Charles Leadbeater: This is one utopian vision that need not be so far from reality

The Diggers of 1649 show us the way to tackle inequality

The financial crisis has left more than a hole in our balance sheets. It has deepened the chasm between our need to have a sense of purpose and our incapacity to muster the collective commitment to do so. That gap haunted the Copenhagen climate change talks; it almost swallowed up Barack Obama; it will overshadow the British election. It is that hole that we teeter on the brink of and which we need to fill in if our society is to prosper in any meaningful sense.

Crises of the kind that occurred with the depression of the 1930s and stagflation in the 1970s retrospectively came to be seen as periods when capitalism was reorganised. Those crises were marked by a prolonged sense of impasse before new ideas broke through: Keynesianism in the 1940s, neo-liberalism in the 1980s. This crisis may not bear political fruit until the end of this decade, once new ideas have taken shape and coalesced, new generations of politicians have emerged to articulate them and new coalitions have formed.

Where might such a comprehensive programme for radical change come from? Surrey, England, in April 1649 would be a good starting point.

That month, Gerrard Winstanley led a group of men to the top of St George's Hill, and started digging, to embody his ideas for a self-governing, cooperative and productive community as the basis for the new social order that would emerge from the revolution. Behind Winstanley's community lay a sophisticated philosophy, centuries ahead of its time, which linked social justice to self-determination, innovation and mutual ownership, democracy to dignity at work.

Winstanley argued that society should be judged by how well it treated the poorest and that the dispossessed could be agents of social justice for all. Instead of focussing on bankers and mobile capital we should judge politics by how it would tackle the deep pockets of inequality that are like open wounds in British society.

If we were to follow Winstanley we would experiment much more ambitiously with new forms of economic organisation – mutuals, co-ops and social enterprises. Winstanley argued that unused land should be given to mutual ownership to boost food production. Today's equivalent would be intellectual property laws to open up access to shared knowledge with the presumption that knowledge should be freely shared unless there is good reason for it not to be.

Winstanley argued that democracy should be radically extended, including greater local power, rotation of public posts and limits to the power of property. Winstanley was even ahead of his time on the environment: he described the land as a common treasury.

In our time a ragbag of New Diggers – social entrepreneurs, open-source hackers, grassroots political campaigners, civil libertarians, environmental innovators, self-builders – are operating in the margins of business and politics. Yet out of their efforts a synthesis of ideas could emerge to redefine mainstream politics based on a series of corrections to ultra free market, environmentally unsustainable, financial capitalism, governed by an enterprise state with declining legitimacy and a welfare state of declining efficacy.

This would mean shifting from a welfare system based on services that maintain dependence, compensation after the event and cheques in the post, to one that invests in capabilities, focuses on prevention and engages as many people as possible to be contributors in creating solutions in their own communities: from the private exploitation and hoarding of knowledge to sharing and collaboration as the engines of innovation and growth, based on the presumption that all knowledge and culture should be available for sharing.

Exhausted, parliamentary politics would have to give way to a high-energy politics based on constitutional convention to create a state based on high levels of citizen engagement. From the ultra individualism and atomistic freedom of "I want" to the collaborative individualism of "We can", in which the quality of relationships rather than units of individual choice are at the heart of a good society. From the idea that we are what we own and control, to the idea that we are what we share.

All of that might sound utopian. Yet the scale of the failures that surround us in finance and the market, politics and public services, in the deterioration of the environment and the quality of our relationships – demands that we seek fundamental remedies. The Diggers in 1649 dared to think big thoughts, to chart a transition away from feudal power and the Church that would also limit the emerging power of commerce and the market. That is why their ideas have had such reach and power over such a long time. We should follow in their footsteps and pick up our spades.

Charles Leadbeater's pamphlet 'Digging for the Future' is published by the Young Foundation: youngfoundation.org