Has the world changed beyond recognition over the past two generations, according to the common cliché, or is it simply our perception of it that has altered? Observations that the world is different, and that it yet obdurately remains the same, are both true. Wealth and power have become more concentrated; accumulation continues where riches are already abundant. In that sense, changes have been small. On the other hand, the popular view of these agglomerations of wealth has been radically modified.

The rich have ceased to be regarded as enemies of the people, monopolists of the substance of the poor. No longer possessors of gains ill-gotten, filthy lucre or tainted money, the rich are now regarded as an inspiration, heroes of wealth creation, generators of universal wellbeing, since it is by the grace of their abundance that the rest of us subsist.

To measure the epochal nature of what has occurred in Britain, few instruments exist, since who can say how the psyche and sensibility of the people have been affected by what is blandly referred to as 'economic and social developments'? A more penetrating view is required than that provided by opinion polls, economic indicators, or even more recent indices of happiness. The much-documented churnings of the past half-century do indeed partly account for the change in our subjective view of ourselves, our purpose and function; but these are also a consequence of events set in train long ago by the coming of industrial society.

To take account of what has become of us, we need to look back to the time when an archaic and wasting peasantry was transformed into an industrial working class. That upheaval, that coercive, driven transition, offers the closest parallel to the mutation of the past half-century. For these epic processes - chronicled variously as the deindustrialisation of Britain, integration into a single global economy, consumerism, the rise of the middle class, the waning of the working class, multiculturalism - have serious implications for what we thought were our 'values', and the very reason for existence of these rich societies.

The psyche of an agrarian people was dismantled and reassembled in response to the 'new' rhythms of industrial production in the early 19th century. The structures that evolved at that time have been dismantled now in the making of contemporary man and woman. Then, as now, this is no mere 'adjustment' to change: it has been savage, often violent. In the early industrial period, we saw not only the creation of a working class, miners and manufacturing workers, the starving handloom weavers who surrendered their independence to enter the textile industry, but also the emergence of an 'underclass' living on the streets of major towns and cities, disorder and crime, and the punitive response of magistrate, workhouse master and mill owner. A measure of the mental disorder of the time is clear from the enormous increase in the number of 'lunatic asylums' between the late 18th century and the 1840s.

The making of an industrial working class required the imposition of draconian discipline: the regularity, timekeeping and frugality of a regimented, quasi-military production process. It demanded a curb on desires and appetites, and the virtues preached by authority of abstinence, restraint and thrift. The deferment of the better life to the hereafter was an aspect of this, as secular disciplines were accompanied by the promise of rewards in the next world. This proposal was resisted by political radicals and also by the 'rough' working class, who partook freely of the comforts of this life, particularly alcohol, laudanum, sex and gambling. What these shamed outcasts were not to know was that their way of life, rehabilitated, was destined to become dominant in the (secular) time to come.

The unmaking of the working class in our time has required quite different compulsions and a loosening of repressive control and containment. This has been represented as progress, liberation and improvement - not without justification, for we always know what we are being liberated from. What we are being emancipated into is less clear.

The transformation of popular sensibility since 1945 has also been attended by social and psychological disruption, distinct patterns of mental and emotional disorder, breakdown of social institutions and dissolution of networks of kin and community. The principal difference with these dislocations is that, unlike earlier industrial convulsions, they have been accompanied by far greater prosperity and rising disposable income. And since poverty and insufficiency were principal attendants of the earlier era, the erasure of the most extreme of these privations has masked any losses and penalties that may have been incurred by stealth among all the improvements.

It is a familiar observation that social evils can long go unrecognised as long as they are neither named nor described. An obscure sense that the elevation into global imperative of the Western way of life may be accompanied by uncounted reckonings has been dismissed. All residual social problems are seen as a consequence of a faulty human nature, disordered individuals, a perverse refusal of a few malcontents to subscribe to the view that everything that has happened is for the best.

It is easier to describe the presenting symptoms of the contemporary malaise than to recognise their cause. Thus the 'perpetrators' of recent rioting, looting and violence can be said to have been produced by bad parenting, criminality, lack of respect, nihilism, 'moral collapse' and, significantly, an absence of limits or boundaries.

But many of these are consequences of the very improvements everyone applauds; and it is precisely in these that the origin of fresh disorders is to be sought. For the remaking of the people in the image of the global market is today's equivalent of the psychological remoulding of the old rural sensibility in the interests of manufacturing industry. This recent development has been so strange and so at odds with the earlier function of the people that it is easily overlooked. But what has been absolutely essential to people-as-markets instead of people-as-captives-of-manufacture has been the removal of constraints on desire, the breakdown of resistance, and the emergence of an individualism based upon self-regard and self-indulgence (how many things are sold with the exhortation to let yourself go, give in to temptation, spoil yourself?). The origin of this altered sense of purpose is not obscure: it marks the social descent of what was previously the prerogative of privilege, an aristocratic disdain for everything that does not further the satisfactions of the individual.

This change, so widely observed, so partially described, so one-sidedly perceived, corresponds, like the emergence of an industrial proletariat long ago, to material changes in the world. That a market economy would evolve, with the removal of the labour of industrial manufacturing and the subculture of resistance generated by it (the labouring poor asked only for security and sufficiency), into a market society, and that this would, in turn, generate a market culture has been scarcely visible to those concerned with maintaining order, social peace and a kind of harmony. Only now that the market has already become cosmos, we are forced to confront some of the consequences of 'progress'. This universal market is, of course, a mutation of a more 'primitive' version of markets, which implied face-to-face transactions and relationships, and were in any case subordinate to other social imperatives. But when the market usurps all other social, moral and ethical concerns, strange outcomes are inevitable. The market - global, impalpable, mystifying - is totalising and inescapable; and we discover to our dismay not only that we inhabit ideology but that ideology also inhabits us. For any system of belief to be successful, congruence between the objective world and subjective perception is essential; and such conditions are fulfilled by the iconography of globalism.

This has become a major determinant upon the lives of people who are made by, within and for the market. Of the early industrial era, labour historians J.L. and Barbara Hammond wrote: "Workers were not citizens of this or that town, but hands of this or that master." Of today's youth, it could equally be said they are not inhabitants of this or that neighbourhood, but dependants of the products of this or that transnational entity.

Into this evolution of British industrial society and its aftermath, many people have come from other parts of the world, whose forebears were also subject to the authoritarian impositions of racism, imperialism, dominance, and slavery. Fugitives, migrants and exiles from the colonial periphery arrived in the metropolis, the 'mother-country', at the very moment when the old disciplines there were in a state of dissolution. They quickly found themselves, in the main, at the bottom of society, and were expected to find a place in a floating world of decaying certainties and vanishing punitive severity. Among the wreckage, why would peer-groups, gangs and other forms of belonging not swiftly materialise?

Since the principal compulsion of the West is economic growth and expansion, it would be astonishing if this had not been internalised by the people. The idea of limitless growth and perpetual increase has been, literally, taken to heart. Boundaries are breached, desire is deregulated, wants are not artificially created but rather encouraged to grow spontaneously in an atmosphere where permanent increase is the overriding objective, and any interruption in economic growth soon becomes tragedy. For the success of this model depends on the satisfaction of dilating desires, and the ability of a system to respond to them by offering people the possibility of buying in whatever is needful for the full life. At times of economic slowdown, of recession and falling income, people become angry in ways that politicians well recognise ("It's the economy, stupid.").

The pathologies of recent events in England are not only those in the consciousness of individuals. They flow through the culture of the market, a powerful, corrosive toxin. Most parents negotiate with their young and the demands of the universal market: they strike deals, make compromises, come to an agreement out of love and affection, even though the exigencies of the market pull in another direction. The power to resist does indeed depend upon the circumstances of certain social groups and individuals. For instance, the rich and knowing understand the paradox of buying their way out of the buy-in culture: they know the value of discipline and self-control, and it is duly applied to those who will inherit great privilege and considerable fortunes. Pity the poor, who do not have the strength to resist or the power to create strategies to repel this invasive culture, so different from, yet eerily reminiscent of, an earlier industrial humanity at the mercy of forces over which they had no control, and by which they were dazzled and confused.

When confronted by an unfamiliar situation, it is easy to stay with the archaic language of an industrial past: the politics of Left and Right, the tired clichés of having a stake in society, knowing right from wrong, entitlements and responsibilities, criminality and depravity on the one hand, and a lexicon of privation, government cuts, sink estates and all the rest of it on the other.

Just as it was difficult to make sense of early industrialism, so it is hard to come to terms with the reconstructed psyche of the people in our own time. When an absence of boundaries is essential in an economy for which perpetual expansion is a primary purpose, it is accompanied by an internal sense of limitlessness. While the rich can more or less make good the deficits by keeping pace with the expropriations of our humanity (even though they also complain about what they cannot afford, thanks to penal taxation and government predations on their hard-earned income), the mainstream barely can (keeping up with the much-maligned Joneses), and the poor cannot, even though they are all subject to the same exhortations and compulsions as the rich. When the opportunity arises, why would we not make up for all that is missing in our lives in any way we can? Looting is after all only a more brutal form of shopping for those who lack the means of exchange but realise that nothing lies between desire and its fulfilment but a fragile pane of glass.

We have yet to come to terms with the world we have made, for society and culture have been overrun by the runaway freedoms of a global market, over which no one, it seems, has control; a savage god, to be propitiated, as George Osborne admitted when he insisted that Britain is a 'safe haven' for investment. If it is scarcely a safe haven for its people, this is because their wellbeing is merely a by-product of the tyranny of autonomous, majestic and unappealable markets.

Jeremy Seabrook is the author of Consuming Cultures: Globalization and Local Lives.