"When the government was formed it was in the context of febrile markets and worries about sovereign risk, at that stage in Greece, but with the potential for contagion," he said.
"There was good reason to worry that the UK, as the country arguably most damaged by the banking crisis and with the largest fiscal deficit in the G20, could lose the confidence of creditors without a credible plan for deficit reduction including an early demonstration of commitment."
But three years later with the country experiencing sluggish growth, Cable has indicated he believes this is no longer the right approach. "The question is whether the balance of risks has changed," he said.
"The IMF argued last May that the risk of losing market confidence as a result of a more relaxed approach to fiscal policy – particularly the financing of more capital investment by borrowing – may have diminished relative to the risk of public finances deteriorating as a consequence of continued lack of growth."
The article titled 'When the facts change, should I change my mind?' is a pointed challenge to Osborne, who has been criticised for sticking to his economic plan despite continued economic stagnation.
The chancellor has resolutely refused to change economic course, arguing that abandoning the "fiscal discipline" of spending cuts would panic the markets and risk increasing borrowing costs.
But Cable argues that borrowing more in order to finance more capital spending such as the building of schools, rail projects and housing would "not undermine the central objective of reducing the structural deficit, and may assist it by reviving growth".
Cable's stance is similar to that promoted by Ed Balls and Labour - that borrowing to invest in infrastructure is necessary order to stimulate growth.
His intervention will be seen as a significant blow to coalition unity on economic policy and will be read by some as a further indication that Cable is preparing the ground for a deal with Labour after the 2015 election.
Cable has previously acknowledged that he exchanges text messages with Labour figures including Ed Miliband. And Balls has mischievously said that while Labour could not work with the Lib Dems under Nick Clegg, the party could do a deal with Cable if he were leader.
Miliband and Balls also hope to get Lib Dem MPs to break with the Tories and vote in favour of a mansion tax, a Lib Dem policy appropriated by Labour, when they force a vote on the issue later this month.
Lib Dem party president Tim Farron has said his party are "all ears", suggesting its MPs are toying with the idea of joining Labour in the vote.
Cable's break with Osborne also signals a renewed confidence in the Lib Dem ranks following their victory in the Eastleigh by-election.
Chris Leslie, Labour's Treasury spokesman, said: "Vince Cable may at last be seeing sense."
He claimed the Business Secretary was "in office, but not in power".