“There is no crime, absolutely none, that cannot be condoned when ‘our’ side commits it,” wrote George Orwell in his oft-misquoted 1945 essay, Notes on Nationalism. “Even if … it is exactly the same crime as one has condemned in some other case, even if … it is unjustified – still one cannot feel that it is wrong.”

Intellectuals have long theorised over the “disrupted” state of politics in the 21st century: the rise of Trump and the “alt-right”, One Nation’s electoral re-emergence in our polity, Brexit in the UK and the hard-left turn of the British Labour party.

As I argue in my newly released book Getting the Blues: the Future of Australian Labor, this state of affairs can be simply explained. Levels of economic insecurity not seen since the 1930s, a power imbalance between labour and capital, driven by the emasculation of the union movement, have turned democratic politics potty.

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This trend was only exacerbated by the global financial crisis. Far from aiding parties of the left and unions, popular anger over these trends, is lessening support for social democrats. It is driving the working-class into the arms of populist, far-right demagogues who seek to divide people on the basis of race and religion.

The Australian way of life has always been premised on a basic set of assumptions: a fair’s day pay for a fair day’s work, decent working conditions and job security, basic services, a fair say for working people in our workplaces and parliaments, even if, for too long, it excluded women, our First Nations and minorities. It never simply concerned achieving absolute equality, though equality was a key concern. Nor can it be reduced to some vague “equality of opportunity” or “aspirationalism”.

Above all, the Australian way was built by working people. They and their institutions – unions and the Labor party – created and protected our national covenant, or social contract. That contract is broken. Good, secure, well-paying jobs are being replaced by low-wage insecure work lacking dignity. Less than half of Australian workers hold down a full-time permanent job. While company profits remain healthy, average wages growth is at record low rates and is increasingly decoupled from productivity. CEO remuneration continues to grow at unsustainable levels. The Australian way is fraying in other respects. The dream of home ownership is slipping away from working Australians. One in three homeowners are living in “mortgage stress”. This is replicated across our rental market. Australians are living in private rental for longer. Unable to buy homes, people are under pressure to pay rent.

Labor was formed to prevent these goings-on. Yet Labor is facing an existential crisis three decades in the making. Its federal primary vote has been stuck at 33-34% three elections in a row. If not for compulsory, preferential voting it would be in the position of its European comrades, polling under 30%. Wherever they reside, working-class people either blame Labor for their plight or believe it does not understand or care for them. These voters began leaving federal Labor in the 1990s, and it is these voters and their children and grandchildren who have not returned.

If the ALP can enshrine affirmative action quotas for MPs based upon gender, it should be able to establish a “working-class” quota system

Getting the Blues was written in sorrow and anger at this state of affairs. My proposals for reform are three-fold. Internally, Labor must become less inner-city, middle-class “progressive” in structure, culture and outlook. If the ALP can enshrine affirmative action quotas for MPs based upon gender, then it should be able to formally establish a new “working-class” quota system, and it must actively seek to recruit new members from the suburbs and regions of working Australia.

I want to see Labor apply a neglected lesson from the Blue Labour experience in Britain. Co-founder Lord Maurice Glasman’s platform emerged directly from his community organising. Community organising embodies the Blue Labour idea of being “radical and conservative”. An example is faith-based organisations, many clearly not “progressive”, working in alliance with secular groups to achieve reform. Real organising would help Labor rebuild concrete links with working-class communities and pay attention to their issues. It could empower those communities to identify, foster and train leaders from within. In this unions are critical.

Policy-wise, I wish to see Labor adopt a number of more radical positions. There is scope for a transformative agenda, moving beyond a statist liberal progressive obsession with “tax and spend” politics and “nudge” economics. Labor exists to win power to redistribute wealth and power, to democratise the market economy via labourist institutions – unions and Labor governments – rather than expand the state to redistribute wealth without power, creating individualised, “rights” legislation.

The next Labor government must pursue worker representation on company boards, if necessary, by force of legislation. The measurement of unemployment – technically one needs to work one hour per week to be employed – should be torn up. Governments of all stripes must cease lying to the public about its scale and nature. This should be accompanied by a genuine commitment to returning to full employment and a living wage. The Tafe and vocational education sectors must be revived with clearly enunciated national standards around skill competencies and outcomes, linked to climate and energy policy, paired with better labour market entry laws. It’s time for a complete rethink. Doctors, nurses, lawyers and accountants, only practice after completing a period of training and apprenticeship. Why not move these vocations to the vocational system? This move would boost the prestige and funding of the non-university sectors, in turn smashing social class barriers.

Finally, Labor must ditch its technocratic, soporific “progressive” language.

It is passing strange to read that I’m some rightwinger. I doubt Jeff Sparrow has read my book instead of relying upon selective media reports and a book extract comprising less than 3% of the book’s contents. To assert, or even imply, that I’m some advocate of rightwing identity politics, or fetishise some “white, socially conservative” male working class, is misleading. I’m Jewish, after all, and have vigorously attacked and been attacked, in turn, by the racist far right.

Sparrow misunderstands my view of class. Of course, women, LGBTQI people and ethnically diverse Australians are members of the working class. The Australian working class, a term I insist on using despite criticism from left and right, is diverse, and, by definition, exists – not in a static or homogenous sense. Its existence turns primarily on power relationships – economic, social and, yes, to an extent, cultural – precisely what Sparrow accuses me of not accounting for. Why? Working people, including tradies and sub-contractors, sell their labour in a market economy.

Modern Labor struggles to articulate class, as a homogeneous working-class culture erodes, and it has become mostly middle-class, become less tolerant of those who don’t conform to a neat progressive worldview and adopted elements of identity politics. It has a problem with people of faith and small “c” conservatives. This is an insurmountable roadblock to building a coalition to win federal government.

I am not alone in viewing “identity politics” as a toxic development. Blue Labour thinker and Cultural Studies academic Jonathan Rutherford gets to the heart of why identity politics is so harmful: “progressive and left politics in the 1990s turned away from class politics and solidarity in favour of group identities and self-realisation … into a competitive struggle of one group identity over another. In place of solidarities, there is a kind of Hobbesian war of all against all.” US historian Sheri Berman, writing in the context of Trumpism, also criticises identity politics.

And yes, I am demanding more class-based identity politics, and unashamedly so, whether those workers wear a blue, white or pink collar. Nowhere in Getting the Blues do I place a caveat upon the race, colour, gender or sexual preferences of working-class Australians, wherever they live, though most do reside in our suburbs and regions, and are not the majority of the 26% of our tertiary degree holders. Returning to Orwell, this is where progressive politics is the problem. It has committed the crime of ID politics. The right’s ID politics of divide and conquer is criminal, often shockingly racist. This is no excuse for not admitting fault.

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The fundamental concerns of working-class people – and middle Australia for that matter – are universal: their family (understood in its broadest terms), work and place (safe communities serviced by quality healthcare, schools, childcare), and a quiet love of country – call it patriotism. As Tim Soutphommasane insists of the idea: “it is no different to other forms of loyalty or love, and a necessary condition of collective self-improvement”. These are not inherently socially conservative values – a point of departure of mine from Blue Labour – though a good many working people are socially conservative or possessed of some socially conservative values.

Failing to acknowledge the complexity of working-class people – to fetishise them as either some progressive vanguard or reactionary enemy of progress – or seriously address their concerns is brutally evinced by the swings against Labor at the May election.

Working-class people and middle Australia can be united in terms of shared material interests and wellbeing and non-material values. That’s Labor’s reason for being and its only future. All of this, however, entails retelling an enchanted story which places family, work and community at the heart of Labor’s idea of this nation of 25 million souls; its story of the good life, of the good society and the common good. As Anthony Albanese, speaking in the first days as Labor leader, argued: “Australians firmly want not just a better life for themselves, they want a better life for their family, they want a better life for their neighbours, they want a better life for their community and for their nation. And that’s what Labor offers. That’s what we need to clearly articulate.”

• Nick Dyrenfurth is executive director of the John Curtin Research Centre