Mr McDonnell, Jeremy Corbyn’s shadow chancellor, laid out his economic vision for the UK this afternoon in central London.
But before his keynote speech at the IPPR think tank event, the left-winger was slated by fellow Labour MP George Freeman.
Mr Freeman hit out at his party colleague and told him: “Marxism is not the answer.”
He said: “This afternoon you’re going to hear from John McDonnell and I wouldn’t be doing my job if I didn’t tell him, through you, these are big challenges.
“I put it to him: Marxism isn’t the answer. Increasingly dependency on the state isn’t the answer. Nationalisation isn’t the answer. Imaginative thinking is the answer but not nationalisation.
“Defending old left union obstructionism to innovation and modern working practices isn’t the answer either.
“It would be a disgrace if he threw away the hard-earned gains of the last 30 years: the 1980s reforms of the Conservative Party and the 1990s reforms of New Labour.”
He said politics in the UK does need to change but not in the left-leaning way in which Mr McDonnell wants it.
Mr Freeman called for a “intelligent” conversation between centrists leaning to both sides of the political spectrum.
He said: “We have to modernise politics in this country and modernise the way we do government in this country to make it fit for purpose.
“More urgently than ever we need an intelligent, principled, proper conversation between the centre-left and the centre-right.
“I ask you again, what’s it going to be? Will we look back in 20 years and say we finally lost it. We didn’t wake up and smell the coffee.
“We all hid behind our organisations, our soundbites. We took cover and let someone else take responsibility.”
Mr McDonnell spoke later in the day, beginning his speech with a scathing attack on Theresa May’s Government.
He said Mrs May was overseeing a “decaying government” which was poisoning the public with “toxic combination of incompetence and ideology”.
Mr McDonnell accused the Government of being “barely capable of being able to agree among themselves”, let alone negotiate a Brexit deal with Brussels.