Imagine a young Karl Marx alive today: a radical-minded, straggle-bearded intellectual who wanted to make the world a better, more just place. He blogs, presumably. He's among the millions fed up with the party knockabout. What might Karl seize on as the great issue in economics and politics? I'm beginning to think it might be advertising.

The thought comes from a new Compass paper, The Advertising Effect, published tomorrow, which is original, intriguing and only wrong-headed in parts. It calls for new policies to restrict and control advertising, and quotes David Cameron more than any leftwing politician. But, in a way, it's not really about advertising so much as the struggle between political and social values and those of the triumphant market. Hence the Marx thought: advertising regulations have become capitalism's frontline.

Certainly we are bombarded by images trying to make us buy through the course of an average day – on mobile phones, computer screens, billboards, at bus stops, on flashing screens in railway stations and public transport. Then as we slump in front of television at night, there are plenty more, and we can soon expect product placement to supplement the ad breaks.

We are more brand-driven, more advertised-to, than ever. We are also unhappy, indebted and extremely wasteful; and the two things may be connected. The Compass authors say that during an average day we will see more than 3,500 brand images. The purpose, they argue, isn't fulfilment and happiness – they don't sell products – but "the creation of a mood of restless dissatisfaction with what we have got and who we are so that we go out and buy more". We have become people not, as the religious once said, born to die, but born to buy.

My criticism of the argument is that, at times, it's overstated. I am not sure that children, bombarded by advertising, are as passively receptive as Compass seems to think. It's true that some kids are even being named after products, such as Armani or L'Oréal; but what, after all, is calling a child Roderick Featherstonehaugh De Vere, but branding of another kind? We have to be careful of urban myth-making and hysteria. Being exposed to heavy selling from a young age produces cynicism as well as interest. People aren't putty: if advertisers are endlessly adaptable, so are their targets.

These, though, are cavils about a bigger argument. In fact, I'd say this is the most important contribution from a thinktank in the runup to the general election so far. The factual basis for worrying about our rampant consumerism, and therefore our susceptibility to advertisers, is strong and familiar. We have enough studies about happiness to get the message that credit can't buy you contentment. Richard Layard and Oliver James, both quoted in the Compass pamphlet, now have many followers.

Similarly, the figures given about ­levels of indebtedness among western consumers, particularly poorer people who have been preyed on by credit companies, are now well understood. And even they are less appalling than statistics about our wastefulness – the third of food thrown away uneaten, the near-half of clothes hanging in wardrobes unworn, the 900m items of clothing and 13m toys dumped in landfill each year … it adds up to something truly shameful.

Many people have thought about the stress and unhappiness in western consumer societies, about the debts of ordinary families, and about the wasteful impact on the planet, and decided to opt out – to downsize, live more simply and turn their backs on Branded Britain. But they are in truth a small minority; and these "inconvenient truths" have barely impacted on mainstream politics.

Why? Perhaps because politicians are too scared to tell people they should get off the consumption treadmill. It sounds, at first, like bad news. Perhaps because real power in modern life seems to have gone to the corporate world, and politicians are afraid to take them on. Or perhaps it's because the problem of where to start seems insuperable.

If it is the last of these, politicians need worry no more. The more you think about it, the more rolling back consumerism needs to start by confronting the advertising industry. That is, after all, where our wants are manufactured and sold to us. That's the frontline.

And it is one area where politicians have fought and won a series of important skirmishes already. The ban on ­cigarette advertising is the best known. But restrictions on alcohol advertising and on advertising on children's TV programmes were also significant victories. They barely touch on the project of constructing an alternative vision of the good life, but they're a start. Cameron himself professes worry about the ­commercialisation and "harmful and creepy" sexualisation of childhood.

The Compass suggestions go much further. They include – my favourite – a complete ban on advertising in public places, from town squares to train stations, taxis to bus shelters. Shops would of course have to be allowed to display themselves, but there would be restrictions on shop-front marketing too. Imagine how much prettier and more restful the urban world – and the sides of motorways – would be. São Paulo in Brazil has done something like this, and other cities in North and South America and mainland Europe are following suit.

Compass also wants all ­advertising to children under 12 to be banned; and all alcohol advertising; and all viral marketing; plus new taxes and regulations for advertisers themselves. As advertisers find ingenious new ways to reach us, even when we try to fast-forward through ad breaks, so the counterattack by politicians and regulators will have to become more sophisticated too.

As Young Karl would say, this isn't quite a revolution. So long as market capitalism and our desire for economic growth exist, there will be advertising and we will find ourselves strangely drawn to new wants, fresh desires for this or that we hadn't known existed. And so long as that happens, some of us will borrow a bit too much, and we will waste at least a little.

But if ever there was a time to reflect on the scale of that consumption, that borrowing and that waste, and to rein it back, that time is now. The global financial crunch, the accumulating evidence of our devastating impact on the world's resources, and the challenges produced by our spiking human population mean we need to find a different, more modest way forward. We need politicians up to that job, proposing practical first steps we could actually support. That's going to require a little guts and a modicum of imagination. Here's one place to start.