A dinosaur recently disturbed the peace at an ICA discussion of a film celebrating the hedonism of the ecstasy generation. It said: "The young of the 40s could say they saved the world from fascism, the young of the 60s ended Vietnam. Do the young people here only want to be remembered for making loadsamoney and taking loads of E?"

The question was dismissed as being "really, like, patronising to young people" by several dazed and confused, self-appointed representatives thereof, but I must confess to having felt some sympathy for the unfortunate questioner.

There is a risk of sounding like Colonel Blimp if a middle-aged person begins any sentences with the words "Young people today", or "The trouble with Thatcher's children". Nevertheless, here goes: Young People Today are making themselves miserable by their inflated aspirations for status and wealth.

For a clue as to what is driving these aspirations, one only has to look at the government's annual "quality of life" indicators, published last week. Economic growth is regarded as one of the indices, yet there is no mention of well-being or rates of mental illness. No wonder that young people put the achievement of material success before their emotional lives.

A recent Bread for Life survey clearly demonstrated this. It showed that more than half of young people said they would feel like failures if, by the age of 30, they did not have a long-term partner, money in the bank, a senior career position and an opulent car and home. For very obvious reasons, this is a prescription for misery.

Inevitably, only a minority of them will achieve these goals, leaving the majority feeling that they have failed. Just as the majority of children leave school feeling like academic failures, so with their professional lives.

What is more, even the apparent winners are at grave risk of feeling like losers. In a society where almost everyone feels that they should be thinner, or cleverer, or richer or more attractive, it is hardly surprising that even a man as gifted as Stephen Fry or a woman as beautiful as the Princess of Wales should be at grave risk of depression.

In 1970, an American president stated that "In the next 10 years we will increase our wealth by 50%. The profound question is, does this mean that we will be 50% richer in any real sense, 50% better off, 50% happier?" Rather surprisingly, since he is better known as an atavistic advocate of raw capitalism, the speaker was Richard Nixon.

Over the succeeding years, innumerable international surveys proved the wisdom of Nixon's question and disproved the premise of modern life: that increased economic growth increases well-being. At both individual and national levels, once a basic level of affluence is achieved - a car, a video, a home and so forth - increasing it further does not increase well-being or mental health.

That the richest developed nations are by no means the happiest and nor are the richest individuals is something of which New Labour seems as oblivious as its predecessors. Ronald Inglehart, a much cited American authority explained this fact as follows: "In the short term getting what you want may produce euphoria; but in the long run it does not... After a while, people take what they have for granted and either want more or, when they reach saturation point, turn to the pursuit of other goals... One's subjective satisfaction with life reflects the gap between one's aspiration levels and one's perceived situation."

This "relative deprivation" explains a great deal. Above all, it explains Bridget Jones. Young women today have been conned on a grand scale into believing that they can do and be anything they want, as the title of Helen Gurley Brown's bestseller, Having It All, illustrates.

Magazines such as Cosmopolitan and other media influences too numerous to mention have reinforced the idea that if you are a young woman, the world is your lobster (as Bobby Robson so famously misquoted). The result is that if you do not have Kate Moss's figure, a thrilling, highly paid job, a New Man in tow with whom you have complex and anatomically taxing sex and a couple of kids cared for by a nanny, there is a grave danger you might think there is something wrong with you.

In fact, as the popularity of Bridget Jones shows, for many young women the reality has been a nicotine habit and rising levels of anxiety and depression. The great majority end up working in unfulfilling jobs for not much money.

This lack of satisfaction with work was well documented in Helen Wilkinson's 1995 Demos study, Freedom's Children. Career aspirations were outstripping job opportunities in an alarming fashion: 55% of the 18 to 34-year-old single women wanted management responsibility and 67% sought "greater possibilities for advancement". Yet 42% reported no promotion opportunities in their present job. These statistics are a classic recipe for relative deprivation: high wants and sense of entitlement yet poor prospects of their fulfilment. Advanced capitalism has successfully hijacked the aspirations of feminism. Instead of creating a nation of libidinously liberated and equal Cosmo women, advanced capitalism used feminism to create a vast supply of low-paid workers in a world of increasingly gender-neutral jobs.

In 1950, only 12% of women had any job at all whereas today, as many women work as men. A little discussed consequence of this huge change is that the main bargaining counter of the unions - the limited supply of labour - has been destroyed.

But the problem is not feminism, it is advanced capitalism. The way it has evolved, a whole generation of boys and girls have been very actively encouraged to believe that if they work hard they will be like the people on TV, rich and highly esteemed. Never mind that even if they achieved these goals they would be no more fulfilled or less mentally ill. Inculcating these values will make some of the poor saps go all out at school to achieve good exam results. Subsequently, they will work themselves to the bone for little money and with family-destroying hours.

The wholesale adoption of the American version of capitalism which underpins this emotional holocaust - begun by Thatcherism, continued by New Labour - is a calamity. Far from looking across the Atlantic we should gaze across the North Sea for our models.

Only in countries such as Denmark do you find a capitalism which works for, rather than against, the emotional well-being of young people.

Oliver James is the author of Britain On The Couch - Why We're Unhappier Compared With 1950, Despite Being Richer (Arrow)