General elections are rarely epoch-defining events. Though the parties pretend that their political differences are large, in economic terms they rarely are. But this one could be different.

Of course, elections lead to change. Labour’s victory in 1997 marked a decisive break with the Thatcher-Major years in terms of public spending and welfare policy. Yet New Labour didn’t fundamentally challenge the dominant model of economic policy that it had inherited from the Tories: a globalised and declining manufacturing sector, and deregulated financial and labour markets. In 2010 the coalition brought in austerity. But Labour would have done so too, continuing the fiscal orthodoxy. Even at elections, economic policy is usually largely consensual.

There are exceptions. The two epochal elections of modern times were those of 1945 and 1979. Both followed crises in the formerly dominant model of capitalism. And both led to what social scientists call a paradigm shift in economic thinking and policy.

By 1945 it was clear that the laissez-faire economics of the prewar period was dead. It had failed to prevent, and could not solve, the mass unemployment of the Great Depression, and offered nothing to the troops returning from the war. The election won by Clement Attlee marked the start of a new era of Keynesian economics: active government to maintain full employment, and a welfare state to support universal living standards.

The new economic model lasted 30 (golden) years, but eventually it too collapsed in crisis. When President Nixon ended the Bretton Woods system of managed exchange rates in 1971, and the oil-producing nations quadrupled oil prices two years later, the UK lurched into stagflation – simultaneous recession and high inflation. The Keynesian model seemed to have run out of solutions. The election of 1979 saw Margaret Thatcher enter Downing Street armed with a new economic orthodoxy: that of free markets, deregulation and privatisation. The rest is history.

Except that the free market model has also now collapsed. The financial crash of 2008 marked the decisive moment, but the last decade of earnings stagnation, rising inequality and climate breakdown has made it clear.

Just as in the 1930s and 1970s, the orthodox policy prescriptions have failed. After almost 10 years of austerity, the economy remains on the life support of near-zero interest rates and quantitative easing. Investment remains low, productivity stagnant and trade in deficit. The revival of the metropolitan economies of London and some major cities has merely exposed a widening gulf with the rest of the country. As most people’s living standards have stalled, the wealth of the top 1% has soared. Loaded with student debt, facing a future of precarious work and expensive rented housing, young people may be the first generation in modern times poorer than their parents. If people are angry at the elite, it is no wonder.

The free-market model has managed to generate a triple crisis for capitalism: it is financially unstable, environmentally unsustainable and politically unpopular.

This is why 2019 needs to become another of those epoch-defining elections. For just as in 1945 and 1979, we cannot get out of this crisis by carrying on as before.

This is not a view held only on the left of the political spectrum. Read the Economist and the Financial Times, or listen to business leaders in the CBI and the Federation of Small Businesses, and it is apparent that even capitalists think the current model of capitalism is in trouble. Their anxiety is not just that it has lost public support. It is that the core engine of private sector growth is no longer working. In almost every field of economic policy it is becoming clear that tinkering at the edges of the current economic system is not going to be enough. A much more fundamental transformation is required.

There is a gathering consensus on what this requires. It must start by putting the economy on an ecological footing. A comprehensive set of environmental targets and policies are required to drive down carbon emissions, pollution and biodiversity loss: a new Sustainable Economy Act combined with a Green New Deal.

This will need higher levels of investment. With the government currently able to borrow at negative real interest rates, raising capital spending – particularly for green infrastructure such as renewable energy, home insulation and public transport – is economically highly rational. A more active industrial strategy would then guide private investment into the innovation and export-oriented sectors, which can create jobs across the country.

The labour market needs to be rebalanced. For wages to rise, workers need to take home a larger share of national income – through a higher minimum wage, more security for workers in the “gig economy” and a higher proportion of sectors in which trade unions engage in collective bargaining. As other European countries show, this helps, not hinders, productivity improvement.

And governments must provide decent public services, if necessary paid for through higher taxes. Public services are what makes modern societies civilised, and many of them – education, health, childcare – raise productivity too.

There must be other elements: financial reform, controls on the digital monopolies, the fairer distribution of wealth, including housing. The key point is that such proposals represent structural reform of the way the economy works. It is no longer enough to let the private sector determine the path of the economy and then add a bit of ameliorative social and environmental policy on afterwards.

So will the 2019 election mark the beginning of a new economic era along these lines? It is clear that if Labour won it would seek a decisive move in this direction. But how far it could go might depend on whether it had an overall majority or had to govern with the support of other parties. So this raises a critical question for the Liberal Democrats, SNP, Plaid Cymru and the Greens. Their positions on Brexit are well known. But on the economy, are they in favour of a transformative “paradigm shift”, or simply more of the same? If the former, will they enable this to become one of those epoch-making elections? If the latter, why do they believe this will resolve any of the deep-rooted problems that now confront our 40-year-old economic model?

• Michael Jacobs is a professorial fellow at the Sheffield Political Economy Research Institute and co-editor of Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth