Everybody knows about the Swinging Sixties, whether they wrap them in sweet nostalgia or heartily detest them as Margaret Thatcher did. "Fashionable theories and permissive claptrap," she declared in 1982, "set the scene for a society in which old values of discipline and restraint were denigrated."

So how did all this change come about? There is no question that Britain was in the forefront of the transformation. We produced standard-bearers such as Mary Quant, Twiggy, the Beatles, Sean Connery, David Bailey, David Hockney, Julie Christie and Terence Stamp. Even our curmudgeonly neighbours, the French, refer to the era as "les années anglaises" (although many still claim, erroneously, that the mini was invented by Courrèges and not by Quant).

When Quant and her husband, Alexander Plunket Greene, took her new youth-celebrating styles to the United States in 1960, the Americans were incredulous that the staid British could produce such things — but they also recognised that the new British fashion was poised for universal conquest.

Enthusiasm abroad for our popular culture can be traced in American college magazines and in teen publications like Big (Italy), which in 1965 spoke of "our dear, simpaticissimi friends the Beatles". As other countries adopted epoch-making laws regarding the rights of individuals, it was to our examples, many the result of initiatives by particular MPs responding to changing public attitudes, that they referred.

The Obscene Publications Act was piloted through parliament in 1958 by Roy Jenkins and became law in 1959, giving publishers much greater leeway when it came to putting out material that had hitherto been regarded as obscene, providing it had literary merit. The new act had a huge bearing on the show trial of the age — in 1960, Lady Chatterley's Lover by D H Lawrence, just published in paperback for the first time, was found not to be obscene.

Reforms covering homosexuality, abortion, distribution of contraceptives and the Civic Amenities Act (1967) — a prototype conservation measure — were followed by suffrage for 18-year-olds, the abolition of theatre censorship, the appointment of a parliamentary ombudsman (1968), laws on divorce (1969) and equal-pay and divorced women's property rights (1970).

It was clear that we were leading the way. In some western European countries, abortion reform and votes for 18-year-olds did not arrive until the 1970s.

So why did the cultural revolution occur in Britain? It was the result of a unique convergence of circumstances and events. The 1940s baby boom had resulted in a high proportion of young people; economic growth gave them unprecedented security and self-confidence (they had jobs and money), and their elders the chance to embrace the new boom in consumer goods. There were technological advances: in travel (steam trains faded out, private cars crammed the roads, jet planes ruled the skies); communications (the Telstar satellite in 1962, colour TV in 1968); production and distribution of music; and the manufacture of consumer mod cons.

A slight cold-war thaw revived some of wartime's altruism and the great educational aspirations of the 1940s and 50s bore fruit: day-release classes for those in routine jobs, grammar schools for the brightest and best of the working class, and a growth in art colleges.Many of the era's distinctive cultural developments sprang from the latter, the cocktail shakers of class. Lower middle-, working-, and a few upper-class girls and boys at Salford, Hornsey, Norwich and St Martins discussed Sartre, played rock'n'roll and designed clothes.

The sexual revolution had predated the wide availability of the Pill, but its effects were consolidated as it became easier to obtain. These changes coincided with a reaction, among the newly educated young, against the stultifying conventions and taboos of the 1950s. New radical theories were being propagated, notably those bringing together Marx and Freud and insisting on the evil of all types of "repression". There were student radicals (such as Tariq Ali and Christopher Hitchens) who genuinely believed that capitalism was on the point of collapse and revolution at hand. Nuclear weapons, colonial conflicts, events in Central Africa and in South America, and the Vietnam war, seemed to offer evidence of the evils of imperialism and capitalism, and fed the culture of protest. So there was much hot air, and sporadic violence, on campuses and even in the streets. In part, that was provoked by the intransigence of the lower echelons of the judiciary, universities and police — at times, delight seemed to be taken in total resistance to youth's aspirations and activities.

At the same time, other sections of the Establishment revived their interest in classic liberal principles such as civil rights and tolerance. Appointed BBC director-general in 1960, Sir Hugh Carleton Greene provided vital support for the first television show satirising current affairs, That Was the Week That Was (1962). Then, in 1966, came the situation-comedy show Till Death Us Do Part, written by working-class Johnny Speight and featuring reactionary, racist, working-class Alf Garnett. It enraged opponents of the permissive society, though with the delicious, subversive irony that lay at the comedy's core, Garnett himself was that society's most vociferous opponent.

John Trevelyan, secretary to the British Board of Film Censors from July 1958, believed that in a rapidly changing society, films must also change. He worked closely with the new wave of film makers to ensure the release of Room at the Top (1959) and some remarkably explicit films impossible a year or two before. Organised religion, too, was changing. John XXIII gave the papacy its first truly human face: devout Catholics began to tell themselves that maybe contraception wasn't such a sin; the Bishop of Woolwich's booklet Honest to God (1963) publicised a liberalised Anglicanism.

Perhaps the greatest forces for change were the new movements, new ideas, new social concerns and new forms of social protest and participation. The 1960s gave vent to a great passion for experimentation, for pushing matters to extremes and for challenging established ways of doing things, exemplified by experimental drama, art and poetry groups, the Campaign for Nuclear Disarmament, the anti-Vietnam-war solidarity campaign, civil-rights protests, women's liberation, gay liberation, environmental and consumer protection groups, Friends of the Earth, Amnesty International, Shelter, the Institute of Race Relations, Release, and the manifestos of latter-day existentialists, the structuralists and the situationists. The range was staggering, but nothing was totally new: what was unique was so many movements coming together at the same time. It was a maelstrom of excitement and action.

Those who talk glibly about the "counterculture" assume that there was something completely socialistic about all this. There wasn't. For at the heart of this maelstrom were outbursts of entrepreneurialism (Thatcher ought to have appreciated that), individualism, hedonism, doing your own thing, as seen in the founding of clubs (UFO was a hot London venue), boutiques, paperback bookshops, galleries and multimedia centres (Indica, Edinburgh's Traverse theatre, the Arts Lab, ruled by pop culture's new impresarios, such as Robert Fraser, Barry Miles and Jim Haynes), pornographic and underground magazines, and fashions that defied convention and gloried in the natural attributes of the (youthful) human body.

What most affected our lives were upheavals in personal, family and group relationships and in public and private morals, subverting the authority of men over women, parents over children, teachers over students and politicians over interviewers. They altered the balance between province and metropolis, modified relationships between social classes, and added new dimensions to those between majorities and ethnic and religious minorities. They entailed a general sexual liberation: "permissive" attitudes and behaviour, and frankness and honesty replaced 1950s guilt and furtiveness.

The 1966 book The Captive Wife: Conflicts of Housebound Mothers, by the British writer Hannah Gavron, illustrated the shift in attitudes. A majority of middle- and working-class wives felt their marriages were more equal than their parents'; fathers were assuming more of the family responsibilities. In 1966, Lord Hill of the Independent Television Authority explained why TV was adjusting its moral standards: "A sizeable number of people in our society now take a permissive view of sex. Love-making, they argue, has nothing to do with morals... Like it or dislike it, this new outlook is a significant fact in some sections of our society." In 1969 the classic etiquette manual Lady Behave, by Anne Edwards and Drusilla Beyfus, compared what was now acceptable with what had been possible when it was first published in 1959: "Candour, frankness and honesty" replaced the section "Taboos on what can be discussed in public".

Crucial to all this was the formation of a potent youth culture, which dictated taste in fashion, music and popular culture. Music was at the centre of this movement. Until now, British popular music had been a feeble imitation of the sounds that dominated the American charts. There was an empty vessel waiting to be filled, and for a time it was filled to overflowing by working- and lower-middle-class adaptations of black American music, given freshness and immediacy by the way in which the Beatles, in particular, brought their experiences of live performances to the studio. Pop/rock became a universal language. Performers were young compared with the crooners of the 1950s; audiences were mainly (though far from exclusively) very young. The growing prestige of youth and the appeal of the youthful lifestyle meant it became possible to remain "young" at more advanced ages than once would have been thought proper.

The youth culture of the late 1950s had been relatively introspective and confined to teenagers. Now it expanded, integrating with and reacting against the rest of society, and students were in the vanguard of change. And the youth culture presented varied, seemingly contradictory aspects. There was the violence of the Grosvenor Square demonstration against the Vietnam war in March 1968, and the many campus disruptions. It also embraced passive hippiedom, pervaded by psychedelic drugs and oriental religion.

Young people could enjoy such consumer durables as transistor radios, tape decks and pop records and at the same time denounce "consumerism" as the evil capitalist trap that lured workers away from their historical destiny of overthrowing "the bourgeoisie".

Yet despite the different levels of intensity with which different groups held and acted out their principles, there was a unity to youth culture (which expanded into what was christened the "counter culture" by the US academic Theodore Roszak in 1968). Behind this unity were two key slogans, infinitely flexible, but immensely potent: "changing the world" and "having a good time". Most young people, and many of their elders, could persuade themselves that for most of the time they could do both, while some actually persuaded themselves that they were changing the world simply by having a good time. Were they wrong? Not necessarily. Think of the austere, gloomy, authoritarian world of the 1940s and 50s. Sixties youth culture is, of course, indelibly associated with sex and drugs, which can very nearly be explained by the key notion of "having a good time", reinforced by the prevailing notions of experimentation and challenging authority. The spread of drug-taking was greatly accelerated by the belief in the mind-expanding qualities of psychedelic drugs.

The boom conditions of the second world war had turned the United States into a mass consumer society. Its products, displayed prominently in Hollywood films, were objects of fascination for many people in Britain, particularly some artists and intellectuals. But what is noteworthy about the 1960s is the reverse traffic across the Atlantic. Where British fashion and pop music led, plays, films and TV followed: The Forsyte Saga (1967) was a worldwide success. Developments that had originated in the 1950s or earlier, but that now permeated the West, were motor scooters (significant agents in the liberation of young women) and espresso machines (essential adjuncts to the coffee bars central to early youth culture) from Italy, and discos from France. The American monopoly in the export of the artefacts of popular culture had been broken.

Few if any of these changes would have been possible without money. Average working-class earnings rose by 34% between 1955 and 1960 and by 135% between 1955 and 1969; the earnings of middle-class employees rose 127% between 1955 and 1969. Meanwhile, prices fell for cars, washing machines and TV sets. In 1956, 8% of homes had fridges; 33% did by 1962 and 69% by 1971. TV sets — rare in the early 1950s — were in 75% of British homes by 1961, and 91% by 1971. By then, 64% of homes had a washing machine.

Not everyone benefited. For the unfortunate, housing conditions remained deplorable, and already the high-rise estates of the post-war years were becoming slums, or, as with east London's Ronan Point systems-built tower block in 1968, collapsing in a gas explosion. "Redevelopment" — often urban motorways and the break-up of older, often still viable communities — continued. Yet real attention began to be given to rethinking the entire basis on which house-building was planned. Schemes genuinely cognisant of human needs (Newcastle's Byker development; Pimlico's Lillington Gardens estate) were built. A first rebuff to the all-devouring motorcar came in the form of pedestrian precincts.

While Britain saw protests and demonstrations, events here were not as traumatic as those on the Continent and in the US in 1963-64 and 1967-70, largely because our police were not armed, and because our universities were largely more student-friendly. Fortunately for our home-grown protesters, those in positions of influence and authority were willing to respond in an understanding, tolerant way to the ideas and practices, and the claims and protests, of the counterculture. Much of what was most innovatory in popular culture here was fostered by two key Establishment figures, John Trevelyan at the Board of Film Censors and Sir Hugh Carleton Greene at the BBC. In the popular art of the 1960s, much is made, understandably, of raids and "busts" — reactionary judges and police were prominent instigators of confrontation.

Yet in the arrest and imprisonment on drugs charges of the Rolling Stones members Mick Jagger and Keith Richards, the historical significance lies in what happened next. They were arrested in May 1967. In June, Jagger was given three months' jail for possessing four amphetamine tablets bought in Italy. Immediately, in the article "Who Breaks a Butterfly on a Wheel?", the editor of The Times, William Rees-Mogg, wrote: "If we are going to make any case a symbol of the conflict between the sound traditional values of Britain and the new hedonism, then we must be sure that the sound traditional values include those of tolerance and equity. It should be the particular quality of British justice to ensure that Mr Jagger is treated exactly the same as anyone else."

Next day, the Sunday Express, which might have been expected to adopt a more reactionary position, declared the sentence "monstrously out of proportion to the offence". A week later, the then attorney-general, facing questions in parliament, replied: "Under the existing law, the Press is free to comment responsibly on the verdicts and sentences of criminal courts, even where an appeal is pending. In my opinion, this freedom is a valuable safeguard and should not be curtailed." The stars were released on bail. On July 31, Richards's sentence was quashed and, while Jagger's conviction was upheld, he received a year's conditional discharge. In press, parliament and High Court, measured judgment had prevailed.

There are no golden ages. Some of Thatcher's criticisms are valid, and others can be made. Despite some fruitful architectural initiatives, high-rise housing was a disaster. Only tentative starts (in legislation passed in 1966 and 1968) were made in dealing with racial discrimination. Political correctness, too, often became a suffocating miasma in academic and educational circles, a whole generation being indoctrinated into Marxist post-structuralism, great attention being given to any trivia that could be passed off as "women's studies". Sometimes sexual liberation just meant more licence for predatory males, greater pressure on women to conform to the permissive norm, and therefore increased oppression. But the new feminist movement and the changing status of women were having an effect.

The 1960s was a time of DIY performance, of protest and of stunning new concepts, many completely irrational. It was also a time of unprecedented working-class participation in writing, theatre, film, music and the arts. The working class was visible — and its accent
audible — as never before, not just in Till Death Us Do Part but also in films like Saturday Night and Sunday Morning (1960), from Alan Sillitoe's novel and starring Albert Finney, and This Sporting Life (1963), by David Storey, with Richard Harris and Rachel Roberts.

There were the first sustained attempts at "crossover" (uniting elite and popular art) and marrying diverse media: installation art, concrete poetry, performance art, and music and film's introduction into theatrical productions. Take the Arts Lab's 1969 stage show Vagina Rex and the Gas Oven, by the writer/director/actress Jane Arden. Employing strobe lights and other multimedia effects, this alternately surreal and mystical montage explored a woman's bid to come to terms with a sense of inferiority imposed on her by society.

Much art aimed at celebrating, or denouncing, the distinctive characteristics of contemporary society. It featured the car and its destructiveness, the artefacts of consumer culture, sexual liberation, particularly for women and gays, extreme left-wing causes, and theories about the need to question the nature of all art.

David Hockney was an example of brilliant youth and of the potential brilliant youth had for making money; the lower-middle-class Bradford lad also represented the rise of the provincial and was a nonconformist: a vegetarian, a conscientious objector, gay, and utterly resistant to routine obeisance before the acknowledged masters of modern art. Robert Fraser secured Peter Blake the job of creating the cover for the Beatles album Sgt Pepper's Lonely Hearts Club Band (1967), a striking example of entrepreneurial energy.

During the cultural revolution, relationships became more honest, less authoritarian; life improved for most. Inevitably, amid a tremendous flux of ideas and actions, some ideas were daft, many actions futile. That is reflected in the art of the 1960s: almost always challenging, but never to be swallowed whole and uncritically.

- Arthur Marwick's new book, It: A History of Human Beauty, will be published by Hambledon & London in October