It’s difficult, if you are of a certain age and political bent, not to talk about Smallfilms without sounding reactionary.

Smallfilms makes me naively nostalgic for a world before free-market doctrines and focus groups, when a publicly funded body gave two indefatigable eccentrics and, we now realise, avatars of a distinctly British folk art, licence to pursue their particular and quietly subversive ideas, unencumbered by crass commercial expectations.

This would not and could not happen nowWhole series of Smallfilms were green-lit because someone in an ashtray-filled office somewhere saw an eight-page book of pasted-up scripts and scraps of sketches and decided it was worth commissioning. This would not and could not happen now. And the social circumstances and value systems that shaped those paper and scissors, arts and crafts-cowshed visionaries of another era, Firmin and Postgate, are long gone.

The astonishingly thorough archive of Smallfilms – thank Godso much of it survived intact – are a collection of artefacts detailing some much-admired 20th-century art movement, like Fluxus or Dada.

Here are pieces of felt flickering into being as dragon scales. Here’s paper and Blu-Tack bringing a tonally accurate reimagining of Norse sagas into life; here’s a swanee whistle, its scurrying glissandos suggesting identifiable speech patterns, and here’s the saggy cloth cat, its purring weight palpable, its aching fluffiness alive.

Smallfilms’ technical expertise, their inventiveness, their hands-on, can-do adaptability are important object lessons in How Art Works to a generation reared on digital products. Audiences – especially young audiences – appreciate seeing the hand of the artist at work, and admiring the artist’s inventiveness.

CGI technology may render fleets of three-dimensional spacecraft in vivid, almost real, depth. But such an image will never spark the imagination of a child in the way The Clangers’ flying tin space bath can. It’s not objectively perfectly finished in the way Buzz Lightyear is but it is something you could hold, touch and – given time and effort – even make yourself. It inspires.

When David Cameron makes his platitudinous remarks about how British artists need to be more commercial and make internationally saleable content, one wonders where the Iron Chicken, visibly assembled from kitchen junk, or the Organ Mice, with their jerky dances and cracked wheezing chorale, would fit into his prescriptive homilies.

Bagpuss and The Clangers were both against waste, green recyclers in waiting. Perhaps without realising it, Firmin and Postgate fashioned an aesthetic, the methodology of which supported the ideals of their era. Bagpuss and The Clangers were both against waste, green recyclers in waiting. The cloth cats’ multi-skilled team of experts could salvage anything, and the pink woollen aliens were especially alert to alterations in the micro-environment they called home.

Likewise, Firmin and Postgate built enduring images and still-resonant stories from recycled boxes, plastic pots and beaten copper. I am relieved, on a profound level, that samples of the processes behind Smallfilms’ work have been preserved for posterity.

In a political panic our rulers struggle for a definition of Britishness. They could do worse than prescribe a study of the quirky, inventive, adaptable, liberal and profoundly humane back catalogue of Smallfilms.