As the economist Milton Friedman once said: “Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.” It was an insight Friedman and his co-thinkers deployed with great success to seed the ideological beginnings of neoliberalism.

Laissez-faire economics lay discredited after the Great Depression and the resulting rise in extremism, and then the success of wartime planning and the rise of the left. But Friedman and his allies refused to give up, meeting in the picturesque Swiss village of Mont Pèlerin in 1947 to prepare an intellectual fightback. When crisis did indeed come, three decades later, the ideological foundations for what became known as Thatcherism and Reaganism had already been constructed.

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The left did not learn from its opponents. The financial crash of a decade ago was the most severe crisis of capitalism since the Hungry Thirties. Yet the left’s intellectual cupboard was bare. With little to offer other than fiery speeches about bankers’ greed and defensive slogans against cuts, it presented no coherent alternative. Years of austerity followed, endorsed or even implemented by centre-left parties that signed their own political death warrants in doing so.

A decade later, a new intellectual ferment can be found on the left. Meanwhile, a panicked right flips between recognising that the social order is broken – but offering no credible solutions – to believing it just hasn’t made the case for its profoundly unpopular ideology with enough vigour. When Jeremy Corbyn became odds-on favourite to win the Labour leadership in 2015, most of the British right collapsed into paroxysms of laughter, some even urging Tories to join Labour to vote for him to “help consign the party to electoral oblivion”. There were a few perceptive exceptions on the right: one Tory warned that a Corbyn victory would “shift the entire political debate to the left”.

A new report vindicates this prophecy. Four years ago, the centre-left Institute for Public Policy Research published its Condition of Britain report. It was timid gruel: it not only accepted austerity, but even proposed freezing child benefit to fund the expansion of childcare.

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Under the leadership of Tom Kibasi, the thinktank has attempted to embrace the spirit of our time: the latest report, published by its commission on economic justice, is a critical contribution to a left intellectual revival. Its underlying message is inarguable: the current system is broken. “The UK economy is not working,” it declares. British workers have suffered the longest squeeze in wages for generations; young people face a worse lot in life than their parents; most who languish in poverty are in low-income work; and Britain is Europe’s fifth most unequal society.

Its diagnosis of Britain’s failed economic model is damning indeed. Productivity is 13% below the average of the G7 major economies, and investment is also significantly below the OECD average. The richest 10% own 44% of the country’s wealth.

The report’s prescriptions challenge assumptions that until recently were considered to be as immovable as the weather. A well-funded national investment bank would modernise Britain’s creaking infrastructure and drive innovation, while a national economic council would design a 10-year plan for the economy.

The commission recommends that a genuine, higher living wage should be introduced; and proposes that a target should be set to double the percentage of workers covered by collective bargaining – which has been in a state of collapse since the late 1970s – to 50% by 2030. Workers would get elected representatives on company boards; and the self-employed – poorer today than they were two decades ago, and lacking basic rights – would be granted work-related benefits. The report also recommends reversing recent cuts to corporation tax, which have failed to increase investment as promised, and a cooperative development act to encourage the mutualisation of the economy.

What is striking about these demands isn’t just how much more radical they are than only four years ago: it’s who has endorsed them – from the archbishop of Canterbury to business leaders. The IPPR’s polling shows that, from a radical clampdown on tax avoidance to publicly owned investment banks, to borrowing to invest, there is overwhelming support for the junking of the old neoliberal order.

Against this backdrop, the left needs to demand more radicalism from Labour. The very few sympathetic commentators have felt reluctant to do so because of the unrelenting attacks on a besieged Labour leadership. Some fear that any criticisms of the party from its left flank will offer succour to its increasingly hysterical opponents. But public appetite for radical reform – with even business figures endorsing it – means there is space to go further. Labour’s commitments on income and wealth taxes are insufficient to fully reverse Tory austerity and benefit cuts. The case for free movement of people in Europe has, sadly, largely been abandoned. By demanding more boldness from Labour, the political debate can be shifted further left still.

The report calls for a paradigm shift as radical as those achieved by Attlee and Thatcher. Both built a new consensus, forcing their opponents to surrender to their underlying philosophies. To avoid its flagship policies being unpicked by another Tory administration, a future Labour government must seek to do the same.