It was the soundbite that helped elect New Labour. “Education, education, education” epitomised our pro-aspiration credentials – and explained for millions of progressives how we planned to roll back the seismic inequalities of the 1980s. But as Nobel prize-winning economist Joe Stiglitz set out on Wednesday for a cross-party group of parliamentarians, it’s simply no longer enough.

The scale of inequality today – especially for the younger generation – is now so great, we need bigger, bolder answers. Like rewriting the rules of our economy.

The New Labour approach of the 1990s had some impeccable intellectual credentials. We shared the idea of many economists that “skill-biased technical change” meant, simply put, that what you learned dictated what you earned. It inspired a revolution in education spending, a radical expansion of universities and colleges and ground-breaking new ideas like UnionLearn. We set course to create a country where half of young people went to higher education.

Young people’s household income has fallen by 20% since 2010 – in effect, they’re working Friday for free

And nor was education the whole story. Though the Tories attacked us at the time, the advent of the new deal and tax credits meant that, for millions of people, work paid more than welfare. In Rewriting the Rules published last September, Joe Stiglitz argued that progressives need to hold on to the investment we’ve made in education. But we’ve got to be bold reformers now – because quite simply, the rules of our economic institutions are rewarding the wrong people with the wrong prizes and encouraging bad behaviour.

Impatient capital markets, short-termism in the board room and a “slow-growth government” are creating a country where, for all the money we spend on education, wages have fallen sharply as a share of national income. More and more of our national income is rewarding capital as corporate profitability rises, share buy-backs boom, top salaries spiral and more and more cash (£522bn and rising) gets parked in company bank accounts.

The result for workers is injustice; while output per hour is up nearly 15% since the turn of the century, medium wages have only risen a little over 8%. So workers are producing more – but getting short-changed, while FTSE chief executives now earn 120 times more than average staff. Britain is now a nation where the number of billionaires has doubled since before the crash – while the number of children living in poverty is up 300,000.

No one is harder hit than the younger generation. More is spent on educating our young people than ever before. Yet, today’s under-25s are the first generation in over a century to earn less than the generation that came before them. Young people’s household income has fallen by 20% since 2010 – in effect, they’re working Friday for free – and they are now more likely to live in poverty than pensioners.

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Stiglitz’s argument has big implications for Labour – and frankly it lets all wings of the party rally around the fight against inequality which Jeremy Corbyn has set centre-stage. The facts about inequality have changed profoundly since the New Labour era. So it’s time to decisively move on from neoliberalism and debate the new answers now needed.

For instance, why don’t we change the Bank of England’s mandate to prioritise full employment as well as price control? Why don’t we change the rules for our budget watchdog, the Office for Budget Responsibility, so it advises parliament on tax justice? Why not change the rules for capital markets to encourage longer-term investment, making it possible to reward longer-term investors with extra voting rights?

What about changing corporate governance so those with a long-term view – like workers – are automatically on the board? Why don’t we raise the science budget, to “crowd in” private spending? And what about changing the rules of social security so that those who have paid in a fortune in national insurance – like workers in their 50s – get retraining, when new technology consigns their old careers to history?

It’s been 20 years since Labour had a proper first principles debate about economic policy. John McDonnell and Angela Eagle have opened up a debate that is long overdue. Over the coming months, Hillary Clinton is going to put a lot of Stiglitz’s prescriptions into her programme. Let’s follow her lead.

There is no celestial design for capitalism. It’s politicians that write the rules – and it’s down to radicals to reform them.