IT took fewer than three years for the bright, shiny new model to come apart at the seams.

All that effort spent liquidating the Scottish Arts Council (SAC) and dissolving Scottish Screen, all the hideous jargon masquerading as coherent speech, all that careful work to turn the arts into something called "the creative industries": what remains?

For one thing, there's a long session ahead for the board members of Creative Scotland as they survey the wreckage and wonder where their next chief executive is coming from. For another there is, or ought to be, deep embarrassment within government that a strategy – as these things are called – could become a shambles in such a brief span of time. If Andrew Dixon is the only casualty, justice will be in short supply.

The departing chief executive lost the confidence of those who make art. Some 100 of them wrote a letter to say as much in the sort of plain language that Creative Scotland never cared to master. Yet even at the end Mr Dixon seemed unable to grasp where, how and why he might have gone wrong. Those who remain to pick up the pieces, if they can, are unlikely to be any less perplexed.

This is fundamental. The people who make and talk about art or culture are worlds apart from those who regard such things as branch economies of their "creative industries". The latter are in the business of tourism, economic development, "gross value added", and the promotion of anything – fashion, computer games, advertising, cookery shows – capable of being called creative. The other lot care about art. There's a difference.

It has nothing to do with cultural hierarchies, elitism, or who is best served by a diminishing pot of public money. It is an argument, chiefly, over Creative Scotland's purpose. Scottish Enterprise, by its own account, is "here to support the businesses behind the creativity". It is already "helping hundreds of creative companies achieve great things". But it does not exist to aid the 49 theatre companies and art galleries who next year will face being funded on a project-by-project basis thanks to Creative Scotland.

That body doesn't deserve all the blame. It didn't break the solemn promise, repeated by successive Westminster governments, that Lottery money would never replace core funding. Creative Scotland was the victim, like everyone else, of public spending cuts and austerity. The decision to take the country's main arts institutions into direct government care was none of the body's doing. Neither Mr Dixon nor anyone around him took the actual decision to treat creativity as an industrial commodity.

Creative Scotland was eager to please, nevertheless. It talked the asinine talk of "experiential opportunities", "creative pathways" and "outcomes". It accepted the grisly "Year of Creative Scotland", now drawing to a merciful end, at face value, as a straightforward marketing opportunity. It did not once pause to ask a simple question: is this how art works? You can and must market a thrilling computer game or a fashion show. Good luck to you. But what has that to do with those who make art in solitude?

They could do with a funding body willing to listen and capable of listening. We could call it an arts council. Such was the burden, after all, of the letter from the 100. It pointed to a fundamental misconception. There is plenty of room and need for an organisation to represent and promote those creative industries. What is there, practically speaking, for those who work in art, those who tend to be remembered when a politician decides to boast about the national culture?

Creative Scotland is but one part of something called Scotland's Creative Industries Partnership. This also embraces the Scottish Government, Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland, The Convention of Scottish Local Authorities, the Scottish Funding Council, and Scottish Development International. Try getting poetry out of that lot. Better still, try getting these worthy bodies to understand the delicate balance between support for the arts and artistic autonomy.

Creative Scotland developed a taste, to put it no higher, for the artistic command economy. It quickly acquired the habit of telling arts people what they ought to be doing while turning a deaf ear – so the allegation goes – to anything it didn't care to hear. So-called "project-based funding", destroying any hope of artistic independence, was the predictable result. It was a notion dreamed up by people who see no problem in bureaucrat-sanctioned art.

The crack about reviving the arts council was not a joke. Collectors of jargon and threatened theatre companies alike are entitled to conclude that Creative Scotland is not – may the gods of literacy strike me down – fit for purpose. It was swamped, from the beginning, by contradictory demands, and it has sunk ever deeper into that mire with each passing month.

The old arts council was never far from controversy. Arts people hated it, too, for much of the time, especially when a grant application failed. That body suffered from its own contradictions. Arguments over public subsidy, its extent and purpose, were never resolved – how could they be resolved? – to general satisfaction. For four and a bit decades, nevertheless, there was a rough and ready agreement over what the SAC thought it was for. The same cannot be said of Creative Scotland.

Some of the 100 who wrote the now-famous letter were keen to say that the row "wasn't about money". They were wise. A good case can be made to show that governments driving austerity or driven by austerity neglect the arts at their peril. But in which sphere of the public realm is funding irrelevant? The ability to disburse £80 million makes Creative Scotland the envy of a great many important organisations and charities now being slaughtered by cuts. Arts people had better not forget it.

That must not become the issue. A cultural body could be reduced to handing out used fivers in the street and Scotland would still be entitled to ask what it was doing, why, for which purpose, and for whose sake. Far from providing answers, Creative Scotland has failed to understand the questions.