The British are engaged in a strange rebellion. They are turning on their failed elite and scourging their institutions. No one knows what they want. But their targets are plain. To see them gathered in one place, look at this gruesome scene from July 2004 recorded in Piers Morgan's diaries.

Morgan's managers had just fired him from the editorship of the Mirror for running pictures of British soldiers pissing on Iraqi detainees, which a fool could have told him were crude fakes. Morgan does not care. He toddles off to the 40th birthday party of Ross Kemp. Brown is there. Blunkett is there. Tony and Cherie Blair are there, along with Greg Dyke, the former director general of the BBC, and Sir John Stevens, commissioner of the Met. It seems that everyone who is anyone in Britain is there, but no one is there to see Kemp. They are paying court to the then wife of the EastEnders star, Rebekah Wade (now Brooks). Rupert Murdoch made her editor of the Sun and she is thus a mighty figure in the land.

The guests scratch, slap and stab each other's backs (particularly over the second Iraq war). But they agree that there is only one way to rule Britain. Whoever is in power must strike a deal with the media, most notably with the Murdoch papers, and feed them crowd-pleasing stories.

Politicians must let the City do as it pleases because what tax revenues its bankers provide allow ministers to pay for public services. As for all those millions who are never invited to celebrities' parties, they can still "live the dream", to use the most unintentionally revealing phrase of the last decade. Even though the incomes of working people were stagnating by 2004, the banks allowed them to pile up debt so they could consume on the never-never in a land of make-believe.

Reading Morgan made my stomach turn. But most believed he was part of an elite that might be tawdry and compromised, but at least knew how to run a country.

Look at them now. Brooks is awaiting trial on charges of conspiring to hack into the voicemail of a murdered teenager. Embarrassed Met officers arrested her and virtually every other journalist they could find evidence against, because they had been as ensnared in Murdoch's net as the politicians and knew they needed to get out fast. The wider police "service" has been disgraced by the revelation that it was serving the people of Liverpool by systematically lying about the dead of Hillsborough. The cover-up, the worst in living memory, has forced senior officers to resign and will doubtless lead to criminal charges.

Meanwhile, the Leveson inquiry has made Morgan's tabloid press a free-fire zone for serious and silly critics alike. The expenses scandal has led the public to regard all politicians as frauds. Blair and Brown, who seemed such mighty figures in 2004, now look like nincompoops who could not see the crisis coming in a financial system whose plutocrats they flattered. The banks are bust. The debts they approved so carelessly now cripple households and the wider economy. Even Greg Dyke's BBC is being torn apart by accusations that its self-serving managers suppressed the evidence that one of its stars raped and abused children for decades.

Historians will try to find common themes in Britain's great reckoning. Justice is one. Justice for the cheated taxpayers, the dead of Hillsborough, the celebrities who had their lives invaded by peeping Toms and for the children Savile stalked. I am sure they will also say that the crash fuelled the rage. Successful elites are formidable. Failed elites are vulnerable. The fastest fall in living standards since the 1920s makes the urge to take on anyone from the Murdochs to the prime minister all the keener.

If historians go beyond these generalities, though, they will find only confusion. The Occupy campaign is a true representative of our directionless times when reformers have no coherent ideology. Unlike previous leftwing protests, Occupy had no leaders and no manifesto. More to the point, it was proud to have no manifesto beyond a well-merited rage at what the bankers had done.

The confusion of the protesters is shared everywhere. People who want Leveson to attack the tabloids are inclined to defend the BBC and vice versa. Right-wingers are more anxious to denounce MPs for stealing public money than private sector bankers for wrecking the economy. On the left, it is the other way round. Meanwhile, double standards abound. The sadists and masturbators who gawped at the News of the World now condemn it. The borrowers, who piled up debts, now damn the banks for their own imprudence The destructive nature of modern outrage is as striking as its incoherence. The voters want blood. If the Savile affair ends with the BBC's director general resigning, they will be satisfied. Hardly anyone, however, talks about the need to reform to counter the next generation of Peter Rippons and Fred Goodwins.

It seems self-evident to me that we must have German-style worker directors on the boards of public and private sector hierarchies, so that whistleblowers in the mould of the magnificent Liz MacKean have someone in authority to talk to about incompetent or dangerous managers. I am also astonished that we have still not smashed the banking conglomerates and divided their retail from their casino arms. But I should be realistic. There is little prospect of crowds filling the streets to demand free speech in the workplace or of demonstrators chanting: "What do we want? A British Glass-Steagall. When do we want it? Now."

The old is dead but the new cannot be born. And because the coalition will not act as its midwife, I find it a hard government to hate. Its inability to map a new course for Britain makes it seem an irrelevance as much as a menace; a footnote in history that will be forgotten as soon as it is gone.

Paradoxically, given Labour's responsibility for the crisis, the only senior politician who understands the need for reform is the shy and stuttering Ed Miliband. He at least grasps that the world of Piers Morgan and Tony Blair, Rebekah Brooks and David Blunkett was not worth having. For all our current sufferings, we should be glad that we can never go back.