The shadow of Scotland will be cast over everything for at least another week as the party leaders wake up to the threat of the end of the union. Meanwhile, one politician has been pondering the new politics of self-determination for a while and today makes a timely intervention. Labour’s policy review is necessarily taking time to take shape. After the second- worst defeat in its history and against the backdrop of a recession it had a hand in, intellectual revival was never going to be easy. But important patterns are emerging and become stronger today with the publication of One Nation: Labour’s political renewal by Jon Cruddas and Jonathan Rutherford.

While the notion of “one nation” looks rather dicey, given the headline-hogging independence referendum, this document sets out the thinking behind a potential transformation in the way we do politics and people’s role in making change happen. It’s a rallying cry to give power to the people, and with it to move beyond not just a state that is too remote but markets that are too free.

Cruddas is sometimes accused of being overly academic and theoretical. But nothing of merit comes without hard thinking and tough experience. Cruddas spotted early the cultural significance of nationalism. With the BNP’s tanks parked on his lawn in his east London, migration-fuelled seat of Dagenham and Redbridge, it was hard to ignore globalisation’s role in creating a world of anxiety and alienation that propels Ukip but has some echoes in Scotland.

More recently, Cruddas has come alive to the potential of radical democracy. Labour has unnecessarily and tragically tied itself to the mast of austerity in a way that builds a cage for any victory it may enjoy. That decision was above the Cruddas pay grade, and when you can’t go big on spending you go big on reform – this is the Cruddas agenda.

As “one nation” falters and “responsible capitalism” is still half-baked at best, this is the one point of potential coherence Labour can rally behind. But the party has to do it properly.

Earlier in the year, a host of Labour-orientated thinkers signed a letter in the Guardian demanding this localism and devolution agenda. It caused a flurry, and ever since other party figures have at least been miming the words of this real “power to the people” tune. But the coherence, pace and authenticity of this approach now need to be stepped up.

Cruddas understands that the energy and resources to build a good society must come from citizens. The approach carries the seeds of the “big society” without any of the anti-state baggage, or at least it recognises the key role that the local and regional state must play to provide the platforms and spaces for people to make their lives better by growing what they share in common.

It’s a good time to try. The world is shifting from the vertical and the top-down to the horizontal. On these flattening planes the values of democracy and equality can resonate if we get the politics right – and ensure power isn’t concentrated in corporate hands. Much of it is technologically driven, and this is why Cruddas is so interested in open data as a key new commons. As such he is trying to inject into Labour’s veins the vital strain of modernity, for Labour succeeds (1945, 1964 and 1997) when it has a story about the future.

So what could happen if central government really did give power away – or, in the case of Scotland, is forced to? The policy details now need to come fast, but obvious examples abound – let councils raise more and spend more, through taxes or bonds, in part to finance networking platforms so debt can be met peer-to-peer rather than through loan sharks; and energy is produced and distributed locally and renewably to cut out the big six. This isn’t the remote state doing things to people, but the enabling state being championed by the likes of the Carnegie Trust.

Labour may win if the Tories are bad enough, but won’t survive government for long without a governing project. No social democratic party the world over has yet to meet the challenge of these changing times. All are in decline. The challenge to Labour is systemic. Scotland and the rise of Ukip are symptoms of a deep malaise that will require fresh thinking.

In a recent lecture to the RSA, Cruddas used the dying words of a native American tribe leader as an allegory for Labour. The chief said: ‘‘When the buffalo went away the hearts of my people fell to the ground, and they could not be lifted up again. After this nothing happened.”

What happens to Labour when the industrial culture that spawned it dies and the work that is left is bereft of dignity, a common culture or even wages on which you can securely live? In essence, the challenge posed is this: can Labour shift from being a party of labour to a party of citizenship?

As imperfect as it must be, Cruddas is pointing the way to a future in which there might just be hope.

This article first appeared on the Guardian’s comment is free