Tom Griffin (London, OK): Shadow chancellor George Osborne launched a bold attack on one of Labour's traditional strengths in The Guardian today, charging that the gap in life expectancy between rich and poor in Britain is at its widest since Victorian times:

When it comes to developing a policy agenda that delivers fairness and social justice, the Conservative party is leading the political world away from the target-driven, top down, statist approach that Miliband pioneered when he ran the Downing Street policy unit. That approach is failing because it relies on a flawed assumption that only the state can guarantee fairness.

What are the characteristics of a fairer society? First, it rewards effort and work. We have established, after a long and bitter ideological argument over two centuries, that the free market economy is the fairest way of rewarding people for their efforts. But just as Conservatives have always stood against the utopianism of controlled economies, so too have we recognised that unfettered free markets are also flawed.

If Osborne's argument shares anything with David Miliband's, it is the underlying assumption that debate is about the right balance between public and private, between the antithetical principles of the state and the market.

Yet this picture is arguably remote from a reality characterised by the socialisation of losses and the privatisation of profit in the wake of the credit crisis. Sunny Hundal recently highlighted the best example of this, the case of Merrill Lynch:

Merrill Lynch is unlikely to pay corporation tax in the UK for several decades after $29bn of losses suffered by the US investment bank were charged to its London-based subsidiary.

The figures, published in Merrill's regulatory filings, emphasise how the meltdown in the US subprime mortgage market is undermining tax receipts for governments far beyond America's borders. They also offer a rare glimpse into the complex tax management policies of a big global financial institution.

This perhaps is today's version of the enduring reality described by the great French historian Fernand Braudel thirty years ago:

We should not let ourselves be deceived: the truth is of course that both state and capital - a certain kind of capital at any rate: the monopolies and big corporations - coexist very comfortably, today as in the past; capital does not seem to be doing so badly. It has, as it always did, burdened the state with the least remunerative and most expensive tasks...

Above all, it shamelessly benefits from all the exemptions, incentives and generous subsidies granted by the state - which acts as a machine collecting the flow of incoming money and redistributing it, spending more than it receives and therefore obliged to borrow. Capital is never very far away from this providential source of bounty. The Perspective of the World, pp.623-4.

A simple dichotomy between the state and the market arguably only obscures the real sources of inequality. The real challenge, uncomfortable as it may be for our increasingly narrow political elite, is to democratise both public and private power.