Weimar Germany to 1930s America – and failed, often with politically disastrous consequences.

And this was no one-party game. Labour frontbenchers from Andy Burnham to Chuka Umunna spent the first half of this decade pleading guilty to the trumped-up charge of creating a debt crisis. Labour councils are among those pursuing outrageous privatisations. And over the past four decades both sides have adopted as an article of faith the idea that politics is about What Works – and that What Works is a mix of Potemkin markets and crude managerialism. From Tony Blair to David Cameron and Nick Clegg, politics was no longer about left battling right – but technocrats and open-necked Oxford philosophy, politics and economics graduate special advisers who “got it” versus the dinosaurs and well-meaning naifs.

In this way, a broken economy has been force-fed more of the same ideas that helped to break it. The outcome has been almost predictably dire.

The weakest recovery in three centuries, according to former Bank of England rate-setter Danny Blanchflower. The severest squeeze on living standards since the Napoleonic wars, going by the Resolution Foundation’s projections. And the deadline to clear the government overdraft – the ostensible alibi for this entire fiasco – has been pushed back and back, from 2015 to 2031.

The nurse at the food bank, the council employee in a homeless shelter: these political actors are new

One lesson of the 1930s and the 1970s is that when capitalism fails this badly, it jeopardises the very functioning of democracy. So it is starting to prove today.

Cameron and Osborne led the establishment in campaigning against Brexit, but it was their austerity that drove voters towards it. The areas hardest hit by the Tories’ benefit cuts, according to economists Steve Fothergill and Christina Beatty at Sheffield Hallam University, were “older industrial areas, less prosperous seaside towns, some London boroughs”. Which is to say, a good half of Brexitland.

Similarly, the minority government that Theresa May tries to run has no chance of again becoming “strong and stable” while the average worker is earning less than they were a decade ago. No poll, no byelection in 2018 will determine the Tories’ standing and political stability as starkly as this one economic fact: the link between growing GDP and rising weekly wages has been severed, for what the Institute for Public Policy Research calculates is the first time in recorded history.

At the heart of modern capitalism is a promise: work hard and you will get on. Britain’s political classes can no longer keep that promise, and the consequences of that take us into politically uncharted territory.

The student radical, the frustrated lawyer: these are the eternal faces of political dissent. Social upheaval has always been initiated by the young and angry. But the nurse at the food bank, the council employee in a homeless shelter: these political actors are new and we don’t know what script they will follow.

Of Philip II of Spain it was said: “No experience of the failure of his policy could shake his belief in its essential excellence.” Not so Theresa May. Her team bears none of the blithely cynical cockiness of Cameron’s mob. They merely serve voters the same old failed policies because they have run out of both ideas and parliamentary muscle.

Now the prime minister rails against “burning injustices”, while doing nothing meaningful about them. And to watch chancellor Philip Hammond or Bank of England governor Mark Carney as they defend their latest damp squib is to glimpse members of the elite who reek of exhaustion, having riffled through all the pages in their textbooks without getting a good answer. Record-low interest rates; £435bn pumped into financial markets through quantitative easing; tens of millions chucked at corporations, the rich and property developers: none of these policies have delivered what their authors promised.

‘We’ll meet councillors extending local government far beyond collecting the bins; housing activists turning themselves into property developers; and energy bosses who actually ask customers how their companies should be run.’ Illustration by Eleanor Shakespeare.

And so British politics has reached the deepest state of zombie-ism: a zombie minority government, implementing zombie economics, underpinned by zombie ideas.

Meanwhile, the economy gets ever more broken. Britain has both the world’s leading financial centre and proportionately lower corporate investment than any of our major competitors. London boasts more billionaires than any other city in the world, yet one in five of the country’s workers earn less than a living wage. While Westminster politicians bang on about devolution, the regional wealth gap in the UK is bigger than in any other member of the EU. Milan and Naples; Frankfurt and Dresden; Bucharest and Transylvania: none of them are as far apart as stucco-fronted west London and the Welsh valleys.

And if you want a tale of misplaced priorities, try this one: Amazon, Facebook, Apple, eBay and Starbucks put together pay less in tax to the British exchequer than the five biggest cooperatives – including such titans as Arla Foods. Yet it’s the Silicon Valley giants who are feted by ministers and given public money. The taxpayer even paid for the roads laid to Amazon’s Swansea warehouse.

So at just the point when alternatives are in greatest demand, where is the left? Still on the subs’ bench. Labour’s former leader Ed Miliband was an astute critic of the rottenness of capitalism. Jeremy Corbyn is the first party chief to promise to end austerity and kickstart a major public-works programme. But when asked what Labour would do to tackle Britain’s fundamental problems, Corbyn and John McDonnell struggle.

The same goes for academia, pressure groups and thinktanks. With Britain already having suffered one lost decade, a murmuring catastrophism has set in among our intellectuals. Mainstream-left politics remains stuck between two cliches. Either: well, we used to do things differently (cue sepia-tinted nostalgia for the establishment of the NHS and huge public borrowing). Or: the Germans do it, and it’s done them no harm (along with wistfulness for a proper industrial policy).

This is totally understandable; but utterly ruinous. Forty years ago, Thatcher gravely intoned that There Is No Alternative – then set about bulldozing the institutions that might incubate anything of the sort. Her political children have carried on the job.

Now the unions are withered; the universities are hamster wheels; the regional business elites have been bought out by the City spivs; the councils are dumbwaiters for Whitehall’s cuts; the independent tenants’ associations have gone the way of council-housing stock; the BBC is for ever on the back foot; and local and regional newspapers are at death’s door.

‘In 21st-century Britain, where politicians and pundits prattle on about robots and artificial intelligence, it’s the basics of economic life that are most political. Things such as housing, work, food supply.’ Illustration by Eleanor Shakespeare

But despair is a luxury good – and it’s not one we can afford right now. If people on the left don’t put forward serious, workable alternatives to the busted British model, the tousle-haired public schoolboys of the Brexit-braying hard right will fill the vacuum with their toxic delusions. Fewer workers’ rights! More tax cuts! Make jingoism great again!

In my reporting for this paper, one of the strongest themes is of communities, discarded by the market and disregarded by the state, trying to work out their own answers to the big questions. Questions such as: where will we live? How shall we heat our homes?

In 21st-century Britain, where politicians and pundits prattle on about robots and artificial intelligence, it’s the basics of economic life that are most political. Things such as housing, work, food supply. It’s those subjects and that seam – outside the big, often-punitive state and the global, short-termist market – that we must mine first.

And that’s where this new series will focus. Every other Wednesday, I’ll investigate real-world examples of people doing things differently. We’ll meet councillors who are extending local government far beyond collecting the bins; housing activists turning themselves into property developers; and energy bosses who actually ask customers how their companies should be run. Much of the reporting will be from Britain, but we’ll also look at other parts of Europe (including Germany) and further afield.

Stack them all together and the grand lie of Thatcherism is exposed. There are alternatives. We can do things differently.

None of the ideas in this series were dreamed up by some prodigy floating on a lotus leaf down from ivory towers. None are wrinkle-free. Their authors are real people, working within real constraints, who often struggle with a dysfunctional banking system or unhelpful national policies. As well as exploring the possibilities, we’ll be honest about their limitations.

But now is the time for experiments and arguments. To reacquaint our economy with the concept of democracy. To, finally, slay those zombies.

Glossary

Austerity The belief that by cutting spending and raising taxes you can eliminate government borrowing

Crowding out The belief that the public sector sucks up finances and workers that could otherwise go to businesses

Debt The total sum of all the borrowing taken by the state over the years

Deficit The overspend racked up by the government when it spends more than it receives in taxes

• Aditya Chakrabortty is a Guardian columnist