When I was a teenager in Dublin in the early 1970s, the phrase “We’re into Europe!” gained a peculiar currency. It was half-jokey but not really sardonic. You used it for good things that promised even better things – when a girl you fancied smiled at you or your team scored the first goal.

It came from what was (in retrospect quite amazingly) a popular TV show called Into Europe that the state broadcaster put on to educate the populace of a peripheral nation that was going to join the European Economic Community in 1973. I remember documentaries about farm consolidation in Denmark or students sitting around some castle in Germany discussing “What does it mean to be European?” It seemed terribly exciting that we, too, would soon be able to discuss that question with the same earnest enthusiasm. We were into Europe.

But what did “Europe” mean in this sense? It was not a physical place. Ireland had, after all, always been part of Europe. And the EEC was not, in any case, Europe – it was a small fraction of the continent. But it wasn’t a mere set of trading and institutional arrangements either. It was a story, an imaginative fiction of the kind that Yuval Noah Harari evokes in his book Sapiens: A Brief History of Humankind. He makes the point that the capacity to believe in fictional constructs is a defining element of what makes us human, because without it we cannot co-operate with people we do not know: “At the heart of our mass co-operation networks, you will always find fictional stories that exist only in people’s collective imagination... There are no gods, no nations, no money and no human rights, except in our collective imagination.”

One of these enabling fictions is “Europe”. It is a story that most of the central and western nations of the continent agreed to tell themselves and each other in order to deal with the legacies of the second world war and the cold war. And like all stories, it sustained itself, if not exactly with belief, then at least with a willing suspension of disbelief. The question now is whether it still exists at all, whether “Europe” has lost its hold on our collective imagination. All the evidence suggests that it has.

In a remarkable outburst reported last week by the Observer, the Italian prime minister, Matteo Renzi, denounced the failure of his fellow EU leaders to agree on more than a voluntary plan to deal with the thousands of refugees and migrants landing on his country’s shores: “If this is your idea of Europe, keep it for yourself… you do not deserve to call yourself Europe. Either we have solidarity or we waste our time!”

In recent weeks, too, the appeals by leaders of Syriza in Greece to “our shared European values” have come to seem not just desperate but naive. It is as if the Greeks were appealing to medieval codes of chivalry or expecting Premier League footballers to respect 19th-century Corinthian values. “Europe” and “European values” seem, even as rhetorical gestures, entirely hollow. They are evoked now only to underline their absence.

One by one, the elements of the Europe story have fallen away. Democracy? European leaders, especially the Germans, have been openly canvassing the idea of “regime change” in Athens. The free movement of people? Hungary is planning to build a fence along its border with Serbia and David Cameron is hoping to build a metaphorical fence around Britain. The welfare state? The recent elections in both Finland and Denmark suggest that even in its Nordic heartland, it is no longer seen as a European value but as a national, even an ethnic, possession, to be kept for “our people” alone.

Solidarity? Who now believes that the average person in Frankfurt or Helsinki sees the pensioner rummaging in a bin in Thessaloniki as a fellow citizen? Thresholds of decency? Formulaic expressions of sympathy aside, there is little sense that the European Union as a whole finds it intolerable that hundreds of thousands of Greeks are living without electricity or that millions have no access to public health care.

The “ever closer union” envisaged by the EU’s founders has been replaced in effect by a deeply incoherent mixture of one-size-fits-all thinking and double standards. On the one hand, there is the absolute insistence that there can be no challenge to the technocratic formula for solving the eurozone crisis: austerity plus massive bank bailouts plus privatisation and the dismantling of social and labour protections.

On the other, there is a sharp moral and political divide between the creditor states and the debtor states, with a supposedly virtuous, prudent and righteous core beset by a feckless, reckless periphery. Or, if viewed from that periphery, between victimised citizens and a European political elite bent on punishing them for sins they did not commit on their own.

There is no “collective imagination” of the crisis – in one Europe, it is respectable, hard-working people being exploited by chaotic layabouts from the hot south; in the other, it is hard-pressed and equally hard-working people being sucked dry to feed foreign banks. The stories Europeans are telling themselves about what’s going on around them are not just different but mutually exclusive and mutually antagonistic.

Nor is this collapse of the collective imagination just a product of the eurozone crisis. It has deeper roots. The idea of “Europe” that animated the EU depended on the conflicts that gave it birth. The Second World War, fascism and the Holocaust created a deep appreciation of the fragility of peace, democracy and human rights. The Cold War made it imperative for western democracies to compete with communism on its own terms by showing that market economies could deliver, not just prosperity, but social justice, equality and security.

But the Cold War ended, the rivalry with communism ceased, and the generation of leaders with memories of the Second World War – the likes of Helmut Kohl and Helmut Schmidt, François Mitterand and Jacques Delors – passed on. With them has gone the urgency of imagining a European story, not as an abstract fable, but as a necessary alternative to the other European stories of Hitler and Stalin.

Their benign fiction also had a powerful subtext – the need to contain Germany. It is not accidental that it was Schmidt, who was 14 when Hitler came to power, who issued what he called “a serious and carefully considered warning” to his compatriots three years ago: “If we Germans allow ourselves to be seduced into claiming a political leading role in Europe or at least playing first among equals, based on our economic strength, an increasing majority of our neighbours will effectively resist this. The concern of the periphery about an all too powerful European centre would soon come racing back. The possible consequences of such a development would be crippling.”

Schmidt was right – and he was also ignored. No one watching the German finance minister, Wolfgang Schäuble, in recent weeks can have picked up the slightest hint of anxiety about being “first among equals”. There is only the absolute certainty that, whatever the evidence to the contrary, Greece can and must be beaten until it learns to become more German.

In the technocratic mindset that has filled the vacuum where “Europe” used to be, the old story is just a sentimental romance. But there’s always a story – the old fable of democracy, solidarity and decency hasn’t been replaced by simple dull reality. What has taken its place is a narrative that poses as hard-headed realism but that is actually much more fantastical than the one that was constructed by the postwar generation. It has a wildly improbable plot in which years of austerity magically produce economic growth; mountains of public debt are paid off by shrinking economies; unaccountable experts know more about other countries than their own elected governments; and everyone lives happily ever after. The good are rewarded. The bad are punished but they repent in the end and return to the fold. There’s certainly a lot of imagination in this story. But its ability to sustain a collective enterprise among 28 stubbornly individual nations is negligible.

It is not entirely true, of course, that no one at all believes the old story of Europe. The last true believers are on rickety boats in the Mediterranean, trying to make their way to an imagined continent of compassion, solidarity and security. If they ever get to shore, they will find at best a grudging welcome. But those who purport to share their belief in what Europe means badly need some of their desperate optimism.