For 40 years, Britain has been under the spell of the market fundamentalist ideology of an Austrian economist Frederick Hayek, considered by Mrs Thatcher to be her guru. The worship of an unfettered free market and a small state, as he advocated, has shaped political and economic decision-making since the 1980s. As we chronicle in our just published book The New Serfdom, the dominance of market fundamentalism has been a disastrous experiment that has ripped up social cohesion and solidarity while the gap between the 1 per cent and the 99 per cent has soared to levels not seen since the beginning of the last century. Home ownership, secure employment and fair wages seem like relics of a bygone era. Meanwhile exploitative workplace practices have created a new serfdom leaving many people trapped in insecure, unfulfilling and underpaid work with no escape route.

Ditching this failed worship of extreme market ideology will only be the beginning of the battle to build a prosperous, fairer more socially and economically sustainable society. Only a democratic socialism built on our five values of equality, democracy, liberty, co-operation and internationalism can hope to meet the formidable challenges of the 21st century and offer us any hope of a better future. We need to embrace a new national mission and mobilise all of society, working together, to achieve this transformation.

To help deliver this we will need to rehabilitate the very idea of the state. Delegitimised, defunded and demoralised by years of market fundamentalist inspired scorn and eight years of austerity, this is a formidable but vital undertaking. So withered and shrunken are parts of the state machinery now that they are not fit for purpose, as the Windrush scandal in the Home Office demonstrates. Our local authorities are teetering on the edge of bankruptcy, barely able to fulfil their statutory responsibilities let alone provide the extras which enhance local community life. We urgently need to build an active, empowering state confident in its capacity to plan and organise for the common good. Only then can we take back control of crucial decisions from ‘the market’ and set them in a new context of democratic decision-making.

People are crying out for a new integrity in the way our economy is run. They are fed up of the soaring levels of executive pay juxtaposed with indifference to the treatment of the workforce and mis-selling to customers. And they are fed up of tax evasion and avoidance. The collapse of construction giant Carillon is a case in point. It contracted with the government building and running schools, prisons, hospitals, railways and military bases. But it collapsed into liquidation in January owing £5bn with just £29m in the bank. This gross mismanagement destroyed 20,000 UK jobs and left thousands of pensioners shortchanged on their retirement income. But this had not stopped the board handing out obscene levels of boardroom pay to failing senior managers and huge dividends to the shareholders even as the company hit a brick wall.

Market mechanisms do not have ethics but people do and a new ethical expectation should be hardwired into our national endeavours. We must crack down on free-riding, cheating and rewards for failure by strengthening and enforcing the law to discourage those tempted to try their hand. Currently those who drive what author Will Hutton has described as our ‘mercenary society’ run little risk. In city dealing rooms the Financial Conduct Authority has only mounted eight prosecutions in the past five years and yet the DWP has prosecuted 10,000 people for benefit fraud in the same period. This is just wrong.

As capital has globalised the accumulation of wealth has been concentrated in fewer and fewer hands. Thomas Picketty in Capital in the Twenty First Century demonstrates that without global action this trend will continue because returns to capital exceed levels of economic growth. History show us how the global domination of wealth by a few individuals has been dismantled in the past and it has been done by progressive income tax systems. Both the USA and the UK had high rates of income taxes hovering between 80 per cent and 98 per cent before Reagan and Thatcher slashed them and let the rich run riot. Picketty argues – correctly in our view – for progressive wealth taxes too. We also need an end to offshore tax havens and a new transparency to prevent wholesale abuse if we are to achieve tax justice in this century. Part of the answer is in the domestic tax environment but part of it must be internationally agreed. This should include country-by-country reporting to prevent multinational companies profit shifting to minimise their tax liabilities. We are on the edge of huge technological change which will revolutionise the way we live work and play. It is only by recognising that we have to move from leaving things to ‘free’ markets to choosing solutions grounded in our democratic socialist ethics that we can survive and prosper as a fair and sustainable society in the future.

The New Serfdom by Angela Eagle and Imran Ahmed is published by Biteback Publishing