The underlying problems, which the credit crunch has laid bare, are the aging of our societies, the failure of some of our education systems, the chronic vulnerability of our western patterns of energy and food consumption, the distorted allocation of resources by capital markets — and our inadequate means of supervising flows of capital across borders.

The fact that people are living longer has meant that the pension systems of most western countries are not viable. People are living too long and qualifying for pensions for too long to be supported in retirement by the contributions they made during their working lives. This was made worse by mistaken “early retirement“ schemes introduced to create jobs for younger people, or to solve short-term public finance difficulties.

The aging of societies has also contributed, along with law cases and incentives, to overuse of drugs and tests, leading to an explosion in health costs. David Walker, former Comptroller of the United States, says, “If there is one thing that could bankrupt the United States, it is out-of-control health costs.”

The United States is the worst case here, but other countries are heading in the same direction.

All these problems were known during the credit boom, but there was no apparent necessity to do anything about them, because money was artificially plentiful. Indeed, it was nearly impossible to do anything because the availability of revenues made anyone who proposed unpopular changes appear to be heartless, or politically unrealistic. All that has changed now.

Education systems have also been failing to respond to challenges. A significant proportion of students continue to drop out of school with few or no qualifications. This is the case all over the western world.

One of the reasons for this is that our educational systems have been designed for those with academic aptitudes, but not to nurture other forms of intelligence. It is too easy to drop to the back of the class. Extra help needs to be given when children are still very young, if it is not to be too late.

The only jobs some of those leaving school without a qualification are able to do are ones that can be done more cheaply in China or Vietnam. Young, unqualified males are particularly vulnerable. Seventy-five percent of the recently unemployed in the United States are male. Young females can find jobs locally in traditional female occupations in the service sector, but the jobs that unskilled males did were either in sectors that migrated to the Far East or in volatile sectors like construction.

Income inequality has risen, especially in English-speaking countries. In 1965, U.S. CEOs earned 24 times the average employee. In 2007, they earned 275 times as much. Since 1970, productivity in the United States has risen five times as fast as wages have.

Long-term unemployment is on the increase, and the longer people are unemployed, the more their skills and aptitudes for work deteriorate. The new jobs are not being created in the sectors for which many of the unemployed are able to qualify.

The underlying failure in all these developments was a failure of education to prepare people for economic reality. The social consequences of that failure make people angry and unwilling to accept leadership when it is most needed.

This leadership crisis was not helped by developments in the capital markets, which have not covered themselves in glory in recent years. That matters a great deal, especially given the pre-eminence the financial industry has in the United States and the United Kingdom.

Thanks to financial innovations, shares in companies could be bought and sold again with much greater frequency than ever before. Hostile takeovers became easier to mount. This meant that companies were judged, and executives rewarded, on the basis of short-term movements of share prices.

The scale and speed of capital movements around the world also overwhelmed those trying to keep track of it in the public interest.

Failure to monitor the consequences of these rapid movements had its most devastating effect in banking, but it infected the rest of the economy too. The freeing up of global capital markets has outdistanced the supervisory capacity, and even the understanding, of national financial regulators.

It allowed banks to be run as a peculiar form of “workers cooperatives.” The short-term financial interests of senior employees were given preference over the longer term interests of shareholders.

(We have not even begun to consider the remedy to this problem. One suggestion, to give preference to longer-term perspectives, might be realized by enhancing the voting power of shareholders who hold their shares for a longer period.)

This has led to the build-up of unhealthy imbalances in the world. Half of the debt of the United States is now held by foreigners, particularly by the Chinese central bank. The Chinese have bought these dollar denominated assets in order to keep the value of their own currency artificially low.

Meanwhile the United States is printing more dollars through quantitative easing. As the Carnegie Foundation said last month, “The United States should cease pursuing what is increasingly seen as a policy of currency depreciation against the rest of the world.”

The net effect of these political decisions is that both the Chinese and American currencies are now being artificially devalued against other currencies like the euro. That is unsustainable. It introduces a lot more uncertainty and tension into a world that is already uncertain and tense. It is reminiscent of the behavior of nations during the 1930s.

Politically created problems need political solutions. The venue in which these political solutions should be found is the G20. But it has not yet found its feet, and is governed by a rotating presidency, a system the EU has found to be unsatisfactory.

Anatole Kaletsky, in his recent book, “Capitalism 4.0,” says, “International coordination of economic policies will be inevitable if the world economy is not to degenerate into a new financial crisis.”

To sum up, if free movement of capital across borders is to continue, the world probably needs to institute what the EU itself is trying to grope its way towards for the euro — a system of cross border economic governance that highlights imbalances and distortions long before they become bubbles about to burst.

Any system of global economic governance will, of course, mean a pooling of sovereignty, something that both the United States and China would be very reluctant to agree to. But if one is to preserve complete free movement of capital across the world, you have to have a global rule maker and enforcer. Capitalism only works when there are rules that are enforced.

That applies within nations. It also applies between nations. If complete freedom from rules were the answer, Somalia would be the richest capitalist country in the world!

Fines and penalties may not be necessary. So long as information is shared and published in a timely way, markets will discipline delinquent behavior. The job of supra-national supervisors is to ensure that the information is obtained and published in good time and is interpreted intelligently and courageously.

The IMF can do this work, so long as it is allowed to. It should be given the full range of supervisory functions over all countries, including the United States and China. If disputes arise, we already have, in the WTO panels, a system of adjudication.

The crisis has created the sense of urgency. It is for political leaders now to come up with the vision.