We have also entered 2012, the year of auto-enrolment: a process that will ultimately see millions of workers begin saving for a pension through the capital markets. Thirdly, we have seen the government turning to pension funds as a source of capital to fuel the economic recovery through infrastructure investment.

Put all that together, and it is clear that the way pension funds invest is no longer, “a minority sport”, but a matter of acute national concern.

UK pension funds still make up around 13% of the UK stock market – with insurance companies who provide pension products making up another 12%. It’s vital that this huge pool of capital is invested responsibly in the long-term interests of pension savers.

Unfortunately, as a report published last year by responsible investment charity FairPensions showed, current interpretations of the law may hinder this objective.

Fiduciary duties – our main legal mechanism for protecting those who entrust their money to someone else – do not apply consistently across the pensions market.

Worse, they are generally interpreted as forbidding pension funds from raising their sights beyond quarterly returns. A view which, far from protecting savers’ long term interests, may in fact be damaging to them.

Clarification of this seemingly obscure and technical area of the law could unlock positive change in a whole range of areas – supporting jobs and growth, ensuring decent pensions, and underpinning the shift to a more responsible, resilient capitalism.

The pervasive myth that fiduciary duty begins and ends with maximising returns leads many funds to neglect intangible factors – be they excessive pay or poor environmental performance – even though they may well affect the long-term returns which matter most to pension savers.

Making companies more accountable to shareholders will not be enough to tackle ‘crony capitalism’: shareholders themselves must also become more accountable to the ordinary savers whose capital they invest.

Among other things, this means much greater transparency about what is being done with our money.

At the moment, if I want to find out how my pension fund voted on Barclays’ remuneration report, they are not obliged to tell me.

Given the choice, many pension savers might well want to see their savings invested in British industry or green infrastructure. But under conventional interpretations of the law, their views are irrelevant.

This is emphatically not about hijacking pension funds’ capital to serve government ends: that is a dangerous road to go down. It is about allowing them the discretion to take a broad and enlightened view of what is in their beneficiaries’ interests, rather than prescribing an approach which may ill serve savers in the long run.

The Pensions Regulator estimates that 5-8 million people will be newly saving or saving more as a result of the 2012 auto-enrolment reforms. Many of these will be low-paid workers. There is a huge responsibility on government to ensure that these people’s savings are responsibly stewarded and deliver a decent retirement income. This means ensuring that fiduciary standards of care are applied across the pensions market.

Strathclyde Pension Fund offer an excellent example of how pension funds can make investments that add genuine, sustainable economic value for their members. It recently announced a £100 million ‘New Opportunities Fund’ to invest in job creation in Glasgow, with the proviso that it will only invest in businesses which pay the Living Wage.

But these examples are very much the exception rather than the rule.

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This is an extract from a speech last week by Jon Cruddas on pensions reform at the House of Commons.

The recession has destroyed the compact between the market and the individual which provided the social cement for the neo-liberal order. The government has no alternative set of values or social politics to replace it with.

For a brief period, history is in the public realm and ours for the making. The opportunity will not come again for generations, but the Left needs to rediscover our capacity for collective change. The political fault lines of a new era are starting to take shape. They divide those who believe that privileging the market and individual self-interest is the best way to govern society and those who believe that democracy and society must come before markets.

These fault lines cut across party lines and divide them from within: Thatcherite politics versus elements in the New Conservatism; market Liberal Democrats versus social Liberal Democrats; neo-liberal New Labour versus social democratic Labour.

In our new ebook The Crash – a View from the Left we argue for a politics of democracy and the social. We need a new socialism not dictated by the few from above, but made by the many from below. It will have a number of broad but defining principles. It will be grounded in the interdependency of individuals and the value of equality. It will be democratic, because only the active interest and participation of individuals can guarantee true freedom and progress.

It will be ecologically sustainable and pursue economic development within the constraints placed on us by the earth. And it will be pluralist, because we need a diverse range of political institutions, and a variety of forms of economic ownership and cultural identities, to provide the energy and inventiveness to create a good society.

Its task is not to win the political centre ground – it is gridlocked and dead – but to transform it and embark on the deep and long transformation that will bring about a good society.

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Contributors: Jon Cruddas, Clive Dilnot, Bryan Gould, John Grahl, Colin Hines, Adam Leaver, Toby Lloyd, Lindsay Mackie, Robin Maynard, Richard Murphy, Carlota Perez, Ann Pettifor, Michael Prior, Jonathan Rutherford, Göran Therborn.

It is the tax payer who has stood between capitalism and its self-inflicted collapse. With credit frozen and the banks unwilling to lend, the government is being pushed toward the role of sole lender. Capitalism has been rescued by people’s taxes and it will be dependent on them for its survival. It’s time for capitalism to be made accountable to democracy, and it’s time for democracy to renew itself and make itself fit for the challenge.

This is the great challenge of our time and it will shape our society for future generations.

To begin, the Government needs to dispel the idea of a quick return to business as usual. There is no going back to the old order of free market capitalism and a micromanaging, centralist state. That way lies market failure and a risk averse culture.

We must tackle the recession by laying the foundations for ecologically sustainable and equitable economic development. It will mean creating a democratic and responsive state, devolving power to local government and renewing our civic institutions of social trust and security. Society needs to reassert itself over the market economy.

The government’s bank bail-out scheme is not working. It sends out too many contradictory signals. The government needs the confidence to assert its leadership over the economy and to use its stake in the banks to become an activist investor. Taking ownership of the banks will enable it to seek a good return on taxpayers’ investment over the longer term while allowing the banks to rebuild their balance sheets.

Public ownership will ensure that the banking sector develops new kinds of corporate governance and business models that are geared to longer term economic development. The shadow banking system has to be de-leveraged. Global institutions of financial governance have to be reformed and created.

A regulatory framework must be put in place before the sector is returned to private ownership. Only the government with its authority, global alliances and its tax revenues can achieve this kind of reconstruction.

We will need a national strategic investment bank to build a sustainable economy. This could fund infrastructural development and coordinate a series of regional banks that devolve economic decision making and investment to regional manufacturing and business. Living on the thin air of the knowledge economy is not enough. The fundamentals of the economy need rebuilding and rebalancing.

The house building market must be regenerated as a priority. New green markets and a renewable technologies industry need developing, both for a carbon neutral economy and for energy security. The countryside exists in a state of economic deprivation and our agriculture needs radical reform.

The bank could partner with mutuals and pension funds to help build up the growing fair trade economy, cooperatives, Community Interest Companies and voluntary sector activity. Local government bonds could be used for financing local development initiatives.

A new pro-social economy won’t work if it means a top down, domineering politics. The focus must be on the local level by politically reengaging with people and rebuilding institutions of local civic authority.

A strategic investment bank could work with the post office as a people’s bank, providing retail banking facilities and incorporating a reformed social fund to provide micro credit as an alternative to exploitative door step lending. By operating at a neighbourhood level it has a role to play in local collective regeneration and community development, funding small scale social and for profits enterprise.

This kind of financing is already being undertaken by credit unions and by Community Development Finance Institutions. There are numerous local initiatives like Surrey Save and Partners Credit Union in Liverpool. Essex County Council has discussed a ‘Bank of Essex’ working alongside the European Investment Bank. Democracy needs finance. It is the key to economic and social development and we need a coordinated and devolved public infrastructure of lending, savings and investment opportunities.

The recession is a frightening prospect, but it is creating opportunities for social change and economic development that would have been unthinkable even six months ago. The Conservatives are floundering. The opportunities belong to the left. It is a matter of seizing these opportunities and galvanising people’s creativity.

If we fail then we risk the alternative of a shrill and authoritarian politics that will scar the country for decades.

Whoever wins the next election, the future does not belong to the Conservative Party. Nor will it be a re-run of the neo-liberal economics of the 1980s and 90s. Three decades of restructuring and liberalisation have been brought to an end by recession and the credit crunch. Neo -liberalism has done its work and its creative destruction is now undermining capitalism itself. The financial bubbles make it structurally unsustainable.

Britain now faces acute problems in creating a more equal and sustainable economy. Large areas of the country have lost their economic base. Both Conservative and New Labour governments, heavily influenced by economic liberalism, have driven this process of restructuring the economy and society further and deeper than other European countries. As a consequence we have become over-dependent on a deregulated financial sector and badly exposed to the unpredictable forces of global financial capital. Whole areas of the country have had their economic base wiped out. Our capacity to manage the recession is threatened by the decades of liberalisation, depleted government reserves and unprecedented levels of personal debt.

Neither New Labour nor the New Conservatives are willing or able to tackle the structures of economic power and privilege that have distorted economic development and which shape all our destinies. Instead the focus has been on getting people to fit the prevailing dysfunctional system. Risk has been shifted from business and the state onto individuals, including those least able to help themselves. When Steven Byers argues that the Conservatives would abandon individuals to economic and social circumstances beyond their control, he fails to register that many working class people believe this is just what New Labour has done.

Growing public concern with safeguarding living standards and ensuring social stability and ecological sustainability will require a new commitment to institutions that promote greater equality and generate social renewal. This will mean a more active and democratic state engaging with economic development and regulation.

The redistribution of wealth and resources will be essential in rebalancing a dysfunctional economy. Part of this will involve a Green New Deal creating employment in green industries and developing a green market and sustainable energy supplies. There has been a rejection of New Labour’s centralised micro-management and marketised state.

Instead of marketisation, we need a new kind of democratic settlement between the individual and a democratic state which informs everything from welfare reform to constitutional change. This radical social democratic politics means embracing the value of the equal worth of all citizens. A society of equality means electoral reform, enlarging individual freedom, promoting trade unionism and devolving power back to local government. There needs to be gender equality in pay and childcare.

The prospects for this kind of social democracy are arguably better than in 1997, but it will remain wishful thinking unless we can create a mass politics. In the end meaningful change toward greater equality will come about only by re-energising individual and collective political agency. So far the debate about taking on the Conservatives has remained locked up within Labour circles. We hope ‘Is the Future Conservative? will create a wider discussion.

The future lies in bringing a left politics back to life. The Labour Party needs to turn outward and connect with the creative energies that are everywhere in society but are few and far between in mainstream politics. It means going back to the people, reconnecting with popular cultures, rediscovering common idioms and so remaking a language of social democracy. The left’s power lies in collective action. We will remake our politics from the bottom up.

This autumn Soundings joins with Comment is Free to make a contribution to this debate. We’re jointly organising a series of Guardian public debates , ‘Who owns the Progressive Future?’ at Kings Place. We hope this will also be a political event in the blogosphere.

There’ll be debate on CiF and Soundings website about the New Conservatives, the future of Labour and the next left. More than that, it is an opportunity to realise some of the ideas discussed in the meeting organised by Sunny last June and create a strong, vibrant political force.

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Jon Cruddas is MP for Dagenham, East London.
Jonathan Rutherford is editor of Soundings and Professor of Cultural Studies at Middlesex University

- Is the Future Conservative can be downloaded at www.lwbooks.co.uk/conservative.pdf
(This article has been written exclusively for Liberal Conspiracy)