Stephen King: The Seventies were just dire – let's resolve to put them firmly behind us

Economic Outlook: No one should want to return to the Seventies but we are in danger ofheading back to something strikingly similar

One of my more remarkable experiences last year was a visit to the Edinburgh Fringe where a comedian decided – in all seriousness, I believe – to compare our current lamentable economic circumstances with the halcyon days of yore. Specifically, she was referring to the glory days of the Seventies. I was amazed.

I am a child of the Seventies. My formative years were dominated by Slade, flares, oil shocks, industrial unrest, three-day weeks and candlelight. The last of these was a consequence of the early-Seventies coal dispute which led to wave-upon-wave of power cuts up and down the nation. I also, just about, recall extraordinarily high inflation and a political debate between a Mr Heath, a Mr Wilson and, so it seemed at the time, a Mr Yarwood.

The Seventies ended prematurely after Margaret Thatcher's general election triumph in May 1979. Her victory marked a watershed, a signal that Britain could no longer continue down a path heading inexorably towards the edge of a cliff. Loathed by many, she brought in a new brand of politics which clearly chimed with the public at large and, in particular, with the citizens of Basildon.

Britain – and, in time, many other parts of the western world – waved goodbye to what had become a tired post-war consensus. Nationalisation, social ownership, high inflation, union power and a bloated public sector were out: privatisation, owner occupation, price stability, profit and a reduced welfare state were in. Britain's economic performance turned a corner: no longer the sick man of Europe, Mrs Thatcher's experiment became Britain's new – and increasingly successful – economic and political reality. Slowly but surely, the rest of the world followed suit. Europe's Single Market – allowing free movement of labour, goods, services and capital – would not have happened without Mrs T.

It was, unfortunately, a violent economic revolution. Unemployment soared, income inequality rose, greed was good. Initially, the revolution should have been kinder. Nevertheless, it marked a welcome departure from some of the more monstrous economic crimes of the Seventies. Most obviously, inflation plunged, allowing markets to work more efficiently and preventing the implicit theft by the state of the savings of little old ladies throughout the country.

Indeed, despite her enthusiasm for Messrs Friedman and Hayek, Mrs T's desire to eradicate inflation rested in part with John Maynard Keynes and Lenin. As Keynes claimed in his Economic Consequences of the Peace: "Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens... The process engages all the hidden forces of economic law on the side of destruction." Mrs T understood this; my Edinburgh comedian did not.

No one should wish to return to the Seventies. We are, however, in danger of heading back to something strikingly similar. We're not likely to see monumental inflation again – at 4.8 per cent, today's inflation is a tad too high, but it's nothing like the 20 per cent-plus inflation rates seen all those years ago.

But there are plenty of other similarities: a lack of firm electoral franchise, reflected in the reliance on Liberal/LibDem support, a crushingly weak growth rate, an economy which has lived beyond its means, an unstable global economic environment, an absence of deep political debate ("cuts now" versus "cuts later" wasn't inspirational then and it's not inspirational now), and political upheaval in the Middle East (in 1979, we waved goodbye to the Shah of Iran and said hello to Ayatollah Khomeini).

The Seventies represented too many claims on too little output. The UK had lost its way. Unable to cope with the oil shocks of 1973 and 1979, its sclerotic labour markets were dominated by a sense of entitlement. And there was a corroding sense of cynicism: nothing could be done to make the world a better place. Seen this way, Mrs Thatcher's arrival was a bit like the last throw of the dice from an increasingly disillusioned electorate.

Today, we face the same problem: too many claims on too little output. But it's a generational dispute, such as: should the old be entitled to generous healthcare, should the young be entitled to free education and what should happen to the squeezed middle?

All the while, we are in danger of forgetting that more output will help resolve many of these disputes. Yet there are opportunities out there. The New Year Honours list included a knighthood for Jonathan Ive, without whom you would not be listening to your iPod. On a recent trip to New York I was serenaded by the strains of Adele. Thanks to the decision not to join the euro, the cost of borrowing is a lot lower than in Italy, Spain or Greece.

There is no need to wallow in faux-nostalgia for the Seventies but we must avoid being caught in a trap which resembles that decade. More than anything, we need to re-discover economic growth and the entrepreneurial spirit to lift us out of our entitlement gloom.

That should be our collective resolution for the New Year.