In March, Mervyn King, governor of the Bank of England, expressed surprise that people were not angrier about the causes and aftermath of the banking crisis. "Now is the period when the cost is being paid [of the bailouts]," he said. "I'm surprised the real anger hasn't been greater than it has." There are signs that the mood is turning. Inspired by the Occupy Wall Street movement in New York and demonstrations in other cities around the world, protesters have set up camp outside St Paul's Cathedral in London - the closest they could get to the Stock Exchange - where they intend to remain until Christmas and beyond.
London is one of 951 cities to witness protests in recent days. From Amsterdam to Athens, Berlin to Bogotá, Tokyo to Toronto, people have taken to the streets to protest against inequality and injustice. Leading the way are the disaffected young. The demos vary in size and character but they share a common root: a belief that the market is not working for the majority. For this reason, the new événements, unlike the anti-globalisation protests that shook Seattle and Genoa a decade ago, enjoy the sympathy of the political mainstream. The last wave of protests took place at a time of easy credit, cheap oil and low unemployment; the current wave accompanies the largest fall in living standards since the 1920s.
In nearly every developed country, the gap between rich and poor has yawned since the early 1980s as a result of the neoliberal policies - tax cuts for the wealthy, deregulation, privatisation - pursued by governments of both right and left. Britain is no longer a society in which the benefits of economic growth are widely distributed. The richest 10 per cent now receives 31 per cent of national income and owns almost half of the country's personal assets, while the poorest 10 per cent takes home just 1 per cent of the total income. The coalition government's decision to rely so heavily on spending cuts, rather than tax rises, to reduce the Budget deficit will inevitably widen the gap.
In the US, the situation is even worse. The richest 1 per cent of Americans received 23.5 per cent of national income in 2007, up from 10 per cent in 1980. Belatedly, the Obama administration has recognised a political opportunity, promising to ensure that "the interest of the 99 per cent of Americans is well represented". Even conservatives now recognise that the status quo is untenable. It was Alan Greenspan, the former head of the US Federal Reserve and disciple of the free-market guru Ayn Rand, who warned in 2005: "This is not the type of thing which a democratic society - a capitalist democratic society - can really accept without addressing."
For now, the priority in the UK and elsewhere is to use all means necessary to avert another global recession. Finance ministers looking for inspiration should read last week's New Statesman, in which nine of the world's leading economists suggested imaginative alternatives to ever-greater austerity. But once the immediate danger has passed, policymakers must dedicate themselves to developing an economic model that recouples growth and wages. As the protesters recognise, it was the decline in real wages that led to the crash as families borrowed to maintain their living standards. Since 2003, 11 million low- and middle-income earners have had no rise in their real incomes.
Tony Blair used to respond to questions about inequality by quipping that he didn't go into politics "to make sure that David Beckham earns less money". That was at a time of plenty. Today's politicians cannot afford to be so glib. Those who wish to avoid a repeat of the financial crash must respond to the cry for a fairer, more balanced society. The alternative is despair for the many, especially the young.