Labour government could give employees the right to take over their companies if they are sold, dissolved or floated on the stock market.
Shadow Chancellor John McDonnell says the party does not want to return to an era of widespread state ownership.
Instead, Labour would look to expand co-operatives and explore giving workers the “right to own”.
David Cameron has accused Labour of wanting to turn back the clock to the days of state ownership and strikes.
But Mr McDonnell tackled this claim head-on in a speech in Manchester, saying Labour had to move on from its traditional belief that state ownership was always the answer.
“Whatever the achievements of the past, we cannot simply turn the clock back – whether to 1997, 1964, or 1945,” he said.
At the last election, “the Tories talked relentlessly, overwhelmingly about the future. Labour, strikingly, did not”.
“We cannot allow that to happen again. We cannot be small ‘c’ conservatives.”
He added: “A future Labour government will end the current programme of spending cuts. We will protect what has already been won.
“But we must look beyond this point. We should be seizing the opportunity to create a fairer, more democratic society.”
Labour has already announced its intention to return the railways to public ownership.
But when it comes to the wider economy, Mr McDonnell said Labour should “look elsewhere” for solutions, and draw on its tradition of supporting workers’ co-operatives.
He signalled support for giving employees in companies which are about to be sold off – or floated on the stock exchange – the first option to purchase the company.
“The Tories have offered a Right to Buy, Labour would seek to better this. We’d be creating a new Right to Own,” he said in a speech in Manchester.
He said the “biggest hurdle” facing co-ops and other small businesses was getting initial funding from high street banks.
“No other major developed economy has just five banks providing 80% of loans. We’d look to break up these monopolies, introducing real competition and choice.
“Regional and local banks, prudently run and with a public service mandate, have to be part of the solution here.”
Mr McDonnell is also considering adopting the Italian government’s policy of offering funding to help employee-owned enterprises to get off the ground.
“With consortium co-operatives providing an effective means for new businesses to share and reduce costs, we’d look to support these at a local level, working with local authorities, businesses and trade unions,” he said.
He said the policy would be developed “over the next few years”, adding: “In an uncertain world where a laissez faire market approach continues to fail, co-operation is an idea whose time has come again.
“This is the start of developing a new, positive economic alternative for Labour.”
He also urged Labour to embrace opportunities offered by the internet and new technology.
“Technology is proving disruptive. It can have terrible downsides – de-skilling and an accelerated concentration of wealth.
“But it also opens up new possibilities – the explosion of sharing that the Internet can provide.
“There is an entrepreneurial spirit at work here: not the theatrical meanness and one-upmanship of Gordon Gekko, but a desire to create something better for us all.”
Chief Secretary to the Treasury Greg Hands said Labour represented “a threat to our economic security”.
He added: “Now we know the truth: Labour is planning another debt-fuelled spending spree and a huge tax bombshell on the businesses that have helped to drive Britain’s recovery from the economic mess they left behind.”
BBC News 21 January 2016