The one-time favourite to be the next Labour leader took Mr Corbyn to task on “egregious” foreign policy as well as accusing left-wing politicians of a lack of imagination on domestic issues.
The former foreign secretary has made the comments in an article for The New Statesman, in a special feature on the future of left-wing British politics.
Mr Miliband, now president of the International Rescue Committee, said the New Labour government in which he served “defined the contours of political debate”.
He added: “We had won three elections on the trot and the Tories felt the need to dance to our tunes - from the minimum wage to tripling of overseas aid to gay rights to boosting the National Health Service.
“Now Labour sits a long way from power, even before boundary changes.
“The ultimate ignominy of not being able to organise our own party conference has been avoided, but we have not been further from power since the 1930s.”
Mr Miliband said this decline of left-wing politics has happened through a series of choices rather than by accident.
He also said the EU referendum result has “torpedoed” some recent political progress and can be directly linked to weakness in left-wing politics.
Mr Miliband is particularly critical of Mr Corbyn’s stance on foreign policy, saying his “half-hearted” campaigning for Britain to remain in the European Union was “a betrayal of millions of working people”.
He also called Mr Corbyn’s lack of commitment to Nato “dangerous” given recent events in and around Russia.
Mr Miliband added: “But the electorate can see through the domestic policy, too.
“Nationalisation cannot be the answer to everything; anti-austerity speeches cannot explain everything; corporate taxation cannot pay for everything.
“It doesn’t add up. It wouldn’t work. People are not stupid.
“When it is willing to use markets and the voluntary sector as well as the state as agents of change, the left in Britain and around Europe has shown the capacity not only to win the confidence of the public but also to change the country.”
Mr Miliband also condemned the “Tory Lite” tag thrown at those who disagree with Mr Corbyn, saying government often involved compromising on principles.
He said that more radical figures such as Mr Corbyn and American Bernie Sanders had to be credible in order to succeed, citing the new Liberal government in Canada as a positive example.
Mr Miliband added that the left now needs to come up with credible policies both to address inequality as well as boost the economy. Now is the time to set clear tests for the Government’s negotiations with the European Union, to show how a progressive approach to engagement with the EU helps manage globalisation, rather than turn our backs on it,” he said. “Nationalist isolationism of the left (or the right) offers no answers in an age of interdependence.
“The issues today are momentous: whether global capitalism has more bust than boom; whether we can sustain Western liberal values in the face of global pressures; whether the climate crisis is past resolution; whether the people I work for - refugees and the displaced - will ever find a home; whether public services can survive the flight of capital from Western tax authorities; whether democratic norms can survive the tyranny of flash mobs.
“These challenges cry out for a relevant, persuasive, open-minded left.”