Shows such as Matilda and War Horse seem to make the case for subsidy. But if the money was used at the grassroots, how many more great shows might we produce?

British arts funding is not a level playing field. London gets many times more money than the regions; our big institutions get multiple times what the grassroots gets. When we celebrate the successes of War Horses and the Matildas – and we're quite right to – we are quick to explain that such shows could never have emerged from the commercial sector. It would never have countenanced the amount of money and length of time that it takes to create such remarkable work.

These shows are a tremendous advertisement for subsidy, and put much-needed money in the depleted coffers. But what we never mention are all the ghost War Horses and the ghost Matildas – productions that will never emerge, simply because those who might have created them never got access to the theatre in the first place.

In his book Unweaving the Rainbow, Richard Dawkins talks hauntingly of unrealised potential:

We are going to die and that makes us the lucky ones. Most people are never going to die because they are never going to be born. The potential people who could have been here in my place, but who will never in fact see the light of day outnumber the sand grains of the Sahara. Certainly those unborn ghosts include greater poets than Keats, scientists greater than Newton. We know this because the set of possible people allowed by our DNA so massively outnumbers the set of actual people. In the teeth of these stupefying odds it is you and I, in our ordinariness, that are here.

Dawkins is talking about biology. But if that potential had been realised in theatre, might we have produced a dozen War Horses, not just one? Most of us working in the arts are the privileged ones. A few years back, when Brian McMaster was undertaking his inquiry into arts funding and excellence, I attended a meeting at the Arts Council, full of leaders in the arts world. He asked every person – I think there were about a dozen in the room – how they had each got involved in the arts. The answer for every single person was the same: through participation.

The artists of tomorrow are not made through funding an elite, but by funding at the bottom of the pyramid – a pyramid that we have created and sustained during the good times but now seldom question, even though the landscape will look very different in the coming years. It's always those at the top of the pyramid that are most likely to attract private sponsorship, and who are best equipped to survive a downturn. When a member of the board of one fashionable London theatre told me that any cut to their funding will mean a cut to their education work, I knew that was a theatre that had got its priorities wrong.

Education, community and participatory work is not an add-on. It should be at the heart of every arts organisation. It is the future. We can't afford to just play lip service to that idea. We need to make it a reality, which means we need a fundamental rethink.

"Radical imagination begins with a move beyond complaint and resistance, beyond reactive tinkering or hunkering down or cynical accommodation. The first big move is an alternative picture of how things could be instead," suggests Anthony Weston in How to Re-imagine the World.

The fact that we have funded some organisations doesn't mean we have to always fund them to such levels in the future – particularly in a tight funding climate. Neither funders nor artists should ever think any company or organisation should have a natural right to do so. We should be prepared to let institutions die. We should stop building bricks and mortar and empires, and rid ourselves of the belief that growth is a good thing for the arts. We should put money into the bottom of the pyramid, not the top – it is only by funding the bottom that we can create the future.

If we dared to do some of these things, then in 20 years' time we would be faced with a very different theatre landscape. Change is going to keep on coming, whether we like it or not. The danger is that we do nothing, simply lurch from crisis to crisis as we did in the 1980s and 90s, when British theatre went into a tailspin. As Weston says: "Beneath the problems that often seem so given lie cultural norms and practices. Our problems have contexts, backgrounds and roots. These can be shifted and redirected. The word radical means roots." We need to work at the roots. If we don't, we will end up with the top of the pyramid and nothing beneath.