George Osborne did something foolish last weekend. On Saturday morning at 8.15am, possibly as his guard was down while munching on some rösti over breakfast in Davos, he tweeted: “#Google tax bill is a victory for the action we’ve taken”.

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Now, whatever your political views, most people would agree that our chancellor is one of the best readers of the game of politics. Which is what makes this moment of spectacular misjudgment so surprising. A cursory look at the Google tax deal is enough to show how ridiculous Osborne’s boasting was: a back payment of £13m per year for the past decade, which is probably not much more than Google’s annual spending on chicken in its UK staff canteens, and a paltry (sorry for the pun) 2.5% of the company’s annual UK profits.

Reaction to Osborne’s hubris was pretty uniform and pretty derisive. But most interesting of all was the flicker of critical reaction within the Tory fold. And not just Boris, who of course got in some subtle distancing from his leadership rival. Tim Montgomerie, social conservative commentator and acolyte of Iain Duncan Smith, called on the Tories to use the Google uproar to rediscover the moral passion of Adam Smith, and make the reinvention of capitalism a 10-year priority.

He has fellow travellers. Cameron’s shoeless former muse Steve Hilton was very persuasive on the airwaves yesterday on the need to shake up markets in which the success of the big players has come at the cost of innovation and competition.

Meanwhile, Cameron’s occasional nemesis, David Davis, has just finished a book on the “new capitalism”, which will no doubt channel Teddy Roosevelt’s hostility to oligopolies on behalf of Britain’s consumers. And one of the Tories’ rising stars, Jesse Norman, who coined the term “crony capitalism”, has set out a reform plan to return to “properly governed markets” in the wake of the 2008 crash.

My reaction to the emergence of this strain of “market reformism” inside the Conservative movement is to be heartened by it. Perhaps that is politically naive of me. After all, if the Tory leadership heeds the call of Montgomerie, Davis, Hilton and Norman to own the reshaping of capitalism, won’t their shift further squeeze a Labour party still in recovery from a year of turmoil? And as someone who championed the cause of “responsible capitalism” in Ed Miliband’s team during the last parliament, shouldn’t I want Labour, not our opponents, to be the champions of building a better economy? Perhaps I should have these reactions. But I don’t. And I think the reason for that comes from the experience I had working with Ed Miliband.

I continue to think that rewiring the way that our economy works is the biggest economic challenge Britain faces. Our growth is too dependent on spending and household debt, and too little on investment and exports. Our track record in skills, R&D and innovation is relatively poor across the economy as a whole. Our long tail of low-wage, low-skill jobs is wrapped up in a decades-long productivity problem that has got worse not better since the crash.

The problems in the engine-room of the UK economy manifest themselves in a range of economic symptoms – from weak penetration into emerging markets, to persistently large inequality – all of which put a strain on taxpayers and governments alike. Sorting this out is a huge challenge, one that will require a shared commitment across political parties, and between politicians and business, to sort things out. If the Tories are waking up to this challenge, that can only be a good thing for Britain.

On the other side, I want Labour to continue the zeal for a more responsible capitalism that Ed Miliband showed. But we need to accept that for all that zeal, we failed to persuade Britain of our case in May last year. And we need to ask: Why?

Voters know that something is wrong with the rules of our economy. But they were singularly unpersuaded that Labour was the right party to sort the problems out. If we are honest there were a number of reasons for that scepticism, lack of credibility on public spending being perhaps the biggest of them all.

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But I think even those who found themselves agreeing with our diagnosis of what was wrong with Britain’s banks, energy markets, housing markets and employment laws didn’t think we had the prescription to go with it. Our response looked limited and tinkering, nowhere near the scale needed to turn the supertanker of the UK economy around. I also think our body language wasn’t right. My sense is that voters were not persuaded that our strong criticism of the way markets in Britain were working was coming from people who actually wanted the market economy to work well. We came across as having the outrage of sceptics of capitalism, not the concern to sort things out of critical friends of capitalism.

Put all this together and our mistake on responsible capitalism was paradoxically both a credibility deficit and a radicalism deficit. If we want to reform the way our market economy works – to channel the public’s anger about Google, Fred Goodwin, energy company profits, zero-hour contracts and inequality into real change – we need answers that match the scale of the problems. We need to acknowledge that our economy is changing rapidly and we don’t have all the answers yet. We need to settle the question of the affordability of our policies to get permission to be heard on our reform proposals. And we need to invite business to share the mission to improve the way we create wealth, share it and compete.

And one other thing: we need to applaud and encourage those of our political opponents who agree with the challenge we face. Perhaps we should even think about talking to them and forming a common cause. To do anything else suggests we aren’t as committed to actually achieving a better kind of economy as we pretend to be.