Will Hutton is a decent man, a very decent man.

Oxbridge principal, former Observer editor, author, 20years ago, of the liberal left manifesto The State We're In, he embodies many of the values of old-fashioned liberal Britishness.

He stands four square for institutions like rule of law, NHS, BBC - and that's not to be sneered at. He says that "fairness" is not just an ideal, but a "deeply ingrained human instinct". And he's right. Unfortunately, as he concedes, this essentially "British" virtue has been eroded by the past three decades of rampant turbo-capitalism.

Britain isn't British any more thanks to the intellectual capitulation free market ideology, the corruption of the press and the state by privatisation and above all the erosion of social solidarity as the top 1% soar above the rest of society. Hutton is no revolutionary and he criticises the left and trades unions for being part of the problem rather than part of the solution. But there's no doubt which side he's on.

This book is, in many ways, a lament for a lost Eden. One that perhaps never really existed, but somewhere everyone would like to live and one which everyone sort of realises could exist if all of us behaved with good will.

We have the productive forces, Hutton says, with digital technology to create a society free from material want, ignorance and conflict. But established power structures, entrenched private interests, bolstered by a sycophantic intellectual elite, prevent this good society from being born.

Instead we face a digital dystopia where nearly half of all jobs, according to an American study, could disappear though automation in the next few decades, leaving millions of us scrabbling around on zero hours contracts and dodgy consultancies.

Hutton is not the first to argue this, but he correctly identifies the fundamental economic problem as being not technology, or even globalisation, but inequality itself. The more that wealth becomes unevenly distributed the less flexible and productive the economy becomes.

At a basic level, everyone can understand this. If people don't earn enough, they can't spend and therefore the economy lapses into an unproductive torpor. Businesses fail to invest; governments lose tax revenue; debt soars. We see it at its most extreme in Greece.

Hutton describes how the increasing concentration of wealth in fewer and fewer hands leads to distortions. Private debt has soared to 140% of GDP as ordinary consumers have had to borrow to maintain their living standards. House price inflation is out of control as the well-off speculate in property rather than industry. Big British companies are sitting on £800bn because markets are dwindling.

Inequality is self-reinforcing: the more you have, the more you get. "There is an iterative interaction between wealth and income: ultimately great wealth adds unearned income to earned income, further ratcheting up the inequality process".

There is an obvious answer to this and he gives it: increase taxes - not a lot, but by 3% of GDP. Hutton wants to curb the kleptocratic excesses of of the City of London, gear banking to industry and reform corporate law so that businesses are required to look beyond the short term movement of share prices.

Hutton is no great friend of trades unions and their restrictive practices, but he recognises how important they were in what he calls, after Thomas Piketty, the "golden era" of 1910-1950 when, uniquely in the history of capitalism, wealth actually became more equally distributed. Today, he argues, public sector unions have managed to prevent their workers suffering the worst of the income collapse suffered in the private sector.

Will Hutton is also decent enough to blame himself and his own generation for the state we're in. Twenty years ago his seminal book of the same name became a kind of bible of New Labour. It called for constitutional reform, modest redistribution, "stakeholder" capitalism and a relentless concentration on education. It didn't happen.

A sense of lost opportunity infuses this book and a profound anxiety that the Britain Hutton stands for is no longer viable. He sees Scottish nationalism as the Nemesis of post-Thatcherite Britain though he is not uncharitable in his portrayal of the Yes campaign, its energy and positive mindedness.

He argues passionately for a new federal constitution: "Scotland must be a country in a federal Britain: no more, no less". If this doesn't happen he predicts that Scotland will be independent in 20 years. It's hard to disagree.