Delivering stronger economic growth and sustained rises in living standards for all working people is the economic policy challenge for our generation.
A new progressive policy agenda is needed to achieve this. And it won't come by either turning our backs on the world economy, or hoping that traditional right-of-centre economics - laissez-faire, trickle-down, deregulation - is going to turn the tide of stagnating wages and rising inequality.
That's the conclusion of the Commission on Inclusive Prosperity, which I have co-chaired with former US Treasury Secretary Larry Summers and reports today. Our report sets out how we can reverse the toxic combination of too little growth and rising inequality which has hit many developed economies in recent years.
It sets out the detailed cross-country evidence that, left to their own devices, unfettered markets and trickle-down economics are leading to increasing levels of inequality, stagnating wages and a hollowing out of decent, middle income jobs.
The report outlines that globalisation and rapid technological change have brought many benefits but, alongside an increasingly short-term outlook across our economies, and without new policies up to the task, working people - especially those on low and middle incomes - are losing out.
And it shows, in stark terms, why David Cameron and George Osborne are completely out of touch when they try to tell people in Britain that the economy is fixed.
The fact is the delayed return to growth in the UK - after the recovery was choked off in 2010 - has not been accompanied by the sustained rise in living standards for most people which the Conservatives promised. Far from it. Stagnating wages explain both why people are £1600 a year worse off since 2010 and why the Chancellor's deficit reduction targets have been so badly missed as lower tax receipts have led to billions more borrowing than planned.
But Britain is not alone. The US, despite a stronger recovery in GDP growth than the UK, has also seen stagnant living standards for most people in work. Income growth for the bottom 90% has been going backwards in Japan for a decade while low levels of demand and premature austerity are creating deflation in the Eurozone.
In our report we argue that not only social justice, but also public support for our open, global trading system and trust in democracy depend on getting it right.
And we show that, in the face of global competition and rapid technological change, developed countries cannot succeed through a race to the bottom in which companies simply compete on costs as working people see their job security eroded and their living standards stagnate or decline.
We argue that a race to the top requires policies to support more good jobs and higher wages, boost skills for everyone, support innovation, encourage long-termism in private and public sectors and so raise productivity.
In the UK, the policy solutions include greater support for young people facing long-term unemployment, more and better quality apprenticeships, expanding free childcare for working parents, raising the minimum wage faster than earnings, reforming corporate governance to encourage long-term investment, an independent National Infrastructure Commission, giving city and county regions the powers and budgets to drive growth and support clusters, a proper British Investment Bank and reform of the banking sector.
But we also argue that we need more international cooperation not less to deliver inclusive prosperity at home and abroad. We need internationally agreed progressive policies to support global growth, open up markets through greater cooperation on trade, progress on stronger international financial regulation and international cooperation to tackle tax avoidance.
Without a strong and progressive response, the danger is that our politics will tend toward populism and insularity. But a better future is possible, one that combines openness with solidarity, dynamism with security and innovation with equity. That is what we mean by a new Inclusive Prosperity for the 21st Century.
Ed Balls is the UK's Shadow Chancellor of the Exchequer. He is the Co-Chair of the Commission on Inclusive Prosperity. Its report is being published today by the Center for American ProgressSuggest a correction