The prospect of another election hangs Damoclean-like over the Conservative party. Whether it comes sooner or later, one thing is certain: the message needs to change. If the party chooses to build a new consensus, it can triumph. If it reverts to the free market fundamentalism of the past, it will fall.

The result on 8 June was not an endorsement of the way the economy is run. Neither was it a vote for unbridled capitalism, nor a call for a smaller, less interfering state. The most popular Tory policies were promises to spend £8 billion more a year on the NHS and to curb its use by migrants. The most attractive Labour lines were pledges on rent caps and student loan giveaways. Every mainstream party pledged to tackle corporate excess, use the state to build houses and give workers more rights and protections. Conservatives can restate the case for markets as much as they like – it will not win the next election.

The liberal consensus that has dominated British politics for decades is crumbling. Markets remain the best way of distributing wealth, but have tended towards narrow interest when left unchecked. The benefits of globalisation have accumulated in the hands of the comfortable few; its costs – uncontrolled migration, regional decline and industrial atrophy – are shouldered by the struggling many.

This is more than just turbulence. Trends in demography, technology and geopolitics will exacerbate liberalism’s flaws, not ameliorate them. Pensioners, no longer society’s poor relations, are seeing long-held assets accumulate as the debts of the young multiply. Technology is disrupting ingrained concepts of labour, ownership and competition faster than permissive laws can keep up. Easier travel, communications and trade conspire towards more migration, lower wages and fewer jobs.

In the new world, parties must build a new consensus to prosper. The Labour party leadership knows this. Jeremy Corbyn’s back to the future socialism would be ruinous for Britain, giving us a bureaucratic state and a sclerotic economy, when agility and innovation are paramount – but it is smart politics. The status quo isn’t working, so why not offer a full-fat alternative?

If Conservatives want to win the next election, they too need to build a radical new prospectus. In doing so, they must remould the shibboleths of the centre right. The new conservatism must be pro market, not free market. Its ideal state should be strategic, not small. It should prioritise opportunity for the young and the hardworking over security for the old and the undeserving. Tax should be low on productive economic activity, such as labour, and high on unproductive parts of the economy, such as property.

These things are easy to say, hard to translate into policy and more difficult still to deliver. But from those principles a coherent and achievable policy agenda can be built. The economy should be made fairer by default. Providers of essential utilities, including energy and broadband, should compete on price,not complexity, with loyal customers looked after, not ripped off. Drags on jobs and wages, such as employer national insurance, should be cut, while rent-seeking, including ownership of commercial, second and empty properties, should be taxed more. The first rung of the housing ladder should be lowered, for example by abolishing stamp duty in favour of a capital gains tax on expensive properties that would be progressive across incomes, generations and geography.

Universities should be more than businesses, reprising their heritage as sponsors of local industry, education and hospitals. Devolution should be expanded, with local health, criminal justice and skills services managed across the same geographies and held accountable by the same democratic body. Metropolitan mayors should be able to not just build houses but plan entire neighbourhoods, as their forebears did, with more tax powers devolved locally.

The state should be refashioned to be agile and responsive. The easing of public sector pay restraint should be accompanied by the relaxing of Whitehall command and control. Public services should set their own terms and choose how to deploy staff. The argument should be remade, properly this time, to end subsidies to the well-off: Corbyn doesn’t need winter fuel payments any more than Nick Clegg needs free school meals. Spending on productive research and development and transport, where Britain lags, should take precedence over areas such as defence, where it is flush.

Brexit must be delivered in spirit as well as in deed. The debate about the terms of our departure is unedifying. A transition period is sensible, as is realism over our financial obligations, but what must be avoided is a dilution of resolve around migration or sovereignty. Such a betrayal of the referendum would not be forgiven; the victory for liberalism would be short lived.

The next election may be months away or years away, but the challenge is clear. Conservatism must be remade for the challenges we now face or must brace itself for electoral defeat.