There's more to this than a botched budget.

Capitalism isn't working and Liz Truss has shown us why.

I don't want to contribute to the general state of panic and end of days, but I think there might be more to the current crisis than Vladimir Putin and the “human hand grenade” as Liz Truss has been called. Certainly a disastrous budget with unfunded tax cuts and implausible promises of growth, precipitated the sterling crisis. Financial markets just don't believe that the UK can honour its debts.

But we can see from the confusion in the Bank of England, and in central banks across the world, that something is deeply wrong with the system. Chickens and a whole flock of other financial fowl, are coming home to roost.

Capitalism is no stranger to crisis – it is built into the system. Every half century or so it collapses in a heap because the system only works if it is expanding, and recently the only expansion has been in public and private debt. These debts are being called in.

The roots of the present crisis lie in the three ugly sisters: globalisation, monopoly and inequality. These have been features of the capitalist system since Karl Marx. But every crisis is different. This one is compounded by hyper-financialisation after the banking crisis of 2008, and by digitisation.

Globalisation over the last three decades sucked capital and jobs out of the mature western economies, and dumped much the cash in offshore accounts while sending the jobs to low wage countries like China. This, combined with new technology, hollowed out middle class occupations in countries like America, causing a chronic weakening of demand at the same time as wealth was funnelling upwards to a plutocratic caste of billionaires..

This was all papered over by voodoo finance. Cheap money stimulated growth in the high streets and online based on the inflated values of real estate. Near zero rates meant people on modest incomes who in the past could only afford houses worth say £200,000 could now finance mortgages of £500,000. This wealth effect made them spend, even though the cash was largely illusory.

This much we know. But on top of this has been the sclerosis of monopoly capitalism. The internet, far from opening markets to competition, has created a hyper-concentration of behemoth companies many of whom generate wealth from next to nothing. Amazon is just a mail order company, but its control of algorithms and its half a million servers has made it the second largest company in the world. Facebook and Google are really just websites that managed to get control of a colossal income stream through surveillance capitalism and by stealing the revenues of old media.

The productivity puzzle that everyone talks about is why growth has stalled in the leading world economies just when new technology should have created a myriad of new products and markets. But growth is just another way of describing how capitalism works though creative destruction. By discarding old methods of production it creates new products and revolutionises markets. It isn't doing that. That's the one thing that Liz Truss got right, though her attempted solution, radical tax cuts, was hopelessly misguided.

The world economy needs to get rid of a mountain of debt and kill off and legions of zombie companies kept alive by cheap money. For capitalism to work, monopolies must be broken up, markets liberalised and regulation lessened to allow new companies to flourish. At present we have an economy in which corporations have merged with the state and use regulation to keep competitors out.

But there is another more fundamental problem, almost a philosophical one, in resolving this crisis. In the past, capitalism was challenged by socialists who envisaged a new and more prosperous future once greedy capitalist were expropriated by the working class. No one believes in communism any more and more importantly, much of the intellectual elites in the West no longer believe in progress and economic growth.

The Greens who are in government in Scotland and Germany, are opposed to growth on principle. But the demonisation of growth has pervaded the thinking of academics, media and politicians across the advanced capitalist countries. This 'limits to growth” ideology largely, though not entirely borne out of the very real threat to the environment from climate change. Growth aversion equally applies to the solutions to climate change especially the ones involving large scale engineering projects, carbon capture and storage, onshore wind etc..

The one thing Boris Johnson got right is that climate change is both a problem and a solution. Tackling it will release investment of $120 trillion, according to the former Bank of England governor, Mark Carney. Green growth is not a contradiction in terms. But getting it started is not looking easy.

In the meantime the sclerotic economies of the west are still trying to play the financialisation game. Pumping cheap money into the system to inflate asset prices and stimulate spending. But as we watch the Bank of England founder this weekend, it seems pretty clear that it is over for the bubble economy. Perhaps it is fitting that the oldest industrialised country, Britain, is at the leading edge of the new crisis of capitalism

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