A cruel irony surrounds the 30th anniversary of Margaret Thatcher’s arrival at No 10. More than any other political leader, more even than Ronald Reagan in the United States, she personified the capitalist renaissance that swept across the globe in the 1980s and 1990s. Now, the economic model that powered the renaissance is in ruins. The mantras of high Thatcherism – “Markets know better than governments”, “There is no such thing as society”, “Trade union power is the true cause of unemployment” – are no longer heard. Keynesians new and old such as Martin Wolf, Robert Skidelsky and Will Hutton stride across the op-ed pages.

New Labour’s demi-semi-Thatcherism has collapsed as well, and its high priests have apostatised. The Third Way is, at most, an embarrassing memory; triangulation is out. The hunt is on, no longer for new privatisations, but for new nationalisations. Under Gordon Brown, the old left-socialist dream of an economy whose commanding heights would be publicly owned is nearer to realisation than ever before in peacetime. (In a capitalist economy, after all, the true commanding heights are to be found in the financial services sector.) No one knows where the political fallout will land. It is probable – but far from certain – that Labour will lose the next election. Yet even if it does, the Tory nationalist crusaders whom Thatcher led with such passion and élan will not return to the seats of power. Despite one or two false steps in the past few weeks, David Cameron has patently abandoned the Thatcherism of his salad days. The last thing he wants is to embark on a Tory nationalist crusade. His unacknowledged role models are those Whiggish champions of irenic gradualism, Harold Macmillan and R A Butler.

There are deeper ironies than this in the present crisis. Thatcher’s crusade was not only, or even primarily, economic in character. “Economics,” she said herself, “are the method. The object is to change the heart and soul.” The Tory nationalist tradition, of which she was the greatest 20th-century ­embodiment, has always been haunted by the spectre of what an even greater embodiment, Lord Salisbury, once called ­“disintegration”. Tory nationalists are always on the watch for a downward slide into a Hobbesian state of nature, where there would be no authority to check the destructive passions of undisciplined individuals. Thatcher’s frequent hymns to the free market obscured her real purposes. In truth, it was the disciplines of the marketplace that attracted her, not its freedoms. Her objection to collectivism was not so much that it misallocated resources as that it produced “moral cripples”. The changed souls she hoped to see would be those that had reigned in the idealised 1930s Grantham of her later imagination: abstinent, provident, self-reliant and, above all, disciplined. And discipline was learned first in the family, the nursery of self-reliance and the chief bulwark against

social chaos.

She wanted to free enterprising individuals from the dead hand of the state, but she did not want the individuals she freed to sink back into hedonistic self-indulgence. She wanted them to incarnate the puritan virtues extolled by the cham­pions of the entrepreneurial ideal of the early 19th century: to work hard, to defer gratification, to deal fairly, to respect ­authority, to live within their means and to put something aside for a rainy day – in fact, to behave as she thought her redoubtable father, Alderman Roberts, had behaved. The 1986 “Big Bang” that opened up the City to an influx of foreign firms and laid the ground for the speculative frenzy that brought us to our present pass occurred on her watch. But she would have been appalled, or at least incredulous, if she had been told that the end result would be an economy and society awash with debts that no one could repay and toxic assets whose extent no one could fathom.

“There is no such thing as society”, “Markets know better than governments” . . . the mantras of high Thatcherism are no longer heard

The greatest irony of the Thatcher crusade is that its economics pulled against its ethics. I doubt if the idealised abstinent, puritanical, self-respecting Grantham of her imagination ever existed in the real world. It certainly didn’t exist in her Britain. As a quick reading of the Communist Manifesto would have warned her, free-market capitalism is, of its very essence, subversive. It is restless, heaving, masterless, wonderfully dynamic and creative, but, in itself, utterly amoral. The hot breath of the cash nexus dissolves the ties of faith, community, family and tradition. And, as Friedrich von Hayek pointed out more vigorously than any critic of the free market, entrepreneurial success has nothing to do with merit or fairness. It is about satisfying wants and even at times about creating or manufacturing them; and the wants are as likely to be bad as good. The speculative frenzies and spectacular frauds that have studded its history are of its essence, too: among the forces that drive it, greed, credulity and the herd instinct loom much larger than the rationality that most economists celebrate.

Thatcher’s tragedy was that she forgot – or perhaps had never learned – these truisms. Under her, the market was freed up, though not as much as she and her colleagues imagined. But the remoralised souls she had dreamed of obstinately failed to appear. The Thatcher years brought immense changes to the culture and the moral economy – the network of moral assumptions and codes of behaviour that tells economic actors high and low how they ought to behave. They were not, however, the changes she had hoped for.

Authority and discipline were not restored, either in the state or in society at large; on the contrary, they were further undermined. One reason was that the government’s attempts to use the powers of an increasingly aggressive central state to end what it called the “dependency culture” turned swaths of respectable Conservative opinion against it, notably in the struggle over the poll tax. Another was that nimble-footed cultural entrepreneurs found that mocking authority sold better than sustaining it. A third was that the instrumental, individualistic hedonism of the marketplace increasingly pervaded other spheres as well, overwhelming old barriers of custom and duty. Thatcher may or may not have realised this. If she did, she must have been grievously disappointed. But she had sown the wind, and had to reap the whirlwind.

Under her governments, the delicate fabric of deference and tradition that had once enveloped authority wore thin. So far from curbing the central state, her governments extended its ambitions and its reach. As a result, it lost legitimacy instead of regaining it. The most obvious hallmark of her reign was a relentless war – partly rhetorical, but partly through state intervention – against the cultural and professional elites that had once sustained authority in society and the state. Universities lost funding and their teachers lost tenure, local authorities were “rate-capped”, the metropolitan counties created under Edward Heath were abolished, the National Health Service was reorganised on market lines, and the Church of England was denounced (to be fair, by Conservative backbenchers and not by Thatcher herself) for its “Marxist” theology. The BBC, the universities (particularly the ancient ones), local government, the established Churches of England and Scotland and even, for a while, the CBI were all driven into revolt, mostly futile. The senior civil service, whose wings she ruthlessly clipped, could not revolt, but many of its most promising members took refuge in the private sector.

As for the puritan virtues, they were scarcer in 1990 than they had been in 1979, while a coarse-grained consumerism swept through the land. The raucous, ostentatiously vulgar hedonism of the Sun painted a more accurate picture of social attitudes than Hayek’s hymns to the “Great Society”. Perceptive commentators noted the rise of a new, know-nothing “plebeian” culture in place of the self-respecting working-class culture of old days, and the rising tide of football violence during the 1980s suggested that they were right. In a different sphere, the City was rocked by scandal as rough, tough upstarts pushed aside the gentlemanly capitalists who had once given it its tone. An emblematic moment came in 1987, when four private speculators were successfully prosecuted for conspiring to force up the price of Guinness shares during a takeover battle. The bonus culture, like the debt culture of which it was part, was born under Thatcher, not under Gordon Brown.

At this point, however, the story takes an unexpected turn. Thatcher and her followers were not the sole authors of the authority-sapping cultural revolution of the age. It had left-wing as well as right-wing antecedents. Of course, the intellectuals of the left loathed her and all her works. They saw her as a tyrannical and philistine harridan, a kind of female Stalin of the right, out to crush the values and interests they most valued. (It was not an accident that one of their most characteristic productions was the journal Samizdat.) They stood – or thought they stood – for solidarity, compassion and social justice, and they did their unsuccessful best to defend the institutions that embodied these from her onslaught. When her party toppled her at last, they felt like dancing in the streets.

Yet they deserved much of the credit (or discredit) for the early successes of the Thatcher crusade. The crisis of authority that made it possible owed far more to the left than to the right. The hypnotic oratory of Enoch Powell and the self-flagellating rhetoric of Keith Joseph would have found no audiences, but for the chaotic incoherence of the Wilson-Callaghan government of the 1970s, the lumpen excesses of the trade unions and the left intelligentsia’s blindness to the collapse of the democratic collectivist tradition in which it had been brought up.

The postwar Keynesian social-democratic paradigm fell apart in the 1970s, leaving a huge hole where a governing philosophy should have been. The culprits – the sour proletarianism that swept through the trade union movement, the shallow neo-Marxism of the Bennites, the degenerate, muscle-bound Labourism of the Wilsons, Callaghans, Healeys and Foots – belonged overwhelmingly to the political left. Almost by definition, the intellectuals of that left could not fill the hole. To have done so, even to have attempted to do so, would have been to sunder the ties that bound them to their past. The time was ripe for a Tory nationalist revival; and Thatcher duly supplied it.

The oratory of Enoch Powell and the rhetoric of Keith Joseph would have found no audiences, but for the blindness of the left intelligentsia

The relationship between the left intelligentsia and the cultural shifts of the 1980s was more complex than that, however. On a much deeper level than conscious intent, left intellectuals and the headline writers of the Sun were siblings under the skin. The voracious, all-consuming hedonism of the Sun, its contempt for traditional elites and the culture of instant gratification it fostered were shared, albeit in a strange, upside-down way, by much of the left. Insofar as it stood for anything, the Sun stood for “bonking”, for “Loadsamoney”, for upwardly mobile Essex Man and Woman, and against conventional restraints of all kinds. Left intellectuals winced at its vulgarity, but, in softer, more genteel tones, they echoed many of its themes. They had no time for Essex Man, but they were all for Barnsley Man. “Loadsamoney” shocked them, but they watched enthusiastically while their houses increased in value, took out new mortgages on the strength of their paper gains, aspired to cottages in the Dordogne and bought claret from the Wine Society, or at least New World wine from Oddbins. Though the language of “bonking” was too flagrant for their taste, they devoured the novels of Martin Amis and Ian McEwan, applauded the television dramas of Dennis Potter and scorned Mary Whitehouse.

They had something in common with the antinomians of the 16th century, who preached the heresy that true Christians were exempt from the moral law. They railed against what they saw as repressive and archaic moral codes, and condemned the institutions that propagated them. They were against economic freedom, but for freedom in virtually every other sphere of social and personal life. They opposed the privatisation of resources, but advocated the privatisation of morality. In their language, wants became needs – and, all too often, rights. For some of them, the distinction between liberty and licence, which earlier generations had taken for granted, was nothing more than authoritarian cant. Above all, they failed to see that the solidarity and compassion they preached depended on a shared, “thick” communal morality that constrained individual appetite in the name of duty, civic loyalty, public decency or even (horror of horrors) religion.

At first sight, New Labour was different. Tony Blair certainly talked the language of public duty, and even stressed his debts to the once-famous philosopher of community John Macmurray and the charismatic Australian churchman Peter Thomson. Gordon Brown – famously a “son of the manse” – spoke eloquently of his moral compass. But though their sincerity is not in doubt, the style of their governments and the content of their policies belied their moral commitments. Peter Mandelson’s famous remark that New Labour was “intensely relaxed about people getting filthy rich” and Alastair Campbell’s throwaway line “We don’t do God” tell us more about New Labour’s economics than Blair’s Christian faith or Brown’s Presbyterian parentage. Under Blair and Brown, as under Thatcher, duty and morality were for Sundays. During the rest of the week, hedonistic consumerism marched on.

The results lie all around us. The crisis of renascent capit­alism which now engulfs the globe is not solely economic. It is, above all, a crisis of the moral economy. When Franklin D Roosevelt spoke, in biblical language, of the money changers fleeing the temple, he showed that he understood the Great Depression in those terms.

There are signs that Barack Obama sees the looming depression of our day in the same way. So far, however, no British leader – not even Gordon Brown – has dared to echo this language. The antinomian leftists of the 1980s and 1990s bear part of the blame. They, too, sowed the wind; and we are all reaping the whirlwind.