John McDonnell’s speech at the Labour party conference was a radical one, with proposals aimed at responding to the concentration of wealth in Britain by doing more than just mitigating it. Mr McDonnell seeks to inhibit the capture of power by putting in place mechanisms that remove the ability of those who accumulate it at an alarming rate. The shadow chancellor rightly wants to use the power of the state to diffuse power – and contrast this with markets which concentrate it.

This strategy is not risk-free, but since the great financial crash of 2008 it has become popular. Mr McDonnell’s policy prescriptions are unfairly attacked. They will not “crack the foundations of this country’s prosperity” as the CBI claimed in its response. We ought to resist adding up perceived past failures into a damaging total. This is a problem of the counterfactual – comparing what is with what would have happened. After all, many of these policies are the norm in other advanced western economies.

In Britain the inequality of wealth is almost twice as high as that of income. The unequal ownership of capital has driven such disparities, which is why new models of company ownership are required to narrow gaps and ensure the benefits of growing national wealth are widely shared. That is why Mr McDonnell’s plans ought not to be dismissed. Putting the water industry into public hands is not a bad idea; after all, it is a natural monopoly.

Mr McDonnell played to the gallery with a swipe at leaders of the water industry, who would have to reapply for their jobs on drastically reduced salaries. The aim of the exercise would be to stop private companies from taking excessive returns from the public. The English water companies had combined operating profits of £3.5bn in 2016, an amount that would easily pay for the bonds required to nationalise the industry. This plan has the advantage of appearing to assuage taxpayers and consumers.

Labour’s other key policies are more squarely pitting labour against capital. Legislating for businesses to reserve one-third of seats on their boards for workers might spark threats from multinationals to walk away from the country. Mr McDonnell needs to think of how to deal with such arguments. But the aim is desirable.

A second example is the “inclusive ownership fund”, capitalised by diverting a slice of excess corporate profits earned in part due to stagnant wages, which would build up over a decade a 10% stake in companies. The idea is that workers would benefit from dividend payouts. Companies cannot complain that this is money that could have been used for investment when investment rates are low despite large cuts in corporation tax.

Labour must also work out more effectively how to ensure global companies cannot redistribute profits away from Britain to avoid them being used for workers. The shadow chancellor is not alone in struggling with that; it is one of the key tasks facing governments of all stripes in all developed economies. But his party should be praised for thinking aggressively about how to stop a minority from controlling and accumulating wealth to this degree. Mr McDonnell’s plan is capitalism – but not as we know it.