What was the most significant year of the 20th century? There are three plausible candidates. The first is 1917, the year of the Russian Revolution and America’s entry into the First World War, which set in train a century of superpower conflict. The second is 1918, the year that saw Russia’s exit from the war and the defeat of the German and Austro-Hungarian Empires, which set the stage for the triumph of democracy. The third is 1919, the year of the Weimar constitution and the Paris Peace Conference, which ensured that the triumph would be squandered. What this means is that it was the dénouement of the First World War that changed everything: a messy, sprawling, disorderly event that spilled out across all attempts to contain it. Its momentous qualities cannot be made to fit into the timeframe defined by a single year. History rarely can.

That is the problem with Christian Caryl’s fascinating and frustrating book, which identifies 1979 as the year that gave birth to the 21st century. Caryl builds his case around five overlapping stories, four about individuals and one about a country. The people are Thatcher, Deng Xiaoping, Ayatollah Khomeini and Pope John Paul II. The place is Afghanistan. The year 1979 mattered to all of them. It was the year Thatcher won her first general election. The year Deng embarked on the economic reforms that would transform China. The year the Iranian Revolution swept Khomeini to power. The year the new pope visited his Polish homeland, sparking vast public outpourings of support in defiance of the communist regime. The year Afghanistan was invaded by the Soviets. These were all momentous events. Caryl weaves them together into a single narrative that tags 1979 as the year that the myth of 20th-century secular progress started to unravel. What joins the different bits of the story together is that each one represents the revenge of two forces that the 20th century was supposed to have seen off, or at least got under control: markets and religion.

But for this particular story 1978 seems just as important. After all, it was in 1978 that two of the leading protagonists, Deng and John Paul, came into the top job. Deng, who had been purged and persecuted during the Cultural Revolution, formally began his comeback in 1977, when he was made vice-chairman with responsibility for foreign affairs. But his decisive victory came at the Central Party Work Conference in November 1978, following a showdown between the Maoists and the reformers at the head of the party. The party chairman, Hua Guofeng, and the ultra-loyalist Wang Dongxing, who had risen to the top as one of Mao’s bodyguards, were the leaders of the ‘Whateverists’ (Q: ‘What should we do?’ A: ‘Whatever Mao would have wanted’). They were confronted by the advocates of a rival slogan: ‘Practice is the sole criterion for judging truth.’ The immediate struggle turned on the rehabilitation of party members who had suffered during the Cultural Revolution. Hua and Wang were moving cautiously to undo the recent past, fearful of undermining their own authority. They still insisted that Mao’s enemies had been counter-revolutionaries. Their enemies insisted that the victims of Mao’s final years, far from having betrayed the revolution, were good revolutionaries who had themselves been betrayed.

Deng was not present for these fierce and highly secret discussions – he was touring South-East Asia, looking for evidence of what worked. But everyone present knew that he was the person they were arguing about. By the time he arrived, four days into the conference, Hua and Wang were in full retreat. Speaker after speaker had begun to attack them by name. Wang was even forced to present a ‘self-criticism’ acknowledging his past political sins. When Deng showed up, there was little left to say. He was offered the party’s leading position on the spot, and knowing full well what had transpired in his absence, he took it.

We know less about what happened at the highly secret conclave that took place in Rome a month earlier and produced a puff of white smoke announcing the first non-Italian pope for nearly five hundred years. The Catholic Church does not give up its secrets quite so easily as the Chinese Communist Party. The accession of Karol Wojtyla, like that of Deng, came as a shock but not a complete surprise: he too was an outsider who had served his time as the ultimate insider. He offered a bridge between the traditionalist past and a more dynamic future. But he still needed the votes, and doubtless he and his supporters did whatever it took to secure them. (As Mandeville said of papal politics, Machiavelli is no guide: he isn’t cynical enough.) It took Wojtyla three days to get there – it had taken Deng four. Presumably none of his fellow cardinals was forced to present a self-criticism at the end of it all. But few of them would have been in any doubt about who had won and who had lost.

By going for 1979 rather than 1978 as his decisive year, Caryl seems to imply that elections are what matter in democracies, whereas in non-democratic regimes what matters is not so much how power is won as what is done with it. This strikes me as the wrong way round. We are fixated on democratic elections because they appear to mark turning points: nothing matches the drama of a government thrown out on the whim of the people. But because democratic elections reflect rather than determine the public mood, the crucial shift often takes place well before the vote. The year that changed British politics was 1978, when the relationship between the Labour government and the unions finally broke down: that’s what brought Thatcher to power, not anything that happened in 1979. Her victory was a consequence not a cause of the sea-change in British politics: the door to the future stood open long before she claimed to have kicked it in. Something similar happened in the United States, where it was the Carter administration’s shift to a pro-business, anti-labour legislative programme in 1978 that jump-started what became the Reagan revolution. Thatcher and Reagan look like the game-changers because they emerged as the ultimate winners. But this is democracy, where leaders only do what the public permits them to get away with. Public opinion shifted in 1978. After that, it didn’t matter so much who the leaders were (as Carter and Callaghan both wistfully acknowledged): the die was cast. If it hadn’t been Thatcher and Reagan, it would have been two other people.

By contrast, in non-democratic regimes it matters who the leaders are. If Deng had lost the high-political game in 1978, things would have been very different in 1979 and thereafter. His victory during those four days in November changed Chinese politics. The same is true of John Paul’s papacy. His arrival in office did not reflect a shift in Catholic public opinion, though doubtless such a shift was slowly taking place (everything was moving in the 1970s). The Catholic Church is not a democracy. When it comes to reaching the top, high politics is the only game in town. It’s once you have reached the top that you can co-opt the people to your cause if you want to. John Paul was able to change the world only because he had acquired his position of power. He didn’t acquire power because the world had changed.

In making his case for 1979, Caryl maybe misses a trick by ignoring the closest thing American democracy has to the elevation of a new pope. He doesn’t find room in his story for Paul Volcker, who became chairman of the Federal Reserve in August 1979. Volcker’s appointment marks a more significant watershed than Thatcher’s election because it signalled the decisive shift from 1970s-style industrial capitalism and stagflation to 1980s-style finance capitalism and debt-fuelled growth. Volcker took the hard decisions on interest rates that brought inflation under control while allowing unemployment to skyrocket, and he took much of the flak as well. That it was Carter who chose him is the real significance of his appointment, which may be the reason Caryl doesn’t include him: he doesn’t represent a clean enough break. Carter didn’t turn to Volcker because the public was demanding tough medicine. He did it because Wall Street wanted the medicine, and the public no longer had the stomach to put up much of a fight. The real story of the late 1970s in the democratic West is that people were tired of political and industrial strife and were willing to try something different, however uncomfortable. It wasn’t a revolution: more a collective shrug.

In Iran, of course, they had a real revolution in 1979. In 1977 the shah’s modernising regime still looked like one of the world’s economic success stories, buoyed by years of double digit growth and booming oil prices. In the space of three decades the country had gone from what Caryl calls a ‘feudal backwater’ to an ‘industrial powerhouse’. It had modern communications and healthcare systems, car factories and hydroelectric dams. Literacy was expanding, among women as well as men. For all the shah’s weakness for luxury and celebrity – in 1971 he got the man who redesigned the White House for Jackie Kennedy to build him a tent city for a ceremony to celebrate the 2500th anniversary of the Persian monarchy, to which he invited the Duke of Edinburgh, Haile Selassie, Spiro Agnew and Imelda Marcos, among many others – his state was held up as a model of managed development.

Then, during 1978, it fell apart. In late 1977 the eldest son of the exiled Ayatollah Khomeini, the loudest and most fearless of the shah’s critics, died of a heart attack. The ayatollah’s supporters blamed the shah and thousands took to the streets to denounce him. In January 1978 the regime responded by denouncing the ayatollah as a British agent, a sexual deviant and dyed-in-the-wool opponent of the shah’s progressivism. The next day students at the seminary in Qom took part in a demonstration demanding Khomeini’s return. The security forces opened fire and killed dozens of them. Khomeini immediately published a statement calling for more demonstrations. Over the following months he got his wish. By September the government had declared martial law and on 8 September hundreds of protesters were mown down by helicopter gunships in the centre of Tehran, an event known as Black Friday. In the same month the oil workers went on strike. Food and fuel were running short.

Khomeini began to assemble a shadow government ready for his return: the Revolutionary Council, which was made up of student activists and ex-security officials who had fallen out with the old regime. On 16 January 1979 the shah left the country. Two weeks later Khomeini came home to take charge. Though the shah’s demise was a done deal before the year began, the arrival of 1979 does make a difference to this story. It is not an especially evocative date in the Julian calendar, but in the Islamic calendar it is one of the most significant of all anniversaries: it corresponds to the year 1400, when the Mahdi, the Islamic messiah, is supposed to reveal himself to the faithful and usher in a new age of eternal justice. In the secular West, 1979 simply spelled the wearisome finale of a dispiriting decade. To many Iranians, it marked the dawn of the apocalypse.

Khomeini played on this fervour throughout the year, stoking it as well as channelling it towards his own political ends. In November a group of student demonstrators fired up by his anti-American rhetoric and calling themselves Muslim Students Following the Imam’s Line stormed the American embassy in Tehran and took 66 Americans hostage. November 1979 happened to coincide with the start of the year of the Mahdi. The resulting crisis and the ultimate humiliation of the Carter regime cemented Khomeini’s grip on power. As Caryl points out, this was not the only moment of deep numerological significance to occur that year.

In Poland, 1979 was notable as the 900th anniversary of the martyrdom of Stanislaw Szczepanowski, Bishop of Krakow, who had stood up to the tyrannical king Boleslaw the Bold and paid for it with his life. Szczepanowski is a kind of Polish equivalent of Thomas à Becket, except in his case, so the legend goes, the king was unable to find anyone to carry out the deed and ended up having to do it himself, cutting the bishop down while he was conducting mass. This so outraged his countrymen that Boleslaw soon lost his hold on power. As all Poles knew, Wojtyla too had been archbishop of Krakow before his elevation in Rome. When he returned to Poland as Pope John Paul II in the early summer of 1979 he received his most rapturous welcome in his old diocese. On the final day of his nine-day visit he spoke to around three million people in a field outside Krakow, where he told them that it was their right to choose their own government and defend their own faith. The crowds that heard him were calm and orderly, unlike the seething masses who had greeted Khomeini on his return to Tehran a few months earlier. The communist regime sought to downplay the pope’s message and the reverential way it was received but it was impossible to limit its impact. State television did its best by refusing to show John Paul during his open-air masses. Censorship proved futile. Nearly one in three Poles – as many as 11 million people – went to listen to him in person anyway. The echoes of 1079 were hard to avoid. You can’t silence the bishop of Krakow.

In China, 1979 marked the thirtieth anniversary of the communist revolution, which had reached its climax on 1 October 1949 when Mao, accompanied by Deng, proclaimed the birth of the People’s Republic from a platform in Tiananmen Square. As he embarked on his first year as leader, Deng used the anniversary to anchor his proposed reforms. He wanted to modernise China. He didn’t intend to democratise it. Instead, he identified democracy with the chaos and misery of the Cultural Revolution, when mob rule had gained the upper hand. Deng saw it as his role to complete the process that had begun in 1949, and 1979 would be a year of economic and administrative reform, closely overseen from the centre. In January, he travelled to the United States, where he visited the Coca-Cola headquarters in Atlanta, the Nasa Space Centre in Houston and the Boeing headquarters in Seattle. He formalised diplomatic relations for the first time between the People’s Republic and the US, opening the door for direct American investment into China. Chinese state television provided extensive coverage of his visit (though the vast majority of Chinese still had no access to a TV set), sending back pictures of the tiny Deng riding in huge cars, gazing at towering skyscrapers, studying robots on factory assembly lines. The message was that this is the future, and Deng is the man to take you there.

For the people of Afghanistan 1979 was not an especially resonant date until the last month of the year made it one. In April 1978 a coup had installed the local Communist Party in power in Kabul. For 18 months its leaders pursued a course of Soviet-style modernisation, which included an attack on traditional marriage and a programme of land reform. This provoked widespread resistance, both from tribal landowners and radical Islamic clerics. The government in Kabul struggled to put down the rebellion, despite adopting increasingly brutal tactics, and soon its leaders began to fall out among themselves. In September 1979 the deputy prime minister killed the prime minister in a palace shoot-out. By now large chunks of the Afghan army had defected to the rebels. There were rumours that the new prime minister was going to turn to America for help. In December, the Soviets invaded to restore order, which they did with a brutality that dwarfed anything attempted by the local communist regime. They then spent the next ten years regretting it, as Afghanistan swallowed up blood and treasure in quantities that spelled ruin for the Soviet system itself.

The invasion of Afghanistan was a catastrophic error that had its source in events and patterns of behaviour that extended far beyond the confines of 1979. The mistake was a product of Cold War paranoia, fuelled by a bloated and unaccountable military and indulged by a tired and sclerotic political leadership. In one respect, however, the year itself did make a difference. In November 1979 the government of Saudi Arabia had been forced to confront the millennial expectations raised by the calendar when a group of militants, denouncing the corruption of the Saudi regime and its ties to the US, overran the Grand Mosque in Mecca, taking thousands hostage. One of the hostage-takers declared himself to be the true Mahdi who had come to redeem Islam. The Saudi authorities, deeply shaken by this direct challenge to their rule, stormed the mosque at the cost of hundreds of lives, captured the leader of the group and within a few weeks executed him. In order to placate the ultra-conservative clerics who had fired up the militants, the Saudi royal family re-emphasised its religious conservatism. But it also took a conscious decision to export the militancy beyond its own borders in an attempt to redirect some of the anger outwards. The obvious place to transplant it was Afghanistan. Saudi money and men were siphoned into the struggle against the Soviet occupiers and the war in Afghanistan soon became a proxy for the wider conflicts being fought by and within jihadist Islam (Saudi support for Wahhabi mujahedin was matched by Iranian support for rival Shiite factions). One of those who found his way to Afghanistan was the recent Saudi college graduate Osama bin Laden, who had been looking for something to do. In that sense 1979 did give birth to the 21st century, if you think that the most significant date of the century so far is 11 September 2001.

Is there more to tie the strands of Caryl’s story together than these numerological quirks? His unifying theme is that 1979 fatally punctured the illusions of progress. The presiding 20th-century belief that government could carry on delivering more of the things people wanted and in better versions ran up against the evidence that people didn’t want any more of what government was delivering. Harking back to distant anniversaries indicated a deep frustration with the stale certainties of the postwar age. But, as Caryl acknowledges, the problem with casting his story as an anti-progressive morality tale is that too many of its leading protagonists remained in thrall to the idea of progress. That isn’t true only of the conventional politicians like Thatcher, whose time in office coincided with an expansion of the British state and a slavish devotion to economic measures of national advancement, or Deng, whose pitch to the Chinese people rested on ditching ideological inflexibility in favour of ‘what works’. It is also true of the religious radicals. Khomeini, for instance, didn’t just repudiate the shah’s modernisation project. He also repudiated the conservative clerics in Iran who had let the shah get away with it by withdrawing from any direct involvement in politics on the grounds that it was beneath them. Now he wanted men of faith to show the secularists how government should be done. He believed in using the power of the state to make social improvements that accorded with religious teaching. His political philosophy, Caryl writes, was a ‘bewildering blend of traditional faith and 20th-century modernism’. This was not some reversion to ‘medieval obscurantism’, as it is so often caricatured. It was an attempt to defeat the secular progressives at their own game.

The same could be said of the jihadist insurgents in Afghanistan. Their enemies were both the corrupt, brutal, inefficient occupiers and the traditionalists within Afghan society who believed superstition and blind faith could rescue them. Those mujahedin in particular who had been inspired by the Muslim Brothers saw the instruments of modernity – phones, computers, the latest medicines – as weapons at their disposal. The point of their faith was that it made them flexible: its timelessness allowed its adherents to adapt to the circumstances in which they found themselves. In that sense they were incorruptible. This philosophy has an obvious parallel in Leninism, from which it drew some of its inspiration. As Lenin liked to say, if Marxism is true, why are Marxists so worried about maintaining their purity? No one can be contaminated by capitalist society who knows what capitalist society is really worth. Don’t be squeamish: take advantage of the thing you want to overcome.

As a result the term Caryl prefers to describe his cast of characters is ‘counter-revolutionaries’. A counter-revolutionary, he says, is ‘a conservative who has learned from the revolution’. Even Karol Wojtyla, who is probably the closest here to a genuine anti-progressive, saw the advantages of co-opting the outlook of the other side. His political philosophy, which he called ‘personalism’, was founded on the integrity of the individual in the face of social coercion. This was a deeply religious idea but it overlapped with the secular project of human rights and with the late 20th-century idea of personal development. As pope he had little embarrassment in talking the language of modern rights alongside that of timeless sacrifice. To his own way of thinking he was trying to rescue the 20th century from itself.

‘Counter-revolutionary’ works better than ‘anti-progressive’. But it still raises the question: which revolution? This is where Caryl’s thesis breaks down. In so far as he means actual revolutions – the Cultural Revolution, the Soviet takeover of Poland or Afghanistan, the coup that brought the shah’s family to power – it is difficult to see what they have in common. In so far as his ‘strange rebels’ were reacting against something in common, it wasn’t so much a revolution as the hotchpotch of ideas and events and political practices that characterised the messy but relatively stable world that existed between the end of the Second World War and the middle part of the 1970s. They were provoked by some combination of managerial economics, dictatorial politics, international stasis and slowing material progress: they saw in it all a mix of spiritual hollowness and looming stagnation. Their target had to be sufficiently broad and ill-defined for either religious renewal or free market fundamentalism to seem like appropriate responses. Caryl does what he can to bring these two sides of the story together. He talks up Thatcher as a politician of deep moral and religious conviction – the ‘evangelist’ – and Khomeini as an unwitting exponent of economic experimentation, a ‘pragmatist’. It’s not convincing. Thatcher’s religion was nothing like Khomeini’s and his economics were nothing like hers. The tighter Caryl pulls on the threads of his story the more it starts to fray.

Nonetheless, by framing it in these terms he provides a way into thinking about the politics of today. The world that fell apart at the end of the 1970s had begun to unravel much earlier in the decade, in the succession of crises that included the demise of Bretton Woods, the Arab-Israeli war, the consequent oil shock and a world-wide recession. That confused and confusing period turned out to be the dawn of neoliberalism, though it wasn’t until much later that it became clear what had happened. Now that neoliberal order is stumbling through its own succession of crises. We are barely five years into the unravelling, if that is what is taking place. At the same stage of the previous upheaval the protagonists in Caryl’s book were still labouring in relative obscurity. If you had told someone at the start of 1975 that the architects of the new age were going to be the MP for Finchley, the bishop of Krakow, the exiled ayatollah and the ostracised apparatchik, you would have been laughed at. Apart from anything, they looked so powerless. So we shouldn’t be surprised if we can’t yet spot who is going to make the difference this time round. What we’re waiting for is the counter-counter-revolution, led by progressives who have learned the lessons from the age of neoliberalism and are unafraid to make use of its instruments in order to overthrow them. Plenty have started trying. Someone will get there in the end and maybe by the end of the decade we will discover who. But it is unlikely to be anyone near a position of power right now.

One possible lesson to draw from the past forty years is that in the end religious fundamentalism and market fundamentalism don’t go together at all. Their time horizons are just too different. Religion seeks out the moment of crisis. Markets seek endlessly to defer it. You can see the tension at work in our current discontents. Those who have faith in markets claim that what we need is time and patience, which will allow the financial system to correct itself and resume the onward march of material progress. Time will also allow us to overcome any existential threats we face – such as climate change – so long as we permit the ingenuity of the market to come up with technological solutions. Meanwhile, religion has inspired a growing impatience with all these deferred rewards, not only in nascent democracies like Egypt but also in long-established ones like the United States. Religion opens up the possibility of transformation and redemption, which trumps the intractable and messy business of real world politics. It trivialises the practical challenges we face. Religious faith is too apocalyptic for our present needs. Market faith is not apocalyptic enough. The space between is where progressive politics can restake its claim.