The constitutional argument for a referendum on Europe is clear. We elect MPs to make decisions in parliament on our behalf, but not to transfer the powers of parliament to other bodies. That is why the transfer of legislative powers downwards, through devolution, requires a referendum. So also, since the European Union Act 2011, does the transfer of powers upwards to the EU.

But since we entered the EU in 1973, numerous powers have been transferred without our consent. And the referendum requirement poses a particular dilemma for a party of the left, which seeks to be both internationalist and sensitive to the demands of the people. That is why Labour has always had a bad conscience about Europe.

In 1962 its leader Hugh Gaitskell famously declared that a federal Europe would end "1,000 years of history". His successor Harold Wilson agreed but in office sought – unsuccessfully – to enter Europe. In opposition he veered again, opposing entry in 1973 on "Tory terms", but uniting the party through the device of the referendum which, in 1975, yielded a two-to-one majority for Europe – the greatest triumph pro-Europeans have ever enjoyed.

In opposition, however, Labour swung again and, in 1981, proposed leaving Europe without a referendum – one of the issues that led to the SDP breakaway, helping to put Labour in opposition for 18 years. Michael Foot and Tony Benn put their prejudices on Europe above the needs of social democracy. Today pro-Europeans must avoid doing the same.

On no issue has there consistently been a greater gap between the people and the political class than Europe. Survey evidence shows that a large minority, and in some polls a majority, want to leave the EU; but, in the Commons, only a small minority of MPs favour exit. On Europe, parliament no longer represents the people.

Critics say that the referendum will lead to uncertainty which is bad for investment. But without popular endorsement, Britain's position in Europe is bound to be enveloped in permanent uncertainty, so weakening its chances of constructive engagement.

The EU, moreover, is in flux. Britain cannot remain unaffected if the eurozone moves towards banking union. The eurozone in any case remains highly unstable, and Greece, along with other Mediterranean member states, might well exit. Indeed, they would have a better chance of reaching the goals of social democracy if they did in fact leave the euro.

Britain has, of course, always been the awkward partner. There are good reasons. They were summed up by President de Gaulle when, 50 years ago this month, he proclaimed his veto. De Gaulle declared that the Treaty of Rome had been signed by six "continental states ... which were of the same nature". Britain, by contrast, was "insular, she is maritime, she is linked through her exchanges, her markets, her supply lines, to the most diverse and often the most distant countries; she pursues essentially industrial and commercial activities, and only slight agricultural ones". That was why she was so opposed to the Common Agricultural Policy.

De Gaulle concluded that "the nature, the structure, the very situation that are England's differ profoundly from those of the continentals". But he accepted that Britain might, at some time in the future, perhaps evolve "little by little towards the continent". The referendum will test whether Britain has done so.

There is a fundamental decision to be made and only the British people can make it. Europe has for too long been an elite project. The pro-Europeans have been content to win the argument in the corridors of power. That is why, since 1975, the argument has been lost by default. But the Labour party was formed to combat the power of elites, not to yield to it.

The constitutional argument for the referendum is based fundamentally on the need for legitimacy. Some decisions are so momentous that they cannot be decided by MPs alone, but need popular endorsement. It is difficult to think of a more momentous issue than whether Britain should or should not remain in the EU.

Harold Wilson's policy adviser, Bernard Donoughue, said that, while Edward Heath took the British establishment into Europe, it needed Wilson to take the British people into Europe. Today the political and financial establishment remain committed to Europe, but the people are leaving in droves. That is the basic case for the referendum and the left should support it.

• This article was amended on 28 January 2013, correcting the date of the UK's entry to the EU from 1975 to 1973.

