After the Conservatives had won the 1979 general election, Lady Hartwell, wife of the then proprietor of the Daily Telegraph, is reported to have said: "At last, we live in a world where it will be possible to sack servants again." Is that world coming to an end? Does the election of Derek Simpson to lead one of Britain's biggest unions (see Robert Taylor, page 14) signify the moment the working-class worm turned? May we even see, as Neal Lawson, a new Labour supporter, suggests (page 15), a return to corporatism?
It is as well to start by reminding ourselves exactly what happened in the 1970s. Nobody then thought it odd that governments, Tory and Labour, should have pay policies; the question was whether they should be voluntary or statutory. Two prime ministers fell - Edward Heath in 1974, amid candlelit homes and three-day working weeks, and James Callaghan in 1979, after the winter of discontent - mainly because workers refused to accept pay policies and went on strike. The miners rebelled against Mr Heath, the public sector workers against Mr (as he then was) Callaghan. Labour's voluntary pay policy was underscored by a "social contract": the party promised a better "social wage" in the form of higher public spending on schools, hospitals and pensions (plus food subsidies, and price and rent controls) in return for union wage restraint. This was more successful than folk memory suggests. It stuck until 1978 and helped bring down inflation. It collapsed for two reasons. First, after the IMF-imposed spending cuts of 1976, Labour could not deliver the social wage. Second, the workers rumbled that it was a bad deal: by 1977, the purchasing power of the average man with two children had fallen 7 per cent.
The loss of confidence for the left was profound. The social contract was the epitome of the collectivist belief that we were all in it together. What happened then was well described by the social commentator Peter York: "The belief that there was a clear common future for everyone evaporated. And people started thinking about 'my future', an individual future. It got privatised."
What could now evaporate, in the deepening crisis of capitalism, is the belief in an individual, privatised future. One of the great ambitions of Thatcherism and Reaganism was popular share ownership: the masses, it was thought, would be reconciled to capitalism if they got a share of the equity. So they did, not only through direct share ownership, but through private pensions, life policies and such government-supported schemes as PEPs and ISAs. It became an article of faith, among Labour as well as Tory politicians, that people should save more for themselves, and not rely on the state. Now, a raging bear market, to which the bottom seems nowhere in sight, threatens to make people who invested after the mid-1990s poorer than when they started. The whole basis upon which people were drawn into private investment - that companies liberated from state controls could make handsome profits - looks like an enormous fraud, which involved accountants and banks as well as company executives in deliberate deception. There was no real increase in company values, no "new paradigm", no dotcom miracle in which money could be made at infinite speed and at zero cost. Those in the loop knew this all along. It was not so much "irrational exuberance", as Alan Greenspan, the chairman of the US Federal Reserve, once described it, as an entirely rational swindle. The distinguished US economist Lester Thurow suggests that "scandals are endemic to capitalism" and that, whatever the regulations, the big players will always find new tricks to pull. Governments, Thurow says, should actively discourage individual investors.
Thus, just as the late 1970s exposed the failings of collectivism, the early 2000s are exposing the failings of capitalism. The hubris of those who thought state planning was the answer (almost incredibly, the 1974-79 Labour government aimed to make planning "agreements" with the top 100 companies) has been matched by the hubris of those who thought that market-driven new technology would take us to fresh heights of prosperity. All this may dawn on people slowly, but it looks as if capitalism's own social contract is collapsing. It could not deliver better social security, and, as the railways have shown, there must be doubts that it can deliver better public services. People may well turn to more collectivist bodies, including unions. How big a role the state can play is another matter. This may be the moment for that "third sector", of which we have heard much, but seen little, in recent years: the mutuals, the co-operatives, the non-profit trusts.
Life is full of hazards. No sooner has the Danish academic Bjorn Lomborg assured us that global warming is a false alarm - apparently invented by greedy scientists eager for state funds - and no sooner has David Blunkett got all potential terrorists safely locked up than we learn that an asteroid is heading for Earth, and will wipe many of us out in 2019. Asteroids now come thick and fast; three, we are told, have missed us by a whisker (give or take the odd million miles) in the past two years. No doubt the dinosaurs, if they had had scientists, and if they had not worried themselves into premature extinction, would have taken action to save themselves. If we wish, we can follow Mr Lomborg and dismiss the asteroid warnings as another bid for funds by scientists. Or we can put our faith in Mr Blunkett, and hope that the declaration of another state of emergency will do the trick.