The single best guide to what happened in Britain last week was published in 1944. Naturally, its author was a Polish economist. Even economics students may not have heard of Michał Kalecki – but it's the discipline that got small, rather than his legacy. In his time, Kalecki was recognised as having anticipated some of Keynes's most important ideas, years before the Master published his General Theory, and he exerted a big influence on such legendary Cambridge thinkers as Joan Robinson and Nicky Kaldor.

His article, Political Aspects of Full Employment, explains with an almost eery prescience why the coalition is attacking our wages, our working terms and conditions and our welfare state.

Economist Michał Kalecki.

The tone is exhilaratingly brisk. "A solid majority of economists" agree on how to solve a slump, Kalecki says. The government borrows more and invests the cash either in building schools and hospitals or in providing benefits and tax cuts; this boosts demand and generates employment. Ta-da! Two pages in, and he has both fixed the problem of recessions and despatched most of the arguments against public borrowing that we have heard with such tedious frequency in the past five years.

What if savers become wary of lending to the state? Then, Kalecki says, the Treasury pays higher interest rates – and, since most of its lenders are British (just like now), the money will still flow back into the economy. But he notes that Churchill's war coalition has run "astronomical budget deficits", while "the rate of interest has shown no rise since the beginning of 1940". What if it becomes too costly to keep on top of the national debt? Then ministers should raise more funds, not by taxing ordinary pay or spending, which would slow the economy, but with a levy on idle wealth.

That proposal, by the way, is tossed out in a mere footnote on the second page; and, reader, if you can't love a man who comes up with a novel way of soaking the rich in one short italicised paragraph, then I fear we're never going to be friends.

Having rattled through the urgent problems, Kalecki points out that a booming economy and healthy profits would be good for the "leaders of industry", but that they will never support such government intervention. And in a sentence that sums up post-crash Britain, he identifies one of the principal sources of resistance as "so-called 'economic experts' closely connected with banking and finance" along with "big business".

The opposition posed by this coalition of bosses and financiers is motivated by three factors. First, they want as little government interference in the economy as possible; second, they don't want the state expanding into new areas and so doing them out of business. But the thing that really keeps the capitalists awake at nights is the boost to workers' confidence that will be provided by a heathy jobs market. They will demand more pay, better working conditions, perhaps even a say in how their companies are run. Fully employed, well-paid Britons will have more cash to buy things, so a healthy economy supported by the government is better for corporate profits than a sick one. "But 'discipline in the factories' and 'political stability' are more appreciated by the business leaders than profits". Rather an insecure and cowed workforce than a confident and boisterous one.

But it's Kalecki's "political business cycle" that sums up the world we're in now. Rather than opting for public investment and a healthy recovery, Britain is stuck in a slump that austerity and a blind trust in private-sector vigour is only deepening. But the parallels don't stop there. Last week, the day after MPs voted through a bill for real-terms cuts year upon year in benefits for the jobless and the low-paid, newspapers led on government briefings that the butchering of the welfare state would not stop there. Next, the FT reported, winter fuel allowance would be for the chop.

Meanwhile, living standards for those in work are also under attack: through wages that are falling further and further behind inflation and government schemes to sacrifice workplace rights in return for share options. For those slow on the uptake, there is always William Hague, telling Britons to "work harder".

The rhetoric is also echoed in our media. Last Friday, the Guardian's librarians went through all the British tabloids and broadsheets since 2007. Up to 2010, they found that Fleet Street was quite restrained in its use of the term "scrounger": a mere 46 mentions (when discussing benefits or welfare) for all of 2007. In 2010, though, that shot up to 219 mentions, and last year 240 mentions. As for shirkers v strivers, the false opposition du jour, newspapers did not use the phrase at all until 2010. Last year, the total was 10. In the first two weeks of 2013, the press had already racked up 30 mentions.

Whether from politicians or the press, these justifications for austerity are getting more strident even while evidence of austerity's failure is stacking up. It may be that Britain goes into a third recession this year; it is certainly not going to enjoy a recovery. And what was always evident in the coalition's spending plans issued back in 2010 – that our welfare state and public realm were going to get shredded – is slowly but surely materialising.

This assault on an entire social contract, says Malcolm Sawyer, a leading expert on Kalecki, is what his subject warned about. "The argument for dealing with budget deficits has provided cover for attacking wages and benefits." And austerity is just code for the transfer of wealth and power into ever fewer hands.