It might seem an odd time to be leaving the Labour party; after a decade of courting the City, Gordon Brown is nationalising banks, and promising to get tough with global capitalism (not to mention Iceland). Our first chance in a decade to alter the ideological landscape of British politics. If I tolerated Iraq, cash for honours, and Alan Milburn, then why quit now?

The thing is, while the fundamentals of the world economy transform around us, the fundamentals of the Labour party remain unchanged.

I'm leaving the Labour party because its internal culture has decayed to such an extent that – to borrow a term adored by New Labour – it no longer has the social capital necessary to function in its core marketplace. There is a revolt going on in Labour's backyard, demonstrated in recent byelections, and it doesn't even realise it. The party's inner life is, at best, introverted, and at worst, boring. Beyond the perks of being in power, membership of the Labour party today has very little value.

The simple truth is that the Labour party is rotting. Some members have stayed purely out of habit. They aren't really that interested in politics, at least not any more, but they have no place else to go. Most, however, are interested primarily in their career prospects. Everybody seems to have a position, some rung on the ladder. And they talk to each other like workers talk to managers and like managers talk to executives in any large organisation. Yet given that so few will end up in positions of genuine influence, I couldn't logically explain why anyone joins the party any more. Neither camp can be entrusted with the vital task of providing links between the Labour party and its traditional supporters, or society in general. They don't even have the inclination. Working out what society wants is what focus groups are for. It goes almost without saying that most members of the Labour party today wouldn't know what to say to the poor even if they knew how to find them.

By accident or design, Labour has virtually ceased to function outside the formal processes of representative democracy. Local parties work tirelessly on local election campaigns. They work, a little less tirelessly perhaps, on general election campaigns. But they no longer have the capacity to make their presence felt in the day-to-day life of Labour's heartlands.

I am not talking about the party's policy-making procedures. After 18 years in opposition a little discipline was necessary. But Labour members are now self-disciplining. Despite what the media thinks, most members are too busy arranging the deckchairs to care whether it's Gordon Brown or David Miliband or Jon Cruddas at the helm.

I remember bumping into fellow members around the time of the leadership election, and asking who they were supporting for deputy. I was surprised by almost all of their answers – only then did I realise that despite, in some cases, many years of friendship, I had little idea of what my comrades thought about politics. People seldom express opinions in the Labour party. We can't be bothered to argue with each other any more. Nationalising the banks, anyone? We are in the middle of the most momentous, and fascinating, transformations in the history of capitalism. The boundaries between state and market are being redefined as we speak. But the problem is that the Labour party isn't speaking.

Some party members still like to think of themselves as leftwing, but they've spent so long defining themselves against the rest of the left they don't know what they actually believe. Do we like this banks thing or not? What do we say to our friends and colleagues outside the party about it? The crucial and largely informal mechanisms by which a party deliberates with its constituencies have entirely dried up for Labour.

I'm not simply deserting a sinking ship. As implausible as it seemed a month ago, Gordon Brown might even win the next election. But with a party in decay the government's long-term development is rudderless. So nationalise, baby, nationalise: the damage is already done.