Your acclaimed 1995 book The State We’re In was a surprise bestseller. Why did it strike such a chord?

First of all the timing was right, in that it was the run-up to a general election, it was obvious the Labour party were going to win it, and the idea of a book that had thought through what they might and should to do was attractive. In the 90s the decay of public institutions such as schools, hospitals and prisons was woeful. There were enormous social divisions and scars and a sense from all sides that some kind of social binding was needed. When the book came out I felt like I’d been strapped to a small rocket that had gone off. It changed my life.

In the preface to your new book How Good We Can Be you say that New Labour had an opportunity to bring about real reform but they “flunked it”.

I do think that it was my generation’s big chance. New Labour was elected to spend money on public services and it did, and there was some narrowing of inequality, but there was also an unwillingness to take on the big corporate beasts. The short-termism of British capitalism – the biases against innovation and investment – were left firmly in place. Ultimately it comes down to a lack of social democratic conviction. Tony Blair and Gordon Brown will never publicly acknowledge this, but they both know that they didn’t fulfil the mandate that they’d been given and I’d be amazed if they don’t privately reproach themselves.

With the benefit of hindsight, would you alter any of the predictions that you made 20 years ago?

A lot of what I said has come to pass. I was worried about the growth in inequality. I was worried about companies that didn’t have a purpose other than to maximise their share price. I thought that would lead to all kinds of dysfunctions, particularly in the labour market, and it has, but I never anticipated zero-hour contracts. I thought the credit booms were getting increasingly out of hand, but I never thought the whole thing would collapse.

In How Good We Can Be you paint a fairly bleak picture of Britain in 2015. Do you feel less optimistic about our chances of putting things right than you did 20 years ago?

If anything I am more upbeat. There has been a real change of climate. Free enterprise hasn’t exactly covered itself in glory and many people in the British business and financial establishment are less self-confident about this kind of libertarian rightwing position than they were 20 years ago. What I find so tantalising is captured in the book’s title. It wouldn’t take much to create the structures that would make this country the most dynamic in Europe. Instead of blaming everything on the EU or immigrants we have to acknowledge that our problems are homemade and we can address them.

Some of your arguments in the book are couched in quite moralistic terms. How important is the idea of fairness?

Walk through some of our seaside resorts, our old industrial towns, some of our great conurbations, and the neglect and the lack of opportunities that exist for the mass of people to flourish is painful. I do think people have an embedded sense of proportionality, that what you get out should be in proportion to what you put in. Pound for pound of turnover, the people that run British companies are the best paid in the world. But are they really that great? It’s a poison in the heart of our society. I’m the father of three kids, I run an Oxford college and I look at these young people and I think, what kind of world are my generation handing on to them? Are there great institutions they can build careers in? They’ve been sold off, they’ve been privatised. It’s been so much tougher for them and in the name of what? So-called wealth generation.

Which organisations or countries are getting it right?

I think the British university system is to be admired. These are academically excellent institutions that are still more or less open to everybody on merit and produce good results and are quite porous in their relationship with the business world. I love the entrepreneurialism of Palo Alto and Silicon Valley – the experimentation with the new, and the fact that they are all great team players. If I could go shopping, I’d take a little bit of Silicon Valley’s get up and go; some elements of the German banking system, which is very supportive of medium-sized companies; I like the Nordic approach to corporate ownership, which has very democratic foundations; I’d throw in some elements of the Dutch and Danish welfare systems; and finally, the Swiss approach to lifelong learning for the masses. Unfortunately it’s not as simple as taking a supermarket trolley and throwing it all in.

Who inspires you?

I admire Thomas Piketty. For all its small flaws, Capital is a kind of masterwork that’s put the question of equality on the agenda. David Marquand [former Labour MP, historian and political writer] has influenced me a lot. His view is essentially that the way you hold the public sector to account is a fundamental building block of a good society. An economist who interests me a lot is Axel Leijonhufvud: his belief is that it’s impossible for free-market economic principles to be true because they neglect the role of time and uncertainty. Both men are now in their 80s but boy have they got it right. And I know it’s extremely unfashionable, but I think that Vince Cable has done a really good job as business secretary.

Who’s going to win the election?

I think the Labour party will be the single biggest party in the House of Commons, but probably without an overall majority. It will govern successfully for most of the next parliament because the Conservative party will go to war over Europe and Ukip. Neither the Scottish nationalists nor the Liberal Democrats are going to form a coalition with Labour, but they will vote for it on a case-by-case basis.

For the Tories, some kind of intellectual reinvention needs to happen. Although he’s regarded as a buffoon, the person in the party from whom this might come is Boris Johnson. He’s a much more intelligent, reflective politician than he’s given credit for.

What would you like to see Labour do first if they get into power?

Firstly, we need a companies act for the 21st century: ownership reform is fundamental. The next priority should be really scaling up the embryonic innovation architecture that’s been developed by Vince Cable and David Willetts. Thirdly, housing reform – we’ve got to have proper property taxation and construction of new homes. And finally, launching a system of lifelong learning, like the one they have in Switzerland, so the mass of people have the chance to flourish.

Everybody knows Miliband’s weaknesses. You can’t open a newspaper without reading about them – indecisive, not plausible in public, can’t eat a bacon sandwich properly. But his view of what needs to be done is broadly correct, it’s grounded in really good values and, rather like Attlee in 1945, I think he will do it.