No Depression = no 30s-style revolution in ideas. Discuss.
I've been going through the rushes we shot in New York on the day Lehman collapsed, in advance of tonight's programme - a special edition of Newsnight exploring what's changed as a result of the financial meltdown.
It was a surreal day and one of the most surreal moments happened on the stroke of 9am, when a nemesis figure arrived at Lehman's front door in the form of a large man with a beard and a red flag. Only his light-sensitive spectacles spoiled the Karl Marx likeness. He shocked the cops and earpiece-toting security guards by launching into an f-word-laden diatribe along these lines:
"F--- Lehman; f--- AIG, f--- Merill Lynch. Capitalism is doomed. They want us, the working people, to pay for the crisis. Our parents told us about the Depression - they want us to relive the Depression. They want that for us. Hell, no!"
When approached by reporters requesting his last name for the record he responded, after a moment's thought, with a snort: "What's your last name?" Not Hollywood central casting, nor Thomas Pynchon blowing deep and surreal could have invented such a figure nor placed him in such a place at such a time.
Yet the amazing thing about the crisis, one year on, is that he was substantially wrong. Many on the left - and for that matter the ideological right - assumed that the predominantly neo-liberal governments of the G7 countries would let the recession rip, let the banks fail and foist the cost of the crisis onto the population in the form of job cuts, bankruptcies and falling incomes.
They thought this because they had strong evidence to go on. In the early 1980s, the policy response to economic downturn could be summed up by John Major's later catchphrase: "If it isn't hurting, it isn't working." Both in Britain and the US governments crafted policies that would exaggerate the effects of recession: raising taxes, raising interest rates, letting the "lame ducks" of industry go to the wall.
For the old there was, too, the memory of 1929, when the US authorities, in deference to the market, simply let the financial collapse take its toll in the hope that it would "liquidate" all that was inefficient and leave the system stronger.
This time around it's been different. The state has rescued the market. Banks in Britain, the US and beyond have been half-nationalised. Taxpayers' money to the tune of $5 trillion worldwide has been used to replace collapsing demand from the private sector. The G20 leaders have congratulated themselves on the record, and in writing, for "avoiding the mistakes of the 1930s".
From the get-go this response has confused and alienated those who believe markets should be allowed to work untrammelled. The demonstrations, e-mail campaigns etc against the bailouts in the US, which have spilled over now into anti-tax tea parties and protests against state-run healthcare, are evidence of this.
But the bailouts have also confused and alienated the left. Instead of a collapse scenario there is now, at worst, a 10-year stagnation and quite possibly - for the most state-led economies like Brazil and China - rapid resurgence.
"They" - the man with a red flag meant the powerful ruling elite of the Western countries - it turns out, did not "want us to re-live the Depression". In fact they more or less spontaneously swung to the opposite position: they threw away the rule book in order to avoid having to impose the cost of crisis on their own populations in the here and now (though as we will see, the cost will be borne later).
The question historians will ask is "why?" - and how will that change the world?
In the first place the answer is because the free-market wing of US economics did, in its own way, learn the lessons of 1929. The left has long scoffed at Milton Friedman for trying to reduce the cause of capitalism's epoch changing Depression to a simple mistake of central bank policy.
But the result of Friedman's views becoming orthodox was that, on the eve of crisis, an academic steeped in them was at the helm of the central bank and determined not to repeat the mistakes of 1929. In 2004 Ben Bernanke told Friedman and co-author Anna Schwarz, at Friedman's 90th birthday party:
"Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
That is what was at stake on the morning of Wednesday 17 of September, when Bernanke and Hank Paulson realised they were facing financial collapse on a scale that would dwarf Lehman and AIG, and a Depression that would start on or around the following Monday when the ATM machines stopped dispensing cash and giant private firms stopped issuing pay cheques.
So the first part of the answer is that freemarket economics, it turns out, contains sophisticated, if rusty, counterbalances to the doctrine that the market is always right. The freemarketeers had long pondered what they would do in the case of another 1929 - Bernanke famously postulating the concept of dropping money from a helicopter. And they did it.
Of course that does not solve the ideological crisis for free-market economics. As Alan Greenspan famously admitted, it's broken - above all the assertion that the best regulator is the market itself. He told Congress on 23 September last year:
"Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself especially, are in a state of shocked disbelief... I made a mistake in presuming that the self interest of banks and others was such that they were best capable of protecting their own shareholders."
But better and more sophisticated economic theory is only one reason for the turn to state intervention. For some reason most of the world's governing parties and politicians either did not want to impose austerity, or thought they could not get away with it.
I think the reasons for this are the most interesting question arising for historians, and I hope they're being pondered by somebody reading this in 2109 (obviously in a subterranean bubble protected from the collapsing ecosphere) in a better position to know the answers. Something in the spirit of the age made it impossible to justify unleashing market-led destruction of businesses, jobs and lives.
It think this comes down to three things.
First, technology. We might moan about the collapse of representative democracy but we do live in an age of networked communications: that is, the old model of information flowing from the centre outwards is dead.
Just as the story of Tolkien's Lord of the Rings becomes impossible if you give Frodo a cellphone, so many of the great political impositions of the 20th Century would have been impossible with networked comms. That's why the Chinese and North Korean governments are so hostile to the internet and SMS. Unpopular policies have become quite difficult to impose: you have to manufacture consent and you have to control the information flow.
Second, the demise of deference. The populations of the West are not greatly content even with central banks printing money, slashing interest rates and governments handing out large dollops of cash to keep unspectacular small firms afloat. Any attempt to do what the red flag man anticipated - that is to foist pay cuts, job losses, givebacks of work conditions etc over a short period of time - would have provoked resistance. The one country where it became unavoidable - Latvia - went from Swedish-style apathy to violent rioting within weeks and was only stabilised by external intervention.
Third, there is this sense that - even if something was deeply wrong within the financial system - the real-world economy was not broken and did not need fixing with a dose of Depression. Those who remember the 1980s will know that the pro-cyclical (ie crisis worsening) measures adopted by governments were rationalised by the need to drive out inefficient businesses and archaic labour practices: Fleet Street printers, legendarily clocking on with the assumed name of Mickey Mouse to draw an extra salary, with the connivance of managers; British Leyland shop stewards who could bring the entire factory to a standstill by ringing a bell etc.
There is no sense now that the real-world economy is beset by labour strife or inefficiency, and that has been a major factor conditioning the response of those in power. However it is beset by debt and we are probably kidding ourselves that there is not a deep malaise out there in a world where cappucino cafes rise while real wages fall.
The result of all this, one year on, is an ideological hiatus. Free-market capitalism did not behave as its red flag waving critics thought it would. Indeed, it did not even behave in a way its supporters assumed it would. It found - pun intended - a "third way".
It adopted - reluctantly and with many false starts - Keynesian measures. It printed money and it threw taxpayers' money at demand and the state now owns large parts of the banking system. Because of all these highly abnormal things, which cannot be easily filmed, illustrated or directly experienced, the average Joanna and Joe actually experiences life going on as normal.
That, for me, is the answer to the question: why has there not been an intellectual revolution in response to all this?
But remember we're only about a quarter of the way through the crisis. Because all state intervention does is transfer the pain from the present to the future, and from the private sector to the public sector.
Already this is creating disquiet because of the rapid revival of investment banking. JP Morgan analysts show that 50-60% of all bank profits are being generated from high-risk activity right now. That, at root, is why the bankers and hedge fund bosses will be walking away with giant bonuses at Christmas, even as the jobless totals rise.
But it will get scratchier. In states that cannot afford massive deficits there will be austerity. That's why the UK debate on cuts, when and where they'll be made etc has hardly started. In states that can afford the spending spree - above all America with its deficit and China with its habitual surplus - the decision to resolve the crisis in the public sector rather than the private lays the basis for a dangerous clash of interests in the mid-decade.
Does America devalue its own debt and bankrupt China in the process, provoking a trade war, or not? That's a question I hope will be answered within a decade rather than a century, and hopefully with a benign outcome.
On top of all this, the fact is that the "real world" economy, for all its vibrancy, was based on something unsustainable - that is, the constant expansion of cheap credit. Whether it's the lifestyle celebrated in Friends or the one depicted in The Wire, it was all based on easy money that is not going to be available in the same amounts going forward.
So, at the end of it all, we've got an anomaly: state capitalism and Keynesian solutions enacted by politicians and advisers who would prefer the free market and who don't buy Keynes' core assertion that capitalism is inherently unstable.
Will this lead to a wider intellectual revolution as it did in the 1930s? We'll be discussing this tonight on Newsnight.
Some believe it's just a matter of time. In the 1930s the crisis signalled a fairly rapid swing in ideology, away from the market and individualism and towards not the state but also social programmes based on redistribution and solidarity.
But we tend to foreshorten the timescale. The policy revolution took four years and a US presidential election. The revolution in economics took seven years - with Keynes publishing the General Theory only in 1936. And in literature 15 years lie between the creation of Jay Gatsby and the creation of Tom Joad. So it might just be timescale.
But there's another view. The most trenchant critics of capitalism, in the anti-globalisation movement, have been going round for quite some time now propagating the slogan "One No; Many Yeses". That insistence on fragmentation and diversity rather than a single doctrine was actually born out of experience too.
In the 1930s sociologists noted the emergence of what they called the "authoritarian rebel" - the "party soldier" of the left and right, the Hollywood gangster, the brooding cartoon anti-hero.
Many on today's left, scarred by the experience of Soviet communism, are determined not to repeat the experience of the authoritarian rebel. In addition, they regard the issue of state versus market as secondary to saving the planet. That's not to deny there are some, like the man with the red flag, who hold a traditional leftist critique of capitalism. The question - and they are certainly asking it themselves - is why that view has not gained more popularity in response to the crisis.
For all these reasons, it may not just be that we're experiencing an ideological time-lag. The failure of a new narrative to emerge may have deeper roots. Technology has fractured the whole concept of dominant narratives; the anticapitalist movement has rejected a dominant narrative in favour of many competing ones; and for many the battleground has moved from the terrain of the economy to the ecosphere, altering the very concept of left and right.
That's how it looks a year after the explosion: mind you, it would have looked very different in October 1930 to how it looked in October 1933.
We'll be exploring all this with a cast of thinkers, strategists, idealists and bankers tonight on Newsnight at 2230. Pile into the debate right here, in the comments section...