I'm a bit suspicious of the concept of a 'defining moment'. In my experience what are seen as defining moments when they happen often turn out to have defined nothing. In the case of this particular budget the really defining moment came with Geoffrey Howe's budget in 1981. That was the first clear sign that the Keynesian middle way had finally disappeared, and that neo-liberalism was now the order of the day. Since then, neo-liberalism has enjoyed a virtually uninterrupted reign.
For nearly thirty years it was the common sense of the age, the lodestar of virtually every Government in the developed world, of the institutions of global economic governance, like the IMF and the World Bank, and of the formerly social-democratic European Commission. New Labour bought into the neo-liberal paradigm as enthusiastically as the Thatcherites had done. Keynesian economics were derided as 'tax and spend'; undertakings that the Thatcherites had shrunk from privatising were sold off; Gordon Brown, the sometime author of an admiring biography of James Maxton, the hero of the Red Clyde, became the cheerleader of Britain's swollen financial sector. And inequality - which had levelled off under Major after its phenomenal growth in the later years of the Thatcher Government - rose inexorably.
Then came the crash. Suddenly, Keynes came in from the cold, while Hayek was toppled from his perch. But the Keynesian renaissance did not last. It was petering out even before the election. Now Clegg and Cameron have killed it stone dead. Right across Europe, neo-liberalism is in the ascendant again. The only western country to stand out against the trend is the United States. It is an astonishing spectacle. No reputable economist I can think of has endorsed the Osborne Budget.
As one man, the Nobel prizewinners Joe Stiglitz and Paul Krugman; the authoritative (and far from leftist) economic commentators Samuel Brittan and Martin Wolf; and Keynes's equally authoritative biographer, Robert Skidelsky have subjected the thinking behind it to withering scorn. Cameron's role in all this is certainly inglorious, but it is not particularly surprising. With all his inclusive whiggish gradualism, he has never given much sign of economic literacy. The Liberal Democrats are a different kettle of fish. Chris Huhne and Vince Cable are nothing if not economically literate. Yet, at the first whiff of grapeshot from the Governor of the Bank of England, they have abandoned the terrain they occupied in the election and betrayed the millions who voted for their party.
The implications cut deep - much deeper than most post-budget commentary suggests. The Keynesian middle way was designed to reform capitalism, not to supersede it. For a generation or so it appeared to have succeeded. In western Europe and North America, at least, it delivered thirty years of unprecedented prosperity and social peace: the 'trente glorieuses' as the French called them. But it was never as secure as it looked. It depended on delicate, second-best compromises between capital and labour, the private and the public, the state and the market. And in the end, these unravelled.
Were they bound to? Or could the middle way have been saved if its defenders had been wiser, more adept and more resolute? We shall never know, of course. But we do know two things. The first is that the rhetoric with which Nick Clegg and his colleagues defend their apostasy presupposes that the middle way was always - and still is - a chimera: that markets are stronger than governments, and that it is futile to try to gainsay market imperatives. That is what Clegg and Cable mean when they say the coalition's budget was unavoidable: that they had to run the risk of a double dip depression since the alternative was a Greek-style sovereign debt crisis. What they don't seem to realise is that the logic of that rhetoric runs counter, not just to Keynesian economics, but to liberal politics - at least as they have been practised in this country for more than a century.
Since well before Keynes, British liberals have sought to tame capitalism in the interests of social justice and a vigorous public domain, in other words to transcend the harsh choice between the free market and state socialism.
All the liberal greats - John Stuart Mill, Herbert Asquith, David Lloyd George and William Beveridge - have taken part in that endeavour, as well as lesser, later liberals like David Steel and Paddy Ashdown. If Clegg and Cable are right, they were wasting their time. Capitalism is capitalism: it has to be taken neat or not at all. We do have to choose between the free market and the overmighty state. The historic liberal project which is one of the glories of the British political tradition is for the birds.
The implications are stark. The most obvious is that, if liberal politics are impossible, the Liberal Democrat party is surplus to requirements. But there is a less obvious implication as well. For the second thing we know is that free-market capitalism - the untamed capitalism whose mantras Clegg and Cable regurgitate in speech after speech - is inherently unstable. It is dynamic, alright; but its dynamism comes with a heavy price tag. Crashes are to it what fleas are to dogs. So are inequality, injustice, resentment and alienation. It is a strange destination for the heirs of Mill and Lloyd George.