In the summer of 1981, I sneaked out of my parents' home in Altrincham to sit on the wall of a churchyard and have a smoke. A police car roared up. The officer ordered me to get indoors and stay there. You will find this hard to believe, but I was an argumentative young man. I replied that the police had no right to order a British citizen to do anything when he was not committing a crime or – and I added this caveat carefully – giving the constabulary reasonable grounds to suspect that he might commit a crime.

The copper lunged at me. There were riots everywhere, he screamed. "Get off the fucking streets!" The ghettos of Birmingham, Liverpool and Bristol were indeed ablaze. But this was Altrincham, the first town in the Cheshire gin- and-Jag belt. The notion that its residents would lob Molotov cocktails across its leafy lanes was absurd. I thought about explaining the facts on the ground to the constable, but there was violence in his eyes – and fear too – so I backed off.

Fear was everywhere during the long crisis of 1973 to 1983. Trade union militancy pushed conservative opinion to the end of its tether. The miners' strike of 1973 to 1974 first brought power cuts and a three-day week and then destroyed the reputation of Edward Heath's Conservative government. Rampant inflation, industrial militancy and a war in Northern Ireland persuaded domestic and international observers that Britain was ungovernable.

Britain's leaders did everything they could to confirm that impression. Harold Wilson, Heath's Labour successor, descended into paranoid fantasy: "I see myself as a big fat spider in the corner of the room," he babbled to journalists just after he resigned in 1976.

Sir William Armstrong the cabinet secretary went further and had a nervous breakdown in front of his colleagues. Wilson and Armstrong's departures did nothing to restore calm. The Winter of Discontent of 1978 to 1979 stopped the voters returning Jim Callaghan, Wilson's successor, and began 18 years of Tory rule.

In Strange Days Indeed, his history of the manias of the 70s, Francis Wheen documents how thoroughly foreigners' image of the British as a polite and stoical people collapsed.

"Goodbye, Great Britain," a Wall Street Journal editorial concluded. "It was nice knowing you." Henry Kissinger told President Ford that Britain had sunk to "begging, borrowing and stealing". In his memoir Lucky George, the diplomat-turned-politician George Walden recalled talking to a leader of the French Communist party. Far from being pleased by the economic and political chaos in Britain, the communist was appalled. "It's not what we expect from you," shouted the supposed revolutionary. "The English are supposed to be an anchor of stability in democratic Europe."

Well, we are back in character now. For all the complaints from the powerful about the decline of deference, the most notable feature of the British today is their docility, servility, even.

You can see it in the revival of the gruesome obsessions of popular monarchism. In 1977, the BBC had to rig the charts to ensure that the Sex Pistol's republican anthem God Save the Queen was not at number one in the week of the Queen's silver jubilee. In 2012, pop stars and "alternative" comedians fell over themselves to pay homage to their sovereign lady on the occasion of her golden jubilee.

The obedient temperament is all the more obvious when you examine the inability of the majority of the population to grasp how dreadful their position has become. Living standards fell in the 70s; indeed, the strikes of the period were little more than an attempt by organised labour to ensure that wages kept pace with inflation.

Today, we are not seeing a temporary fall, which will soon be reversed, but interminable decline. As the Resolution Foundation emphasises, the incomes of the majority of families began to stagnate in 2003 and fell after the crash. "By 2020, middle-income households will have incomes around 3% lower than in 2008, a level last seen in 2001," it predicts. "These lost decades for living standards are unprecedented in modern times."

Yet, for all the periodic hysteria, in conservative circles about a return to the Winter of Discontent, Mrs Thatcher's anti-union legislation and the arrival on the global market of China's reserve army of labour have ensured that unions can do little to protect their members or anyone else. In 1979, which began with the Winter of Discontent, 29,474,000 working days were lost in industrial disputes. In 2011, when austerity was biting, employers were pushing down wages and the coalition was promising a purge of public sector jobs, strikes wiped out a mere 1,389,700 working days.

Speaking of austerity, I am sure you noticed the praise for George Osborne's autumn statement. The fact that he managed to get to the House of Commons without tripping over his shoelaces and could read his speech without his lips going numb was a triumph, apparently.

The sketch writers had less to say on the gist of his announcement. Tax rises and spending cuts will continue until 2018, if you assume Osborne's predictions are correct. As all his other predictions have been wrong, I don't see why we should. It is better and safer to assume that we are stuck with austerity without end.

I accept that there were riots in 2011 and some vigorous protests by students. But compare them with the disorder of the 70s and 80s and you see how subdued the British have become.

Even crime is down. After record rises for 40 years, it began to fall in the mid-90s. It is falling still, despite the recession and despite a million young people on the dole and millions more stuck in dead-end jobs and in dingy, and extortionately expensive accommodation.

I don't want riots or a crime wave, but let's face it, when establishment commentators talked of the "crisis of the 70s", what they meant was that organised labour could restrict the powerful's freedom of movement.

With organised labour now emasculated, managers and owners can reward themselves without restraint and governments can stagger from blunder to blunder without a thought for those who must suffer the consequences.

Forty years on and we are in a different kind of crisis. A crisis brought by the elite rather than the masses. And the most frightening thing about it is that the elite is not frightened any more.