All the economic indicators suggest a “feelgood factor” should be working in the Conservatives’ favour, but it now seems quite possible that in a few weeks time the voters of Britain will ignore them and choose a Labour government. Is it merely a coincidence that as voters appear unmoved by economics, A-level students, despite the subject’s importance, are increasingly shunning it?

Economics hasn’t changed since the last political watershed, when Margaret Thatcher rode the backlash to the Winter of Discontent, the product of the price hikes and strikes of the 1970s. Out went the Keynsian belief in fiscal manipulation of demand and investment in public works to maintain fullish employment. Out too went the rising numbers of students studying economics.

Up stepped Milton Friedman who argued that markets should be freed to self-regulate the economy, and that governments should interfere as little as possible and then only by tweaking the money supply.

It flew in the face of attempts by social democratic and one-nation politicians to steer between unrestrained capitalism and it’s global challenger, Marxism. This was the ultimate clash of big ideas, backed up by nuclear arms. In the event Communism and state planning disappeared with more of a whimper than a bang, having betrayed the very people it claimed to care for most.

Francis Fukuyama has called the unipolar, post-Cold War era and the death of the Marxist-Leninist alternative, the end of history. That has proved an exaggeration. But it did seem the end of the economic argument. The market was king.

Now we see disillusionment; not least in the power of the market to provide answers, but in many other areas as well. Post-modernism, a reappraisal of the position of individuals and society, the role of ethics, values and so on are all indicators that the policies pursued by government have not in the long run served us well. Deregulating markets brought private monopolies, fat cats, cash for questions and homeless young people begging in the streets. In popularist terms, Will Hutton summed it all up in his book The State We’re In, while J K Galbraith spoke of the dire consequences of a culture of contentment prevalent in a wealthy, articulate group which disenfranchises many others, particularly young, black people.

The emphasis placed on the need for predictability has led economics down the path of mathematics, of treating variables as constants to obtain measurable outcomes, and of treating interrelated and interdependent systems as capable of being judged on their individual parts.

It is little wonder that students are not only turned off the political system but also the economics which they perceive as responsible. For them the middle of the next century is crucial, not the end of this. They prefer to concentrate on single-issue politics because they feel it is only there that they can have an impact; Swampy the eco-warrior is a hero, not just because of what he does but also because of the way he does it.

Perhaps what is needed is a new “big idea”, something that will catch the attention and excite us all. The irony is that alternatives to mainstream capitalism have been around for a long time. Robert Owen attempted one such two centuries ago and his ideas provided a model for others. In 1957 Polanyi wrote about Lebensweg: the day-to-day ethical task of living that is so compromised in a society dominated by material gain. Later, Etzioni argued for a move away from the “I” of neo-classical economic theory to the “we” to overcome excessive self-interest.

This year an invigorating contribution to the search for new ideas has come in the form of Tony Lawson’s book Economics and Reality (Routledge), which offers an alternative to the positivist, deductivist, irrelevant economics which has become so dominant. Lawson lambasts the prevailing orthodoxy.

What use, he says, is a subject that deals with drug abuse, if indeed such a topic even rates a mention, in terms of “preferences” without acknowledging the complicated ethical, societal and environmental issues which are bound up with such decisions? “Get real” as our students might say, and it is that lack of reality, its irrelevance to their daily lives, which has been such a turn-off.

Economics should be able to describe what we observe, but also to recognise that we are critical players within that reality, hence the term, critical reality. Critical realism examines the underlying structures which determine events and suggests ways in which they can be transformed in order to facilitate alternative opportunities. This results in social emancipation because it offers choice rather than control or amelioration (for example, of levels of inflation), which have been the domains of conventional economics.

Should the supply of drugs be reduced, for instance, by law enforcement or by choosing not to flood the Bolivian economy with cheap versions of the cereal crops which offer the only viable alternative that peasant farmers have to growing coca? Then again, will demand be reduced by squeezing supply and forcing up the price, or by investing in housing and jobs for those who live without hope in crumbling inner-city ghettoes of unemployment?

If instead we observe entire systems we can begin to offer exciting opportunities for the study of economics. The big issues of inequality, the arms trade, premature deaths, environmental degradation, female exploitation and so on are not only central to students now, they are likely to become more so as technology and globalisation increase our interdependence into the next century.

Translating these issues into syllabuses may be difficult, but a start has been made. The EDEXCEL Nuffield Economics and Business syllabus as well as economic development options offered by EDEXCEL and UCLES suggest ways forward, but the scope is endless. An environmental economics option, for instance, would attract a large cohort of students and would require them to develop sophisticated thinking skills, since they would need to consider the “right thing” by nature, such as not cutting down the forest, as opposed to the rights of people to enjoy food, shelter and life expectancy. It may or may not be time for “New Labour” but it is surely time for some new economics.

David Lines is lecturer in business and economics and a member of the Education, Environment and Economy group at the University of London’s Institute of Education