ON OCCASIONS, very rare ones, our world is illuminated by a single event. Something happens which acts as a prism, refracting the light and separating a tangle of beliefs, emotions, hopes and fears. The Westminster MPs' expenses scandal is such an event. It doesn't simply tell us that our parliamentary system of democracy is rotten. It also tells us why: because too many politicians are more interested in changing their homes than changing the world. They believe in little more than making their material life better, not making our society better. While it would be foolish to think that our elected representatives were never interested in themselves, the scale of misused public funds by people who claim to know better, but only know how to claim more, demonstrates that something profound has happened, and we need to understand what.

But if we step back from righteous outrage at our representatives abusing the system and simply think about what some of them have been up to, we might find a space to deal with the problem the scandal has revealed. MPs have been making as much money as they could out of property deals; they have been renovating their homes and selling them on; they have been fitting out new kitchens and buying sophisticated appliances and gadgets. They have lost themselves in a world of consumer durables and forgotten that life can be about other things: time with family and friends, helping others or, as they should know, working for a better world. Does any of that sound familiar?

Because what the MPs expose, in a particularly grotesque way because of who they are and where they get their money from, is us. Increasingly, we value and covet exactly the same things they do. We are caught up on the same treadmill of turbo-consumption in the unfounded belief that having more will make us happy. Like them, we are part and parcel of the consumer society. To understand what has gone wrong with our parliamentary system, we have to understand what has gone wrong with us.

So what keeps us running on the consumer treadmill? We buy freedom, escape, love, care, excitement and comfort. We buy to belong to a particular social group and stand apart from others. And, of course we buy status. We want to be as near the top of the herd as possible. Endless consumption fuels the instinct to be "the best", to covet the newest car, to wear the latest outfit, to travel to ever-more exotic places, to possess the latest gadgets and to own a prestigious home in a "desirable" area. We live in a world where, as the commercials remind us, you can be ashamed of your mobile phone and your worth is measured according to your shampoo.

We are kept on this treadmill through fear of falling off, into the abyss along with the other failed consumers who constitute today's poor: the ones who can't keep up or who have to cheat or steal to do so. Consumer society despises those who won't play by the rules, and fear of being like them disciplines us to keep fit for a race that can never be won because there is no finishing line - just a never-ending procession of demands for more.

The whole show is kept going by the vast edifice of designers, producers, marketers, advertisers, branding experts, psychologists and retail consultants who make up the image factory that defines the 21st century. The best brains in the world are engaged in continually turning new wants into new needs: more and more things we must have in order to be "normal".

But life on the treadmill is catching up with us, just as it has caught up with the MPs who got too greedy. The most obvious concern is the survival of our eco-system. If everyone consumed what we in the West do, then we would need three planets to live on. Yet the pressure to buy keeps on building, to the extent that shopping has become our primary recreation. What else is there to do with the kids at the weekend?

Most frightening of all is the fact that there are so few other ways of expressing our humanity, so we increasingly take comfort in so-called "retail therapy". Shopping is used to mask deeper emotional problems. Yet the object of the sellers is not to make us satisfied but dissatisfied so that we soon go back for more. Consumer society is based on the fine art of compensation. It rewards us just enough to leave space for more ... and the emptier we feel the more we shop. It is the most vicious of vicious circles, and the paradox at the heart of a Western political economy is that it is based on the pursuit of "more". Research shows that, beyond the attainment of a fairly modest level of subsistence, getting richer does not make us happier. We are chasing a dream that doesn't exist.

How, then, do we escape from the treadmill of consumerism? There is no going back to some rose-tinted pre-consumption era. Shopping isn't all bad, after all - it's an important means by which we can be sociable and creative. However, we need to strike a balance, and that means regaining control over a machine whose sole purpose is to make ever greater profits, commercialising and exploiting more and more aspects of our lives in the process.

But before we can confront the market, we require a more compelling vision of what it means to be free and live a good life. Shopping sells us a powerful myth of liberty: that the car sets us free on the open road, for instance, when the reality is that we spend hours sitting in choking traffic jams that get us nowhere and pollute the environment. We must grasp the fact that what we really need and cherish can't be bought.

Be wary of the market, however, which at every turn will try and sell us "solutions" that will actually make things worse. Take that covetable £5 Anya Hindmarch reusable shopping bag: will it really make a difference, or is it simply another must-have fashion accessory?

Individually, we can consume better and consume less: opting for ethical shops that encourage us to take more care over what we buy, and therefore to buy less and buy better. Less time spent shopping frees up space for new pleasures, such as walking, cycling and travelling by train rather than flying. We need to create an alternative hedonism, in which pleasure can be discovered in time, quietness and nature.

A 2006 BBC survey showed that 91% of us disagree that money is the best measure of success. Millions of people, across all social classes, are already making the decision to downshift, trading money for time. Swapping a high-powered job for a more fulfilling life doesn't mean dropping out of society, but working less, earning less, consuming less ... and having more time to do what you enjoy and be with the people you love.

Rules and regulations have their place. France's 35-hour week gives people time to do things other than work and consume. In placing limits on us, this kind of "compulsion" also sets us free. Crucially, we will only gain control over our lives when we see ourselves not as consumers, but as citizens. Acting alone won't save the planet or change society. We need to work together. Collective action, such as boycotts of products or stores, hits companies where it hurts. Across the country, "transition towns" are already springing up - places where there is a collective effort to move to lower-cost emissions through recycling and better transport. Alness Transition Town, for example, describes itself as a network of local people who have decided "to come together as a community to build a way of life that is not only sustainable but is potentially much more creative and satisfying". At the sharper end, there are groups such as the young people in Plane Stupid who sit on airport runways to protest against the damage the flights do to our planet.

Finally, the state needs to step in, and we must demand that it legislates to help us rebalance our lives as social beings and citizens, rather than simply as shoppers. A good start would be legal restrictions on advertising - particularly to children, who shouldn't be subjected to the full force of the branding psychologists. Just as Sweden has banned advertising to under-12s, we need do the same and go further, perhaps following the Brazilian city of Sao Paulo, which outlawed adverts in public places.

Other governmental measures could include taxing waste and promoting carbon-trading schemes. Taxation on luxury goods should be increased - thus signalling that status isn't gained by buying top-end merchandise - while key minerals, such as oil, need to be rationed. The global scarcity of resources means this will eventually happen anyway. Far better to plan it democratically and fairly now, rather than leaving it to the market. Finally, happiness - not wealth - must become the number one priority, which means replacing the GDP (gross domestic product) with GWB (general wellbeing) as a measure of the nation's prosperity. The quality of our lives, not the quantity of our consumption, should be the measure of political success.

The current recession is a wake-up call. Right now, we are being forced to shop less. Last month in Scotland, retail sales exhibited the sharpest fall in nine years, with non-food shopping for things such as clothes and furniture down by 5.7% compared with the same month last year. The crucial question is: what happens when the crunch is over? Will we return to a life that is all-consuming, or use the enforced consumer slowdown as a catalyst for change?

If last Thursday's heavily censored publication of MPs' allowances proves anything, it's that our elected representatives have no vision of the good society, beyond the realm of material comforts. And as the "cash for bangers" car scrappage scheme demonstrates, the government's solution is to encourage us to try to consume our way out of this recession.

But shopping got us into this mess. It won't get us out of it. Instead, we urgently need to move to a post-consumer society, in which shopping plays a lesser role in our lives. This will require a critical mass of people to stop competing through what we buy, and start co-operating for a better life. We can't change the world as individuals, but we can do it together.

All I can say is that I will if you will.

A former adviser to Gordon Brown, Neal Lawson is a political commentator and chair of Compass, the left-leaning pressure group, and managing editor of the policy journal, Renewal. His book, All Consuming, is published this Thursday by Penguin, £10.99.