I liked David Cameron; when he became Conservative party leader in 2005 he recognised that something was badly wrong with the right, and a new radical conservatism was desperately needed. I proposed a red Toryism – a commitment to the progressive merits of tradition and social conservatism and the need to build ethos-driven institutions, and a new Tory economics that distributed property, market access and educational excellence to all. In 2009 I argued for a new one-nation approach to Britain's problems, and Cameron appeared to agree. The principles of re-localising the economy, re-capitalising the poor and re-moralising the market were echoed in Cameron's speeches and policy ideas.

I did and still do believe in all this. I advocated a bottom-up civic renewal of our society; plus I wanted to recover social conservatism not as a reactionary war on single mothers or gay people, but as a conserving force to restore the family and loving human relationships as the primary agent of renewal, and the first front in the war on poverty, human neglect and social dysfunction. Crucially I argued conservative economics were not delivering on conservative principles and that current versions of free-market economics were re-inscribing class and caste.

Cameron to his great credit spoke to all of this and offered as its realisation "the big society" – a whole package of measures to add to community empowerment, civic life and community businesses. It was unfortunately designed to work alongside rather than convert a dysfunctional economic model. But despite appalling communication and a belief it was just about volunteering, it gave a sense of social rejuvenation and structural shift. Big society was Cameron's unfulfilled promise to do and be something different.

But what a disappointment and what a tragedy this promised renewal of one-nation conservatism has become. Make no mistake: a radical Toryism has been abandoned, the once-in-a-generation chance to redefine conservatism on something other than a reductive market liberalism has been lost. In 2009 I argued that the party had renewed its social vision but not its economic philosophy, and if it simply repeated 1980s economics, then that would destroy everything else on offer.

And so it has proved. In an act of almost inexplicable carelessness Cameron has abandoned his social project for a re-toxifying 1980s approach to the deficit. He has surrendered No 10 to Treasury determination and become a creature of other people's means rather than his own envisager of ends – the starkest example of which is that in the emergency budget of 2010 he allowed the largest cuts to fall on local authorities even before his own Localism Act had come into force, allowing communities to take over public services or employees to mutualise and modernise – undermining the big society agenda from the very outset.

The government is now focused on a purely negative agenda of deficit reduction, and unable to offer a positive vision of the future. Almost overnight the idea of a governing principle and a vision of a better Britain was overthrown by economic austerity and a smug and indifferent Treasury. Yes, the deficit bequeathed by Labour is a real economic emergency, and yes it cannot be ignored, and yes a simplistic continuance of the Keynesian status quo would simply restore a defunct and broken economic model. But the means employed to address it are defunct and outdated. Supply side reform is not a sufficient condition for growth: an economic approach that worked, for some, 40 years ago now appears not to work for any. Deficit reduction is not even working on its own terms – the government will be borrowing more at the end of its term than at the beginning, and what cuts have been made have predominately fallen on capital expenditure, which since it depresses long-term growth pushes short-term borrowing to yet new heights. The Treasury, unable to grasp that supply-side laissez-faire is not a sufficient condition of growth, is now scrabbling all too late to set up initiatives it once derided.

The PM has given up something for nothing, ceding all his strategic and visionary thinking to George Osborne's tactical and failing approach to the deficit. A new conservatism has been strangled at birth; a failure to rethink the party's economic offer means that old economics have killed new politics.

Why has this been allowed to happen? Cynics will say that Cameron never believed in his vision in the first place and it was all a cover for rightwing extremism. I don't accept this; I suspect the failure is philosophical and structural. Cameron has, or had, some of the best intuitions in British politics but lacks the ability to synthesise these into concepts and clear principles. A pragmatism that refuses to choose or decide on any governing principles may well have worked in earlier more prosperous times but in this economic crisis it's a disaster. The refusal to decide what type of conservatism he represents has led to him backing all the dogs in the fight and abandoning his own vision to the victor. This, coupled with a refusal to lead from the centre, has resulted in a decentralisation of power and a dissipation of purpose. Departments have permission to run with whatever variant of conservatism any minister finds persuasive. Hence the calamities of NHS reform, Europe and the work programme.

Rather like some ghastly ghost story, the various shades of the conservative past have returned and overwhelmed the good that Cameron originally represented. His brand is now polling almost at the same level as that of the Conservative party itself. His failure to maintain a coherent new vision has led to spasmodic appeals to vague progressive notions that have further alienated his own base and suggested that the PM is not a master of his own beliefs. None of this is helped by an almost permanent lack of central direction; even cabinet ministers do not know who is in control of the government's message or approach.

Cameron himself is no longer aided by people with a strategic vision for the country – Steve Hilton has left, exhausted by internal competition over direction, and the PM is surrounded by pragmatists who constantly behave as if short-term electoral advantage is long-term strategic thinking.

Cameron's thinking is now out of step with public demands and economic reality. People desperately want a new economic and social settlement. But nothing is on offer from the right, so the left has moved into the vacuum. More worryingly for Cameron, Ed Miliband's speech this week wasn't even blue Labour – he was red Tory when he both vindicated Cameron's original vision and sidelined it by appropriating Disraeli.

One nation is the new common ground of British politics. If the prime minister does not respond he faces the real possibility of an inglorious one-term premiership. Cameron had the original vision; he must recover it. He should turn to building new moral institutions, re-endow his localism with financial infrastructure and recognise the family and human association as the greatest ally in the war on poverty, disadvantage and human suffering. Cameron is at his best with his back to the wall – let us hope he now recognises that this is where he is.