By far the most significant consequence of "selfish capitalism" (Thatch/Blatcherism) has been a startling increase in the incidence of mental illness in both children and adults since the 1970s. As I report in my book, The Selfish Capitalist - Origins of Affluenza, World Health Organisation and nationally representative studies in the United States, Britain and Australia, reveal that it almost doubled between the early 80s and the turn of the century. These increases are very unlikely to be due to greater preparedness to acknowledge distress - the psychobabbling therapy culture was already established.

Add to this the astonishing fact that citizens of Selfish Capitalist, English-speaking nations (which tend to be one and the same) are twice as likely to suffer mental illness as those from mainland western Europe, which is largely Unselfish Capitalist in its political economy. An average 23% of Americans, Britons, Australians, New Zealanders and Canadians suffered in the last 12 months, but only 11.5% of Germans, Italians, French, Belgians, Spaniards and Dutch. The message could not be clearer. Selfish Capitalism, much more than genes, is extremely bad for your mental health. But why is it so toxic?

Readers of this newspaper will need little reminding that Selfish Capitalism has massively increased the wealth of the wealthy, robbing the average earner to give to the rich. There was no "trickle-down effect" after all.

The real wage of the average English-speaking person has remained the same - or, in the case of the US, decreased - since the 1970s. By more than halving the taxes of the richest and transferring the burden to the general population, Margaret Thatcher reinstated the rich's capital wealth after three postwar decades in which they had steadily become poorer.

Although I risk you glazing over at these statistics, it's worth remembering that the top 1% of British earners have doubled their share of the national income since 1982, from 6.5% to 13%, FTSE 100 chief executives now earning 133 times more than the average wage (against 20 times in 1980); and under Brown's chancellorship the richest 0.3% nobbled over half of all liquid assets (cash, instantly accessible income), increasing their share by 79% during the last five years.

In itself, this economic inequality does not cause mental illness. WHO studies show that some very inequitable developing nations, like Nigeria and China, also have the lowest prevalence of mental illness. Furthermore, inequity may be much greater in the English-speaking world today, but it is far less than it was at the end of the 19th century. While we have no way of knowing for sure, it is very possible that mental illness was nowhere near as widespread in, for instance, the US or Britain of that time.

What does the damage is the combination of inequality with the widespread relative materialism of Affluenza - placing a high value on money, possessions, appearances and fame when you already have enough income to meet your fundamental psychological needs. Survival materialism is healthy. If you need money for medicine or to buy a house, becoming very concerned about getting them does not make you mentally ill.

But Selfish Capitalism stokes up relative materialism: unrealistic aspirations and the expectation that they can be fulfilled. It does so to stimulate consumerism in order to increase profits and promote short-term economic growth. Indeed, I maintain that high levels of mental illness are essential to Selfish Capitalism, because needy, miserable people make greedy consumers and can be more easily suckered into perfectionist, competitive workaholism.

With overstimulated aspirations and expectations, the entrepreneurial fantasy society fosters the delusion that anyone can be Alan Sugar or Bill Gates, never mind that the actual likelihood of this occurring has diminished since the 1970s. A Briton turning 20 in 1978 was more likely than one doing so in 1990 to achieve upward mobility through education. Nonetheless, in the Big Brother/ It Could Be You society, great swaths of the population believe they can become rich and famous, and that it is highly desirable. This is most damaging of all - the ideology that material affluence is the key to fulfilment and open to anyone willing to work hard enough. If you don't succeed, there is only one person to blame - never mind that it couldn't be clearer that it's the system's fault, not yours.

Depressed or anxious, you work ever harder. Or maybe you collapse and join the sickness benefit queue, leaving it to people shipped in to do the low-paid jobs that society has taught you are too demeaning - let alone the unpaid ones, like looking after children or elderly parents, which are beneath contempt in the Nouveau Labour liturgy.

There is much tearing of hair across the media and advocacy of nose-pegging on these pages of the "grin and bear it" variety. In fact, there is an alternative. We desperately need - and before long, I predict we will get - a passionate, charismatic, probably female leader who advocates the Unselfish Capitalism of our neighbours. The pitch is simple. Not only would reduced consumerism and greater equality make us more ecologically sustainable, it would halve the prevalence of mental illness within a generation.

· Oliver James is discussing Selfish Capitalism with Will Self, Madeleine Bunting and Stewart Wallis in three London seminars this month

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