Canary Wharf is a daring development: more bankers now work in its offices than in the City of London. It has, with the Olympic Park, pulled London's centre of gravity decisively eastwards. It is a tribute to modernity and boldness alike. But very few people I know like working there.

You surface from the gloriously expansive tube station to be dwarfed by a cluster of skyscrapers and inhumanly high towers, which strangely don't seem to have any pride in themselves like those in New York. The shops in the underground shopping walkways gleam and glimmer and are full of tempting merchandise. It is all as it must have been in the architect's drawings; it has taken me a long time to understand why I don't feel drawn to any of it .

The reason, it became clearer on a recent visit, is that Canary Wharf possesses so little public space. Nothing is held in common. It is a "non-place", whose lack of heart is brutally exposed at weekends and at night, when it empties. Privatisation and the values of the transactional, anonymised market have been taken too far. It is a dystopian present foretelling a more dystopian future.

Commercial developers behind the likes of Canary Wharf – the pioneer of vast, privately controlled spaces since emulated in the shopping centres of Liverpool One and Bristol's Cabot Circus – want to reduce public space as much as they can. They want to be free to configure where we walk, what we visit and who has access because thus they can maximise sales per square foot of shopping and rents.

Public space costs money twice over: it has to be paid for by taxes (and we know many corporations do their utmost to avoid tax) and public space represents lost revenue. In a world in which everything has to be consecrated to "wealth generation", providing a critical mass of public space that can be used for multiple public and social uses has been a burden too far in almost all recent large-scale urban regeneration projects throughout the country.

It is a crisis of the public realm – linked by a golden thread to the G8 meeting in Northern Ireland this weekend. Governments for the first time – prompted, to his credit, by David Cameron – are to agree to swap information about who is behind the fictional companies that populate the world's tax havens. It is a tremulous assertion of the public interest against the tax-evading super-rich, but the tiny nature of the step and the lack of agreement to go further is part of the same mindset that concedes property developers should shape our country with only token genuflections to the need for public space. In this conception, "wealth generation" is a wholly private affair and "wealth generators" must have what they want whether on tax rules or planning regulations.

But to win the argument, there has to be an accompanying passion to revive the idea of publicness and challenge the super-rich head-on that the private world that they are creating is utterly barren. Non-places such as Canary Wharf in which to work, gated communities in which to live, and segregated private schools in which to educate their children – none is good to society in the round. Wealth generation with no sense of publicness is only wealth generation in name.

Anna Minton, in her wonderfully crusading book Ground Control, inveighs against the privatisation of public space and the whittling down of any voice that seeks to assert how our towns and cities should be lived in. Local government's power has been gutted by virtually eliminating its capacity to raise local taxes, and doubly gutted by the persistent reduction within planning law of any concept that land or space should be held in common for public or social purpose. Minton's particular bete noire is the obscure 2004 Planning and Compulsory Purchase Act, which allows for economic wellbeing alone justifying compulsory purchase.

She warmly endorses the ideas of the Danish urbanist Jan Gehl. In his Cities for People, Gehl insists that the key to enjoyable city living is the chance to interact and that everything – in particular where you can walk – should help the pleasures of accidental encounters with others. That in turn needs public space – squares and pavements that are free for everyone rather than policed by private security guards. And it needs well-resourced, engaged municipal authorities, backed by planning law, to argue on level terms with private developers that such space is an imperative for a development to go ahead.

A virtue of capitalism is that it allows scope for insurgents with new ideas to challenge incumbents, but today's privately owned mega shopping malls are organised physically so that incumbents have all the advantages. Only they can afford the rents and we shoppers are corralled into using them because there is no possibility of chancing upon the new and unexpected.

One of the delights of Brighton's Lanes or Oxford's covered market is the possibility of escaping the tyranny of the shopping chains. You can go there just to hang out, shop, eat, browse or go for a stroll – and in this environment there is a chance to encounter the new shop, pub or restaurant. The insurgent is on level terms with the incumbent. Minton quotes many European architects who despair at our impoverished, weak municipal authorities unable to deliver such a social and public ethos compared with those in Europe: the Swiss, hardly tribunes of the left, have a strong civic tradition and fabulous livable cities. Why can't we?

Maybe we are at a turning point. It is still too easy for businessmen and bankers to climb on to a public platform and complain that the burden of regulation and taxation is what holds them back – and which is too uncritically heard across the political spectrum. Yet the UK has one of the lowest corporation taxes in the G8, lowest labour market regulations in the EU and weakest planning system in the OECD. It has got us nowhere.

But now a Tory prime minister is trying to close down tax avoidance – and revive our high streets, another casualty of the privatisation of our public space. It is time to do this more wholeheartedly. Britain can do better than be a land fit for the owners of Westfield and Canary Wharf. It can be a place we want to live in; where we go to the city because we want to go to the city – not just to shop. The Victorians built great parks and civic spaces with great pride, openly revolting against the depredations of free market capitalism. They also paid their taxes. Time for us to follow suit.