Book of The Week: How Much Is Enough? The love of money, and the case for the good life, By Robert Skidelsky & Edward Skidelsky

The Cabinet Secretary recently suggested that ten years of austerity lie ahead. The Coalition provides no positive vision of our future, appearing simply content to manage national decline. As Labour seeks the path back to government we must confront the condition of the country, and be direct and honest about the circumstances we might inherit. We will have to rebuild Britain; it will require an extraordinary shared national effort. Moreover, it requires a new public philosophy. So I admit to a degree of self-interest when I first picked up this book.

Four years ago, Lehman Brothers threatened the entire global financial system. More evidence of systemic banking and moral failure emerges each week. What is to be done? A good place to start is a short essay by John Maynard Keynes on "National Self-Sufficiency". It was published in 1933, four years after the Wall Street Crash. Keynes confronts the "decadent international but individualistic capitalism" that caused the crash. Its "self-destructive... calculation governs every walk of life... It is not just, it is not virtuous - and it doesn't deliver the goods."

Sounds familiar, but what shall we put in its place? How can we rethink political economy? What will be the moral values and policy ideas that will provide the majority of people with a decent standard of living and the opportunity to get on in life? Liberal market orthodoxies have led to a financialised economy, poor levels of productive wealth creation and double-dip recession. Millions of working people are at risk of poverty. The share of national income going to wages has been falling for three decades.

But how can we change when economic orthodoxies dominate? Neo-liberalism might have caused the crash but is still in the driving seat. Where might we begin? In How Much is Enough?, Robert Skidelsky, the country's foremost Keynes scholar, and his philosopher son Edward offer their answer. It must be an economy that can create the good life of reduced work and increased leisure. In their thoughtful book they extend Keynes's ethical arguments beyond the Bloomsbury milieux of his time.

They challenge the liberal beliefs that have shaped the politics of both Labour and Conservative governments. On the one hand, the self-interested rationalism of liberal market individualism pivots on a one-dimensional view of human nature. On the other, the abstract principles of John Rawls's liberal state, with its neutral stance between competing visions of the good, is a misreading of liberalism. The authors reject both because neither understands that human beings live a life in common with others. Our meaning and purpose does not lie in the endless pursuit of money nor in an allegiance to abstract principles.

It lies in the society of our relationships with family and friends, the places in which we live, and if we are fortunate, in convivial work. These are what a new political economy has to help conserve and strengthen.

The Skidelskys claim a social liberal tradition imbued with the ideals of dignity, civility and tolerance. Liberalism, they argue stands for basic human goods. They identify seven: health, security, respect, personality, harmony with nature, friendship and leisure. The first duty of the liberal state is to uphold these basic goods. If it fails to do so the limitless desire for wealth will be left unchecked.

Their inspiration is another essay by Keynes, "Economic Possibilities for our Grandchildren", in 1930. Keynes reflects on a future in which "man" will be faced with a "permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure... to live wisely and agreeable and well". Keynes thought this utopia might be reached by 2030. That conclusion seems doubtful.

The Skidelskys move seamlessly from the abstract to the concrete; from philosophy to public policy. They are not unaware of the incongruity of their ideal of the good life in a country with high levels of poverty. They note that Keynes's futuristic essay was ignored as the world sank into the Great Depression.

Will we again ignore this call to imagine a better future? The answer will be decided by politics. David Cameron won the leadership of the Conservative Party by drawing on some of the same Aristotelian ideas of the good life. The idea of a Big Society which values civility and relationships has widespread support. The problem has been a failure to put it into practice. Cameron's Big Society has failed because he is trapped in the legacy of Thatcher's economic revolution. The Labour Party made a mistake in dismissing Cameron's pro-society politics.

That is changing as we rediscover traditions of cooperation, collective self-help and mass movements of self-improvement. Our better businesses are recognising there is more to life than the bottom line. Creating social value increases economic value. Our public services need good relationships to work effectively. These and a sharing of responsibility are vital to the health of society. Reciprocity could help create a contributions-based benefits system that can restore trust in the welfare state.

Yet these are just early skirmishes in a wider intellectual war of position. We must hope that a new political philosophy is being forged. It is, in short, a revival of a politics of virtue. It is an exiled Labour tradition. Pioneers such as Michael Sandel, Martha Nussbaum, the Australian intellectual Tim Soutphommasane - who visited Ed Miliband last week – and the Skidelskys are laying the foundations for something profound. Morally, what is our economy for and how do we rebuild the social sphere? This is the new political centre ground. Labour should inhabit these spaces beyond reasons of narrow self-interest, because it tells us what we have lost.

Jon Cruddas MP is leading the Labour Party's policy review