What do we want to see emerge from the greatest crisis of capitalism for 70 years? If I had to answer in a single phrase, I would say: new models for a sustainable social market economy. This requires us to change as well as our states.

Capitalism will not end in 2009 as communism ended in 1989. It is too deep-rooted, too diverse and too adaptable to suffer such a sudden death. There are far more varieties of capitalism in the world today than there ever were of communism, and that diversity is one of its strengths. The rainbow reaches from wild west to wild east, and extends to major national variants of a market economy, such as China, that purists would say are not capitalism at all. So some versions of capitalism will weather the storm; others will be left in ruins or at least very substantially transformed.

An extreme "neoliberal" version of the free-market economy, characterised not just by far-reaching deregulation and privatisation but also by a Gordon Gekko greed-is-good ethos – and fully realised in practice only in some areas of Anglo-Saxon and post-communist economies – seems likely to find itself in the latter category. But how about a modernised, reformed version of what postwar German thinkers called the "social market economy"?

Very definitely still a free-market economy, this model nonetheless calls for the state to provide a strong legal and regulatory framework for private enterprise, for the involvement of stakeholders as well as shareholders, an attempt to balance long and short-term considerations in economic decision-making, a national commitment to a social minimum for all citizens, and a strong moral ethos among those involved in business activity. This then needs to be combined with the 21st-century demands for ecological sustainability in the face of climate change, and ethical sustainability, in the face of ­global poverty. A tall order, to be sure.

There's also a question about the balance between the national and the international levels of regulation and governance. Mervyn King, the governor of the Bank of England, has observed that today's big private banks are global in life but national in death. When it comes to the bailout, it's the national government most directly concerned that takes the lead. And that means us, national taxpayers, picking up the bill.

Yet all this talk of states and systems is only half the story. It was the conduct of individual human beings that led us into this mess, and it is the behaviour of individuals as well as the structuring of systems that has to change. This is most flagrantly obvious in the case of bankers, but we should not kid ourselves that it stops with them.

The conduct of the bankers who pitched us into the slurry-pit – not all bankers, of course, but quite a few of them – may not have been illegal but it was selfish, irresponsible and immoral. Year after year, they took huge personal gains for themselves on the basis of assets whose real nature and prospects they either did not understand or cynically ignored. Their pay and bonuses, out of all proportion to the sums almost everyone else was earning in the societies around them, were justified as "performance-related", but "performance" was measured by inadequate indicators over too short a time-frame. Remuneration at the top was based on competitive benchmarking against rivals, and big shots were heard to complain that it was "unfair" that someone else was earning £5m a year while they were earning only £4m a year.

Then they were laughing all the way from the bank. "The City has been kind to me" was the very English euphemism for this baroque process of self-enrichment. Not for the first time, novelists (such as Tom Wolfe) and filmmakers (such as Oliver Stone with his Wall Street, featuring Gekko) were ahead of economists and political scientists in identifying the disorder.

The classic justification for capitalists making large sums of money is the risk they take, but in this case they did not even take the risk. We did. When the bubble burst we, the taxpayers, were left to pick up the bill – and we and our children will be paying it for decades to come. Near where I live in Oxford, vast Victorian mansions have been lavishly restored to single-owner occupancy, with no expense spared. A year ago, I contemplated these mansions with wry amazement, but I naively assumed that their new owners had, in some real sense, earned their neo-aristocratic lifestyles. Now I look at them with something close to anger.

A friend who has spent a lifetime studying the world's poorest economies argues that such bankers should face personal legal consequences for their selfish folly. There should, he suggests, be a crime of bankslaughter, comparable to manslaughter in the sense that you don't have to prove malice aforethought. A wonderful idea but not, I think, practical, or ultimately even desirable – since it would mean violating the fundamental legal principle that something is a crime only if it was illegal at the time you did it. But I do think those directly responsible, such as Sir Fred Goodwin of the Royal Bank of Scotland, should return some of their excessive and undeserved personal gains. And others should put back into society, if only in the form of philanthropy, more of what they have in effect taken from it.

Yet we can't blame it all on them. Every ordinary Brit or American who spent money he or she did not have, encouraged by soaring house prices, lax mortgage lending and seductive advertising, bears a share of the responsibility. So, oddly enough, do the super-frugal Chinese, whose massive savings were recycled to allow – even indirectly to encourage – western profligacy.

More than 30 years ago, Daniel Bell explored in his Cultural Contradictions of Capitalism the paradox that the dynamism of capitalism depends on individuals living by somewhat different values in their personal lives as producer and as consumer. Extending Max Weber's famous argument about the protestant ethic and the spirit of capitalism, he suggested that the production side depends on people harking to values such as hard work, punctuality, discipline and a readiness to accept deferred gratification.

The demand side, by contrast, depends on them being self-indulgent, expansive, pleasure-seeking and given to living in the now. Add to this the new constraint that the planet will not sustain more than 6 billion people enjoying constantly rising living standards achieved by the methods of production and consumption so far used. Complicate matters further by the moral argument that the world's rich have no right to deny the world's poor a materially better life, which would still be a fraction of the affluence we ourselves enjoy.

What you end up with is not just a systemic conundrum but also a personal challenge to every one of us. The challenge is to find a new balance in our double-lives as producers and consumers, at the same time consciously contributing to a larger set of new international balances between economy and environment, oversaving east and overspending west, rich north and poor south. That, too, is what I mean by a sustainable social market economy.