As global markets continue their slide into oblivion and the Washington Consensus begins to resemble a cringe-worthy pun from a late-era issue of Mad magazine, it’s worth reflecting on what self-professed “centre-left” governments are actually doing in response.

Although broadly supportive of Hank Paulson’s $US700 billion Wall Street bailout — the shortest of short-term fixes designed to strike the baddest of bad debts off the books — social democrats like Kevin Rudd and Gordon Brown remain hamstrung when it comes to dealing with the finance clot wreaking havoc on global markets.

As Guy Rundle argued recently, Western economies, with their manufacturing industries gutted and the entrails shipped abroad, are struggling to actually produce anything beyond amorphous “services” and intellectual property. This has mirrored the spread of cancerous and impossible-to-decipher debt instruments, producing the biggest financial bubble in world history. That bubble has just burst.

Sub-prime mortgages may have been the bitter pill, but it’s the yawning distance between these debt vehicles and the bricks-and-mortar of our everyday lives that could prove fatal.

Assuming the current crisis doesn’t result in the second coming of socialism, we’re left with the familiar remedy of ever more-regulated domestic markets. But the genuine policy levers of an earlier era remain out of reach.

Over the last 30 years, the Keynesian social fabric has being steadily eroded by the slavish adherence of Western governments to global market forces (“external harmonisation”) as a non-negotiable pre-cursor to domestic policymaking. Despite the tinkering of Rudd and co, this remains broadly the case. Not that they’d have you believe it.

Consider Rudd’s extraordinary November 2006 Monthly essay, decrying the economic rationalist ‘brutopia’ constructed by the Howard government. To inner city liberals, his thesis looked promising – their dreams of a return to a 1970s welfarism, with a renewed commitment to social investment, was about to be realised. Rudd continues to receive the benefit of the doubt even as he rams through his own brutal policies to force the indigenous population into paid work.

It’s only now that concrete barriers to Rudd’s vision are starting to emerge. Australia’s infrastructure, like Britain’s, is in a state of terminal decline. Sustained borrowing to fund irreversible social progress has evaporated. Substitute ‘public private partnerships’ are short-term band aids designed to shift liabilities off the government’s balance sheet and uphold its credit rating. When they fail, the old story of privatised profits and socialised losses rings true, just like Paulson’s bailout.

So what is to be done? The social democratic parties, formed as they were as institutionalised mechanisms to achieve socialism “through the institutions”, are effectively hollowed-out shells.

Confronted with their own impotency, centre-left visionaries are mulling ‘ethical alternatives’, concerned, it would seem, with small-targets and a new political language.

As Robert Taylor noted in a recent issue of Dissent magazine, paraphrasing Dutch Labour Party leader Wouter Bos:

…this means putting key political words such as identity, empathy, trust, and security at the heart of social democracy’s new political language. He [Bos] wants to see the parties of the centre-left reconnecting themselves to their core voters by recognising and responding to their genuine fears of insecurity and difference.

In some ways, this is understandable.

Western societies are now so culturally diverse, and so economically oriented around credit-fuelled consumption, that a return to collective ownership, once the mantra of the centre-left, looks impossible. The tax revenue reaped from the biggest domestic corporations is slipping as operations are shipped offshore. Borrowing is an IMF no-no. In the absence of world government, piecemeal domestic responses loom as the only viable alternative.

The broader challenge for the Left, and for politics, is to imagine a radically-different regulatory framework with actual meaning for alienated individuals struggling, in a world of tumult, to carve out a viable identity and a cohesive personal narrative. This won’t come from centre-left policy elites—it requires a new breed of social movements to organise around these faultlines and assert their right to economic and cultural autonomy.

But the outline of such a movement is only just being sketched and echoing Paulson’s doubters on Wall St (the Dow has lost 13 per cent of its value in the last five sessions), there’s little reason to believe conditions on Main St, or anywhere else, will begin to improve any time soon.