Is there always a political fallout from the effects of severe economic crises such as Britain is now experiencing? The answer must surely be yes.

In the 1930s the Depression broke the Macdonald Labour Party, divided the Liberals, ushered in an emergency National Government and led to the emergence of Oswald Mosley's British Union of Fascists. Normal party politics was restored only 15 years later, in the campaign of 1945 when Labour rose triumphantly to power to build a New Jerusalem.

Not only did the recession reshape British politics in the 1930s, but the crisis also provoked a growing disillusionment with conventional party politics and the role of Parliament. The political elite that dominated the National Government was seen as self-interested and out of touch. There was little sleaze about in the 1930s - a great many MPs had private means - but there was a strong feeling among the more progressive forces in British society that MPs were a barrier to social change, economic reform and, above all, to a foreign policy that would really reflect the wide enthusiasm for the League of Nations and popular anti-war sentiment.

In 1935 there were two countrywide votes. One was the general election which the National Government won in the absence of a serious opposition. The second was the peace ballot organised by a number of voluntary associations under the direction of the peace campaigner, Lord Robert Cecil. Half a million volunteers tramped the streets knocking on doors to get voters to fill out a voting slip in favour of the league, disarmament, international control of aviation and so on. In the end 11.6 million people voted, almost all in favour. This was a remarkable expression of independent public opinion; the Government took no notice.

Voluntary effort to try to get across alternative, and more progressive, political solutions mushroomed in the 1930s. Above all the view took hold that Parliament no longer really represented what most people thought. Between 1936 and 1939 widespread efforts were made to create a people's front or popular front that would unite progressive opinion, independently of party allegiance. Sir Stafford Cripps, later Chancellor in the 1945 Government, was temporarily kicked out of the Labour Party in 1939 for making one last effort to create a united popular front to challenge Parliament. The National Government survived the people's front pressure but only at the cost of growing rejection of old-fashioned parliamentary politics, most marked among the chattering classes.

What did not happen was a shift to the political extremes, as in Germany when Hitler exploited economic disaster to make his the country's largest party. British fascism and communism remained fringe movements because much progressive opinion wanted liberal values and social progress, not an authoritarian new order. This is familiar ground today. The sense of disillusionment with conventional party politics, where the main parties seem the same and the new political class lines its own nest, opens the way to political extremism. The British National Party is waiting its turn; radical protest at the G20 summit filled the City with campaigners. Real politics, which will engage people's enthusiasm and mobilise their anxiety, may be about to move from Westminster and out on to the street, but it is unlikely to become a mass movement unless conditions deteriorate even more.

The crisis over what MPs should or should not have claimed is only a symptom of a deeper malaise, which has grown over the past decade. As voting figures fall and party membership collapses, it is evident that something is wrong at the heart of democratic politics. As in the 1930s, people follow causes, not parties. Then it was the Spanish republicans, or disarmament, or peace, or economic revolution. Now it is green politics, hostility to war and foreign intervention, calls for peace, but also demands for a British Britain and growing religious and ethnic intolerance. Parliament no longer feels the centre of what is going on, but appears to be one among many self-interested institutions (like the banks) whose members are more concerned to get their second mortgage paid than to help those who can't pay even for one.

The growing gulf between governors and governed is, of course, nothing new as the 1930s' experience makes clear. However, there are two big differences from that earlier post-crash political world. First the external threat that existed in the 1930s from authoritarian, militarist states no longer exists. The War on Terror has created its own demons, but Osama bin Laden is not Hitler. This has not prevented a wave of popular anxiety after 9/11. Fears in the 1930s of total war and bombing apocalypse have been replaced by fears of dirty bombs and computer meltdown, threats that are almost invisible but no less deadly. Yet these popular anxieties seem out of step with the real nature of the threat; in the 1930s the threats from Germany, Italy, Japan and the Soviet Union were tangible.

The second big difference is perhaps the most alarming. While confidence in Parliament declines, the power of the State increases. In the 1930s there was a small State with a relatively light hand and much of what was done was by voluntary effort and mass participation. Today, when strikes are closely controlled, the right to demonstrate is hedged about with restrictions (a special law stops any demonstration within a mile of Parliament itself), the police are armed with as much power as they can possible handle and vast databanks of our personal information, the State has become the central fact in our lives - difficult to argue with and armed with excessive power to coerce.

The dangers here are evident. If Parliament declines in popular esteem and party politics becomes a messy and corrupt battleground, the stage is set for a British version of the Berlusconi factor. In Italy the erosion of rights and strengthened power of the executive is backed by growing state power. Backstairs fascism is already happening in Italy; popular vigilance and public protest may not be enough to stem it. In Britain there is as yet no Berlusconi in waiting, but the lesson of the 1930s is clear. To maintain the liberal standards that have marked the British political system for a century or more requires broad participation from the public, an awareness of the dangers that now face the democratic process, and a return to the traditions of protest that governments of any hue have never liked, but that lie at the heart of any democratic society.

Richard Overy is author of The Morbid Age: Britain Between the Wars, (Allen Lane, £25)

Times Recommends

• We have kit and leadership. Let’s go
• Behind the scenes at the biggest deal
• Conferences — what a waste of money