Social democracy has nothing distinctive to say about many of the problems we currently face.

An ominous paradox hangs over the battered ranks of European social democracy. By rights, this should be a social-democratic moment. The economic crisis of the last two years has shown beyond doubt that the neoliberal economic paradigm which has dominated academic theory and political practice for nearly thirty years is – quite simply – wrong. Markets don’t behave in the way that neoliberals say they do. They can’t safely be allowed to regulate themselves. It is not the case that government failure is more common than market failure. The rising tide of market-induced growth does not float all boats. Fiscal deficits are not always bad. State management of the economy is necessary – in good times as well as in bad. The unhindered pursuit of individual self interest does not hold the key to prosperity and growth; the assumption that it does has helped to procure the most devastating fall in output and employment for eighty years.

Above all, we have learned anew that the rational economic actor whom neoliberal economists put at the centre of their mental universe is a chimera. Allegedly rational economic actors procured a swelling orgy of risk-taking that culminated in the near collapse of the world’s financial system when the bubble burst. The financial services sector was driven by the wild stampedes of what George Soros, the uncrowned king of hedge-fund managers, called ‘the electronic herd’, not by reason. Keynes’s mordant warning against allowing capital investment to become ‘the by-product of a casino’ has turned out to be as pertinent in the 2000s as it was in the 1930s. And it has become clear that state intervention on a scale unprecedented in peace time has offered the only hope of rescuing the market economy from itself.

All this should have been music to social-democratic ears. During the long ascendancy of the neoliberal paradigm, social democrats were trapped. If they echoed the neoliberal mantras of individualism, deregulation, privatisation and marketisation – as the New Democrats did in the United States and New Labour did in Britain – they risked losing their souls. If they rejected them, they lost all hope of influencing events. Now the crash has sprung the trap. Market fundamentalism is no longer the monarch of all it surveys. A space for social-democratic discourse – perhaps even for a social-democratic paradigm – should surely have opened up.

Yet, so far, the only response has been a deafening silence. The Obama administration in the United States and the Brown government in Britain have signally failed to offer a new social-democratic approach to the new, post-crash world. Both seem bent on returning, as fast as they prudently can, to a cleaned-up version of business as usual; and, in Brown’s case, electoral defeat at some point in the next few months seems virtually inevitable. On the Continental side of the English Channel and the North Sea, the landscape is equally bleak. In the heartland nations of the European Union, the right, not the left, are the chief beneficiaries of the crash. Merkel, Sarkozy and (astonishingly) even the increasingly battered and ludicrous Berlusconi dominate their respective political communities.

The implications are more profound – and a lot more painful – than most social democrats appear to realise. It is an illusion to think that, somewhere at the end of a rainbow, lies a shiny new political vision which would re-vitalise social democracy if only social democrats were clever enough, or eloquent enough – or possibly courageous enough – to discover and articulate it. The social-democratic malaise goes far deeper than that. There are plenty of evils for social democrats to combat. The ancient enemies of mankind – poverty, indignity, cruelty, injustice – have not disappeared, and probably never will. Lately they have been joined by a new enemy: the looming threat of an environmental catastrophe which may yet destroy civilised life on this planet. The problem is that social democracy – at least in any of the senses in which the term has been used up to now – has nothing distinctive to say about them.

Sometimes the central state will have to play a role in combating them; often, supranational institutions will have to play a part as well. But it is one thing to use state power to combat particular, known and visible evils, in a wary and cautious spirit, quite another to imagine that enlightened social engineers, guided by the pure light of reason, can re-make society from the top down.

This is not a call for political quietism: far from it. We, as a species, will need every ounce of intelligence, skill, courage, determination, forethought and generosity of spirit we possess to avert the catastrophe that looms ahead. But social democrats have no special lien on these. Other traditions – in particular, the conservative tradition of Burkean prudence and the republican tradition of civic duty and public reasoning – have as much to say to the tormented twenty-first century as ours. We should stop asking whether social democracy has a future, and ask instead whether the human race has a future. To put it at its lowest, the answer, at the moment, is by no means clear.