The person who is best qualified to hold up a mirror to British politics today is neither a minister nor an academic. He is not even British. No: he is, of course, Michel Barnier, the French-born servant of Brussels. In his 1,036 days as the EU’s chief negotiator, he has sat for numbing hours opposite Theresa May, haggled with David Davis and Dominic Raab and their junior ministers and faced down countless Whitehall officials. He is the outsider who knows our system inside out. So when he popped up right at the end of the BBC’s fly on the wall Storyville documentaries on the Brexit negotiations, I leaned in to listen.

Barnier doesn’t do florid, so his words leapt out … It wasn’t even Brexit at all. The UK is in a crisis as big as the country itself.

Filmed in March, as it became clear that Britain would not be leaving Europe any time soon, Barnier is shown briefing senior European parliamentarians. This latest breakdown is “more than weariness”, he tells them. “There is a very serious crisis in the UK which … isn’t linked to the text of Brexit and even less to the Irish backstop. It’s a much deeper crisis. An existential crisis.”

Barnier doesn’t do florid, so his words leapt out. After almost three years with his eye pressed to a microscope trained on the British elite, here was one of the EU’s finest declaring that the real failure wasn’t this clause or that loophole. It wasn’t even Brexit at all. The UK is in a crisis as big as the country itself.

There are times when some politicians and pundits remember this, when they jerk awake to the reality that the country stands at a moment of reckoning more profound than Suez – one in which our institutions, our economy and our system of representation are all being shown up as simply not up to the job. This week is plainly not one of those times. I watched Barnier’s remarks on Sunday night, as the first UK results from the European elections began to roll in, showing a far-right party as the clear winner. I woke up to a righteous hailstorm of commentary about What Jeremy Must Say Now and Who Replaces Theresa. Such debates can satisfactorily steam up the sash windows of central London, but set in any context they seem almost recklessly marginal.

We have just been through an election that saw Labour wiped out in Scotland, trounced in Wales, and under siege in London, while the party of government trailed behind the Greens. Between them, the two main parties took less than a quarter of all votes. We can enter more caveats than in any insurance contract – low turnout, protest vote, all the rest – but it hardly changes the bottom line. We are fast approaching the third anniversary of the Brexit referendum and Westminster has still barely bothered to respond to the grievances that drove a result campaigned against by the entirety of the political and economic establishment.

After decades of taking the voters largely for granted, the politicians and pundits can’t decide how to respond, so are caught in an elite paralysis. Meanwhile, the public has worked itself up into an impotent fury in which our party democracy is a sitting target. The resulting national mood is straight out of King Lear: “I will do such things, / What they are, yet I know not: but they shall be / The terrors of the earth.”

And the time is filled with displacement activity. As I write, 10 MPs have applied to become leader of the Conservative party – all using the same words in subtly different combinations. We must be “courageous and optimistic”, says Boris Johnson, while Raab represents “optimistic vision”. But lo! Yonder comes Michael Gove, bearing “unity” and “vision”, elbowing aside Sajid Javid who promises to “find unity”.

On it goes, like some interminable episode of The Apprentice, with each failing ink-toner salesman begging Suralan to pay heed to their “passion”. No one dares talk about the appalling parliamentary maths that makes even a Queen’s speech impossible. Nor do they admit to having no actual ideas of their own. Forty years after Margaret Thatcher entered Downing Street, her great-grandchildren are still squabbling over who can claim her ideas. What is Raab’s great wheeze? To slash income tax by 5p.

This is Thatcherism, in all its cold, stiff, failed ugliness. And the problem there is that the Thatcher experiment has pretty much failed. Four decades after she took power, 38% of working-age households now take more from the state in benefits, health and education than they pay back in taxes. Wealth in Britain is so concentrated that the head of the Institute for Fiscal Studies believes “inheritance is probably the most crucial factor in determining a person’s overall wealth since Victorian times”.

Around the same time Barnier was caught on film, I met another outsider expert on the state of Britain. Roberto Unger is a philosopher at Harvard, much admired by Ed Miliband and routinely given such plaudits as “the world’s most important contemporary intellectual”. A Brazilian, he also served as a government minister under both Lula and Dilma Rouseff, where he was known to pass time between meetings by dipping into Milton’s Paradise Lost.

A “sympathetic foreign admirer of the British national adventure”, Unger couldn’t take his eyes off the great Brexit car crash. Although no fan of Brussels, he observed: “If you leave the EU, you do so to become something else. But you don’t appear to know what you want to become.” Empire 2.0 and all that flag-waving guff he rightly waved away.

“European politicians whether centre-left or centre-right are so used to the politics of splitting the difference. They are incapable of facing up to fundamental problems,” he said. “And that leaves a vast vacuum to be filled by any passing nationalist populism.” Except they too have no ideas, apart from buying a few more years for a busted economic model. That is true of Nigel Farage, of Johnson, of Raab – and all the contenders for the Tory leadership.

Instead, Unger wants a radical transfer of power and money to people and places far from Westminster, so they can try their own social and economic experiments that will inform and revivify national politics. The guerrilla localism of Preston, in Lancashire, fits that brief, as does the Welsh government’s new focus on the foundational economy. Only Westminster starves such places of money and reacts to any outbreak of political imagination with suspicion.

Yet the philosopher’s challenge is the right one. What Brexit has shown again is our inability to think anew about what the state and the economy are for, to sketch out what a different future might look like. Instead, the country is stuck in the old battles over who gets what subsidies and which clique in Westminster runs things. You can play those games for a while, as long as everyone feels they are getting richer. But post-crash Britain has already been through one lost decade of wage growth. We need to get serious if we are not to have more, and the accompanying toxic politics.

• Aditya Chakrabortty is a Guardian columnist