When the Office for Budget Responsibility produces its economic forecasts later this week they will show that Conservative chancellors since 2010 have peddled a mistruth: that government must balance its books, just like a household. If a household were to continually spend more than its income, it would eventually face insolvency; it was thus claimed that the government is in a similar situation. This is a fallacy. The government is likely to head into an election spending £43bn more than it takes in taxes – about 3% of national income – and possibly more, should Brexit knock GDP. This framing of the economy enabled austerity for a decade and caused Britain’s economy to sputter and stagnate.

Whether or not it is a good time to increase deficit spending is a question of how much slack there is in the economy. There is a strong case for UK fiscal expansion. The economic data suggests we are some way from running up against capacity constraints. Politicians need to start relating public spending to the size of the economy. That is why a return to 1970s levels of spending is a good thing. Labour’s economic policy has long displayed an understanding of the UK’s structural problems, a point underlined last week by academics at the Policy Reform Group, whose recommendations largely mirror John McDonnell’s blueprint of a national investment bank to raise infrastructure spending from 2% of GDP to the 3.5% norm for developed economies; to build more social housing; to reduce UK inequality to 1980 levels; and even to use “helicopter money” – that is electronically created money – to boost demand.

Labour aims to radically transform Britain; it is a change that is long overdue. The public are quite rightly fed up with the idea that an economic bloodletting is a necessary purgative after the excesses of a boom. Labour recognised this in 2017 and reaped the benefit. Since then, the Tories have sought to claim that they have fixed the economy – and therefore they can go some way to matching Labour’s spending pledges, at least in the election campaign. If ending austerity means ditching self-imposed fiscal targets, Boris Johnson reasons, so be it.

Yet the public is entitled to ask why the state was in so many areas deliberately rolled back, reducing aggregate demand when the economy would have benefited from it. The result was an immiseration of ordinary people and the forced decay of the public realm. This did not bother the Conservatives when they were winning elections. It was a political decision taken because the Tories have been running the economy for the benefit of rentier capitalists, those privileged individuals and businesses whose market and political power allows them to extract a great deal of rent – that is cash – from everybody else. A seminal study by Brett Christophers on this form of capitalism, which has been growing for decades with the rise of finance and the decline of manufacturing, described every one of the top 30 companies listed on the London Stock Exchange as a rentier.

The Conservatives will make a mistake if they just offer voters targeted sops and self-serving arguments that there has been something redemptive about the economic suffering imposed on the country. That is why Jeremy Corbyn’s attack on the “tax dodgers, dodgy landlords, bad bosses and big polluters” ought not to be dismissed. UK inequality is at a damagingly high level and the system is being rigged in favour of politically connected wealthy interests. Politicians need to realise that it is not just the economy that is at stake if they do not act – they are risking our democracy too.