It’s easy to argue that today’s failures – public services, low investment, poor productivity, decaying infrastructure, environmental degradation, etc – are the result of 10-15 years of economic policies pursued by a government pandering to selfish interests. But what if the problem is wider than those policies and ideology? What if our underlying economic system is actually working against the interests of liberal democracy, and contributing to the rise of populism and authoritarianism?

This is the core argument of one of the seminal texts to be published in the last two years, Martin Wolf’s The Crisis of Democratic Capitalism. The Financial Times’ chief economics commentator charts how today’s form of capitalism is actively undermining democracy, which it sees as getting in its way: interfering with its single-minded focus on money for shareholders and executives, regardless of the consequences for the wider economy, society and the environment. The result is that inequalities are growing, whilst those with money are retreating from society and criticising governments for money spent on public services. Wolf argues for reviving faith in the common good, and says citizenship has a vital role to play.

This presents an opportunity for Lib Dems to develop a different approach to the economy as a whole, building on the thinking of those economists who have been challenging the prevailing orthodoxy – not just Wolf but the eight who signed September’s letter to the FT, including Gus O’Donnell and the former Goldman Sachs chief economist Jim O’Neill. Their letter said it was so vital to invest in restoring Britain’s crumbling public services that they urged Rachel Reeves not to cut public spending (unfortunately, Reeves seems to have opted for austerity-lite, growing steadily heavier by the week.)

I’m not suggesting I have the perfect oven-ready new economic model to hand, but that’s deliberate. To gain widespread support, such a model needs to reflect the interests of a wide section of society, including the environment. There are countries which already have successful models that differ from the Anglo-Saxon version, notably in Scandinavia.

Such a model has to place a much greater emphasis on sustainability – not just environmental, but social and economic as well.  Economic policy must question the current roles of the Treasury and the Bank of England, which currently reflect the interests of finance rather than the wider economy, society, and sustainability. Business/industry policy must tackle underinvestment; it must look at the role of the City and finance in driving short termism and excessive rewards for a few; it must toughen regulation on monopolies and those firms and sectors that act against the country’s social, economic, and environmental interests; and it must act as a catalyst for publicly desirable activities, like the growth of renewables and improvements to quality of life. The aim is wealth creation for the whole country, not just wealth extraction to benefit a small minority.

There is great Liberal history we can draw on. Two of the greatest economic and social figures of the 20th century were Liberals: John Maynard Keynes and William Beveridge. Although today’s world is very different, there are clear echoes of the 1930s – a financial crash following a period of wild speculation, failed austerity followed by recovery through a ‘New Deal’ with public investment, the rebuilding of industry for defence, and then establishing the NHS and other public services despite the debts of war. There followed several decades of rapid growth under Keynesian policies, until Thatcher and her ‘neoliberalism’ brought it to a halt.

In short, the underlying liberal principles remain valid. Keynes laid down the basis for the use of fiscal policy for countering the social and economic impact of the upswings and downturns of economic cycles – which is really what the economist grandees were calling for in their letter to the FT.

We should therefore reclaim our intellectual and philosophical heritage by reviving Keynes’ and Beveridge’s relevance through a new economic model that we could campaign on as part of a strategy to save liberal democracy (in its broadest sense). I’m pleased to see this idea being pushed in the What would Paddy do? paper that the Yorkist group is submitting to the party’s policy review.

Recent economic policies have often been referred to as ‘neoliberalism’, ‘market capitalism’, and other epithets. Yet no such label has been identified for an economic policy that puts society’s well-being first, even though the elements of it have been described by numerous economists and commentators. That suggests the time is ripe for a model of socio-economic activity that reflects Lib Dem values and principles – ‘liberal democratic capitalism’ perhaps?

* Robin Stafford is a party member who has worked across private and public sectors, as well as with the third sector and charities. In recent years he has provided support to the party on economic and business policy.