What's the first question that springs to mind when you think about Occupy Wall Street? Where did it go? Was anything actually accomplished? What went wrong? These are not the questions that David Graeber wants to answer in his new book on the protest and its ramifications. Graeber, an anthropologist and lifelong activist, was there from the beginning and helped give OWS its start in life in September 2011. He also helped coin the slogan "We are the 99%", which did so much to brand the movement. Now, nearly two years on, Graeber wants to draw some of the wider lessons. He thinks the question that needs to be answered is: Why did it work?

This is not as crazy as it sounds. Graeber has two reasons for believing that Occupy was a huge success. The first is that so many people showed up at all. Graeber, who is also an anarchist, is a veteran of actions, rallies and occupations whose participants can usually be counted in the tens, not the tens of thousands. Bloombergville, a forerunner of the occupation of Zuccotti Park, was a camp of 40 activists living in tents opposite City Hall in lower Manhattan during the summer of 2011. No one noticed, which is what tends to happen with this kind of protest. The original occupation of Wall Street on 17 September drew a couple of thousand people, which was considered a triumph. But within weeks the movement had spread to more than 600 cities, and huge crowds were assembling daily in New York. Graeber writes of having to pinch himself as he watched thousands of people mimicking the hand gestures and rallying cries of activists who were more used to shouting at each other across empty rooms.

These parts of the book read like the typical memoirs of anyone who has an unexpected brush with fame: they are breathless, self-referential and more than a little pompous. Graeber's stories of the infighting between the different anarchist and socialist groups in the runup to Occupy are inadvertently comical: it's the Judean People's Front v the People's Front of Judea. His account of the subsequent explosion of interest in his ideas reminded me of Jarvis Cocker's description of the first time Pulp played Glastonbury. After years of scraping a living in grimy Sheffield clubs, the band suddenly found itself performing to a field of 50,000 people, who all seemed to know the words to "Common People" and were singing devotedly along. This sort of success rarely lasts. Cocker probably has a better idea of the vicissitudes of popular acclaim than Graeber does.

Graeber also thinks OWS should be celebrated precisely because the movement did not make concrete policy demands. As an anarchist, he believes in what he calls "prefigurative" politics: protests are not meant to extract concessions from the existing system, but to give people an idea of what the world would be like if there was no system and individuals were free to make their own choices. Graeber believes that democracy – or rather, the thing that we have come to call democracy, with its professional politicians, political parties and preoccupation with the money – has been entirely co-opted by finance capitalism. OWS gave a glimpse of a very different sort of politics, free-wheeling, interactive, sometimes chaotic, always creative, never knowing where it was headed next. The big, lively crowds of disparate people talking to each other about their struggles was the whole point: it showed that real democracy can break out almost anywhere given the chance.

To make his case that electoral democracy entirely stifles the expression of everyday experiences, Graeber provides a brief history of how we got into our present mess. This is where the book comes alive, because Graeber's uncompromising approach, so wearying when applied to his personal history, is bracing when applied to the world at large. He believes it is no accident that the current political system protects the interests of the super-rich at the expense of almost everyone else. Our democracy is not some imperfect version of the real thing. It is the opposite of the real thing. Genuine democracy enables ordinary people to break free from the conventions that limit their capacity to lead fulfilling lives. In our democracy, the limitations are entrenched, because the conventions are all about protecting the power of money.

For Graeber, the emblem of our impoverishment of expectations is the massive recent expansion in student debt. Being a student should be one of the few times in your life when you don't have to be fretting about money, but can experiment with other ways of thinking and of living. Instead, students are now forced to think about their degrees in terms of what they can be traded for. Graeber recounts meeting recent graduates who are selling their bodies to pay off their loans: a PhD has become the path to prostitution, not intellectual reward. The thrill of OWS was that it brought these students together with trade unionists and blue-collar workers – the newly graduated with the newly downsized – and got them talking about what they had in common. It turns out that debt – the subject of Graeber's previous book – is the great unifier.

The idea of a street alliance between students and workers will set alarm bells ringing for many readers. It sounds like 1968 all over again, another world-shaking revolution that achieved little and fragmented into petty quarrels and gesture politics. It is to the credit of The Democracy Project that it does not shy away from this comparison. It embraces it. Graeber accepts that 1968 was a failure measured by immediate results. But it still changed the world, because it changed people's expectations. The social transformations of the following decades – above all, the advances in women's rights and gay rights – were made possible by the readiness of the 1968ers to challenge the accepted order. Graeber also welcomes comparisons with the other great "failed" revolution of modern times: 1848. OWS coincided with the Arab spring, which gave some protesters hope that a new wave of democratic change was sweeping the planet. Those hopes now look wishful. But as in 1848, short-term reverses are not necessarily an indicator of long-term prospects. The second half of the 19th-century did eventually see widespread democratic reform, as the old order adapted to the demands of the new. Graeber hopes the first half of the 21st century will see a similar shift.

What would such a shift mean? He thinks the unfinished revolution is in the world of work. Workers have formal rights but they have no real power to break free from the mindless pressure of a service economy and a consumerist society. For most people the fear of losing your job is far greater than the hope of finding a truly fulfilling one. The new information technology has made things worse by ramping up the bureaucracy and relentless demands of working life. But it also contains the seeds of radical alternatives: the internet is a space where it is possible to experiment with new kinds of labour and new ways of sharing information, time and experiences. On a crowded planet of limited natural resources, there have got to be better ways of working for a living than we currently manage.

A lot of this sounds utopian. But Graeber is almost certainly right that something has got to give over the coming decades. We live at a time of astonishing technological change, yet staid and unadventurous politics. The two can't co-exist indefinitely. OWS may turn out to have been a straw in the wind. Graeber has too much personally invested in the movement to be able to write dispassionately about its drawbacks and absurdities. His chapter on how to run a "consensus" democracy, drawing on the experiences of the "general assembly" in Zuccotti Park, is hopelessly light on the practical limitations of anarchism (the main one being that most people are not anarchists). But when Graeber writes about the need to try something new – anything new – he is both compelling and sympathetic. Like many on the far left, he has more time for conservatives than he does for liberals. He respects people who are looking for ways to contribute meaningfully to their communities. As he says, in many parts of the US, where public life has been pared to the bone by the power of the market, there aren't many ways to do this except by joining the church or the army. Graeber gets why people make these choices. He just wants to broaden them.

Liberals, by contrast, tend to sit back and wait for things to happen. Graeber is right about this and reading The Democracy Project, I felt the sting of his critique. Like many people, years of inconclusive crisis politics have left me feeling jaded and apathetic. Despite its faults, this book woke me up.