Illustration: Michael Fitzjames

Illustration: Michael Fitzjames

How they must bleed for us. In 2012, the world's 100 richest people became $230 billion richer. They are now worth $1.8 trillion: just less than the entire output of Britain.

This is not the result of chance. The rise in their fortunes is the direct result of policies. Here are a few: the reduction of tax rates and tax enforcement; governments' refusal to recoup a decent share of revenues from minerals and land; the privatisation of public assets and the creation of a toll-booth economy; wage liberalisation and the destruction of collective bargaining.

The policies that made the global monarchs so rich are the policies squeezing everyone else. This is not what the theory predicted. Friedrich Hayek, Milton Friedman and their disciples - in a thousand business schools, the International Monetary Fund , the World Bank, the Organisation for Economic Co-operation and Development and just about every modern government - have argued that the less governments tax the rich, defend workers and redistribute wealth, the more prosperous everyone will be. Any attempt to reduce inequality would damage the efficiency of the market, impeding the rising tide that lifts all boats. The apostles have conducted a 30-year global experiment, and the results are now in. Total failure.

Before I go on, I should point out that I don't believe perpetual economic growth is either sustainable or desirable. But if growth is your aim - an aim to which every government claims to subscribe - you couldn't make a bigger mess of it than by releasing the super-rich from the constraints of democracy.

Last year's annual report by the United Nations Conference on Trade and Development should have been an obituary for the neoliberal model developed by Hayek and Friedman and their disciples. It shows unequivocally that their policies have created the opposite outcomes to those they predicted. As neoliberal policies (cutting taxes for the rich, privatising state assets, deregulating labour, reducing social security) began to bite from the 1980s onwards, growth rates started to fall and unemployment to rise.

The remarkable growth in the rich nations during the '50s, '60s and '70s was made possible by the destruction of the wealth and power of the elite, as a result of the 1930s Great Depression and World War II. Their embarrassment gave the other 99 per cent an unprecedented chance to demand redistribution, state spending and social security, all of which stimulated demand.

Neoliberalism was an attempt to turn back these reforms. Lavishly funded by millionaires, its advocates were amazingly successful - politically. Economically they flopped.

Throughout OECD countries, taxation has become more regressive: the rich pay less, the poor pay more. The result, the neoliberals claimed, would be that economic efficiency and investment would rise, enriching everyone. The opposite occurred. As taxes on the rich and on business diminished, the spending power of the state and poorer people fell, and demand contracted. Investment rates declined, in step with companies' expectations of growth.

The neoliberals also insisted unrestrained inequality in incomes and flexible wages would reduce unemployment. But throughout the rich world inequality and unemployment have soared. The recent jump in unemployment in most developed countries - worse than in any previous recession of the past three decades - was preceded by the lowest level of wages as a share of gross domestic product since World War II. Bang goes the theory. It failed for the same obvious reason; low wages suppress demand, which suppresses employment.

As wages stagnated, people supplemented their income with debt. Rising debt fed the deregulated banks. We are all aware of the consequences. The greater inequality becomes, the UN report finds, the less stable the economy and the lower its rates of growth. The policies with which neoliberal governments seek to reduce their deficits and stimulate their economies are counter-productive.

In Britain, where I live, the impending reduction of the top rate of income tax (from 50 per cent to 45 per cent) will not boost government revenue or private enterprise, but it will enrich the speculators who tanked the economy. Goldman Sachs and other banks are thinking of delaying bonus payments to take advantage of it. A welfare bill approved by Parliament last week will not help to clear the deficit or stimulate employment. It will reduce demand, suppressing economic recovery. The same goes for capping public sector pay. ''Relearning some old lessons about fairness and participation,'' the UN says, ''is the only way to eventually overcome the crisis and pursue a path of sustainable economic development.''

As I say, I have no dog in this race, except a belief that no one, in this sea of riches, should have to be poor. But staring dumbfounded at the lessons unlearned in the West, it strikes me that the entire structure of neoliberal thought is a fraud. The demands of the ultra-rich have been dressed up as sophisticated economic theory and applied regardless of the outcome. The complete failure of this world-scale experiment is no impediment to its repetition. This has nothing to do with economics. It has everything to do with power.

>> George Monbiot is an author and columnist for The Guardian. His latest books are Heat: How to stop the planet burning and Bring on the Apocalypse?