“Although the crash saw the collapse of market fundamentalism, it also saw the collapse of tax renevues.” © Joe D

Since the financial crash of 2008, centre-left parties across the developed world have been wrestling with the question: how do we do social democracy when there’s less money around?

Of course both right and left have experienced philosophical discomfort since the crash of 2008. For the right, the catastrophic failure of global financial markets destroyed the certainties of market fundamentalism that had built up since the late 1970s. It turned out that markets are fragile things, needing care and attention, and the rules, norms and behaviour on which they depend to work in the interests of all suffered from decades of neglect.

The divisive social consequences of market fundamentalism had already been revealed before 2008. What the crash did was destroy this view of markets on its own terms: as an engine of efficiency, stability and prosperity. The right responded cleverly to this legitimacy crisis by trying to rewrite the history of the crash as soon as it happened as a history of state failure, not market failure. The rewriting continues. I’m sure we’ll see a lot of it in the Conservative Party’s election campaign.

For the left, the challenge was more surprising but no less profound. Because although the crash saw the collapse of market fundamentalism, it also saw the collapse of the tax revenues on which its commitment to social investment and redistribution depended. If 2008 exposed the Co…

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