NEOLIBERAL capitalism has failed and, at a point, it will be abandoned as an economic model. 

This will not happen because right-wing governments, the political class or the corporate world simply decide to change direction because it is rational to do so. 

It will happen because of crisis, towards which the world is again being driven. 

Neoliberalism, the modern and extreme form of laissez-faire capitalism, took a body blow with the 2008 world financial crisis. 

The liberalisation, marketisation, privatisation and globalisation kick-started by the Thatcher government in 1979 brought the world close to an economic abyss and it was only the intervention of governments which prevented catastrophe.

Banks and financial institutions were nationalised, vast amounts of public money were flooded into the financial system to prevent an imminent collapse and printing money on a massive scale has continued since. 

All of this has clearly demonstrated the socialist case, that economies have to be managed by governments, that a substantial measure of public ownership and control is essential to secure the real interests and well-being of humanity, of working people across the world.

Globalised market forces, left to themselves, generate instability, inequality, low and negative growth and ultimately crisis, and the seeds of the next crisis can now be seen. 

The news media choose not to focus on these worrying signs, but their occasional bouts of economic optimism are no more than whistling in the dark. 

The big economic blocs, the major national economies, are all showing evidence of deep-seated economic problems, some further advanced than others. 

The most dramatic case is Japan, where output has fallen by 6.8 per cent on an annualised basis and consumer spending has plummeted by 5.2 per cent, the highest on record, as deflation takes hold. 

There are serious economic weaknesses in the US too, with real incomes and living standards falling and job vacancies disappearing. 

Closer to home, the European Union, and the eurozone in particular, is in serious trouble. 

Greece, Spain and Portugal have suffered savage economic decline, with unemployment surging to levels unimagined when the ill-fated single currency venture began. 

Britain’s decision to stay out of the euro has been shown to be completely vindicated, although that will not mean that Britain will be unaffected by the growing crisis. 

In the short term, however, it has avoided the economic nightmare inflicted on Spain, Greece and Portugal. 

This can be illustrated by the fact that if unemployment in Britain was at the same level as Spain, for example, we would now have over seven million on the dole, not two million. 

Indeed, had Britain joined the euro at the prevailing currency parity of the time, the economy would by now have crashed with a certain exit from the euro and the whole euro project would almost certainly have collapsed.

The eurozone is now in desperate trouble. Repeated attempts have been made to promote growth, primarily by EU leaders making optimistic noises and committing to do “whatever it takes” to save the euro. 

Words have not been followed by action and the austerity policies inflicted on the weaker members of the eurozone continue to drive the whole EU edifice towards the cliff edge. 

The coming EU crisis will strike when the major economies of the eurozone sink even deeper into difficulty. 

Italy is first in line, but France is also in serious trouble and even Germany, the supposed EU economic powerhouse, is on the edge of recession. 

There are calls for Italy to re-establish the lira as its only route of escape from economic crisis, many in France want the franc restored and leading figures in Dutch politics are saying that “the euro is doomed.” 

The eurozone is drifting into deflation, the same dangerous economic phenomenon afflicting Japan.

Britain has so far avoided the worst of the economic storm affecting the EU, but it too has deep-seated economic problems. 

Wages have fallen and the manufacturing sector is too small and under continuing threat. 

The depreciation of sterling after 2008, together with almost zero interest rates, provided some protection from the international economic downturn. 

But the more recent weakening of the euro has brought a corresponding and dangerous rise in sterling’s parity which is again damaging manufacturing. 

Britain’s gigantic trade deficit with the rest of the EU — over £1 billion a week — is clear evidence of a badly misaligned sterling-euro exchange rate, a situation which has persisted since the mid-1990s and which is the major factor in Britain’s manufacturing decline. 

British manufacturing as a proportion of the national economy is around half that of Germany, a result of decades of malign neglect and misguided economic policies by successive governments.

Labour fought the 1983 general election on the basis of a reflationary “alternative economic strategy” and included plans to extend public ownership. 

It is time to revisit such a strategy, but not just in Britain. If the major economies do not soon begin the process of re-establishing the successful post-war economic model, designed at Bretton Woods in 1944 and implemented by left-leaning governments thereafter, they will indeed reap an economic whirlwind. 

Laissez-faire, neoliberal capitalism does not work and it should be reeled in before crisis strikes again.

Kelvin Hopkins is Labour MP for Luton North.