“It is clear then that?.?.?.?those states in which the middle element is large, and stronger if possible than the other two [wealthy and poor] together, or at any rate stronger than either of them alone, have every chance of having a well-run constitution.” Thus did Aristotle summarise his analysis of the Greek city states. The stability of what we would now call “constitutional democracy” depended on the size of its middle class. It is no accident that the US and UK, long-stable democracies today succumbing to demagogy, are the most unequal of the western high-income countries. Aristotle, we are learning, was right. (See charts.)

My September analysis of “ rigged capitalism” concluded that “we need a dynamic capitalist economy that gives everybody a justified belief that they can share in the benefits. What we increasingly seem to have instead is an unstable rentier capitalism, weakened competition, feeble productivity growth, high inequality and, not coincidentally, an increasingly degraded democracy.” So what is to be done?

The answer is not to overthrow the market economy, undo globalisation or halt technological change. It is to do what has been done many times in the past: reform capitalism. That is the argument I made in a recent debate with former Greek finance minister Yanis Varoufakis on whether liberal capitalism should be saved. I argued, in effect, that “if we want everything to stay the same, everything must change”, as the Italian author Giuseppe Tomasi di Lampedusa wrote. If we want to preserve our freedom and democracy we need to embrace change. Here are five policy areas that need to be addressed.