I think that John Quiggin is voicing an opinion held by a lot of people on the Left: the current financial crisis has somehow discredited American-style capitalism, that the only way out of the mess we're in is to embrace a more social democratic society.
One way to think about the political impact of the GFC is to look at the range of political positions it's rendered untenable. This range is large, encompassing, in the US context, everyone from Bill Clinton to Newt Gingrich. More generally, it covers anyone who embraced the claim that a US-style economic system, as of, say, 1995-2005, was the best that had ever been seen anywhere, and could only be improved by making government smaller and/or more business-like.
. . . The only tenable position for anyone who wants to maintain any part of the existing economic and social order is Keynesian social democracy, modernised to deal with the developments of the last few decades, and disciplined enough to avoid the disasters that brought down the Bretton Woods system in the late 1960s and early 1970s.
I believe that many on the left believe this. I even believe that it may have some political salience, although not nearly as much as John Quiggin wishes. But as an empirical matter, it is high-test hokum.
Or perhaps John Quiggin has some different, special meaning for the words "Keynesian social democracy" that have nothing to do with aggregate demand management, and everything to do with regulatory oversight of credit growth. But at Chicago, we had a different word for those who thought that the unchecked growth of the credit supply was the main problem confronting macroeconomists. We called them "monetarists".