The former Murdoch retainer Andrew Neil has described James Murdoch, the heir apparent, as a "social liberal". What strikes me is his casual use of "liberal" for the new ruler of an empire devoted to the promotion of war, conquest and human division. Neil's view is not unusual. In the murdochracy that Britain has largely become, once noble terms such as democracy, reform, even freedom itself, have long been emptied of their meaning. In the years leading to Tony Blair's election, liberal commentators vied in their Tonier-than-thou obeisance to such a paragon of "reborn liberalism". In these pages in 1995, Henry Porter celebrated an almost mystical politician who "presents himself as a harmoniser for all the opposing interests in British life, a conciliator of class differences and tribal antipathies, a synthesiser of opposing beliefs". Blair was, of course, the diametric opposite.

As events have demonstrated, Blair and the cult of New Labour have destroyed the very liberalism millions of Britons thought they were voting for. This truth is like a taboo and was missing almost entirely from last week's Guardian debate about civil liberties. Gone is the bourgeoisie that in good times would extend a few rungs of the ladder to those below. From Blair's pseudo-moralising assault on single parents a decade ago to Peter Hain's recent attacks on the disabled, the "project" has completed the work of Thatcher and all but abolished the premises of tolerance and decency, however amorphous, on which much of British public life was based. The trade-off has been mostly superficial "social liberalism" and the highest personal indebtedness on earth. In 2007, reported the Joseph Rowntree Foundation, the United Kingdom faced the highest levels of inequality for 40 years, with the rich getting richer and the poor poorer and more and more segregated from society. The International Monetary Fund has designated Britain a tax haven, and corruption and fraud in British business are almost twice the global average, while Unicef reports that British children are the most neglected and unhappiest in the "rich" world.

Abroad, behind a facade of liberal concern for the world's "disadvantaged", such as waffle about millennium goals and anti-poverty stunts with the likes of Google and Vodafone, the Brown government, together with its EU partners, is demanding vicious and punitive free-trade agreements that will devastate the economies of scores of impoverished African, Caribbean and Pacific nations. In Iraq, the blood-letting of a "liberal intervention" may well have surpassed that of the Rwanda genocide, while the British occupiers have made no real attempt to help the victims of their lawlessness. And putting out more flags will not cover the shame. "The mortality of children in Basra has increased by nearly 30% compared to the Saddam Hussein era," says Dr Haydar Salah, a paediatrician at Basra children's hospital. In January nearly 100 leading British doctors wrote to Hilary Benn, then international development secretary, describing how children were dying because Britain had not fulfilled its obligations under UN security resolution 1483. He refused to see them.

Even if a contortion of intellect and morality allows the interventionists to justify these actions, the same cannot be said for liberties eroded at home. These are too much part of the myth that individual freedom was handed down by eminent liberal gentlemen instead of being fought for at the bottom. Yet rights of habeas corpus, of free speech and assembly, and dissent and tolerance, are slipping away, undefended. Whole British communities now live in fear of the police. The British are distinguished as one of the most spied upon people in the world. A grey surveillance van with satellite tracking sits outside my local Sainsbury's. On the pop radio station Kiss 100, the security service MI5 advertises for ordinary people to spy on each other. These are normal now, along with the tracking of our intimate lives and a system of secretive justice that imposes 18-hour curfews on people who have not been charged with any crime and are denied the "evidence". Hundreds of terrified Iraqi refugees are sent back to the infinite dangers of the country "we" have destroyed. Meanwhile, the cause of any real civil threat to Britons has been identified and confirmed repeatedly by the intelligence services. It is "our" continuing military presence in other people's countries and collusion with a Washington cabal described by the late Norman Mailer as "pre-fascist". When famous liberal columnists wring their hands about the domestic consequences, let them look to their own early support for such epic faraway crimes.

In broadcasting, a prime source of liberalism and most of our information, the unthinkable has been normalised. The murderous chaos in Iraq is merely internecine. Indeed, Bush's "surge" is "working". The holocaust there has nothing to do with "us". There are honourable exceptions, of course, as there are in those great liberal storehouses of knowledge, Britain's universities; but they, too, are normalised and left to natter about "failed states" and "crisis management" - when the cause of the crisis is on their doorstep. As Terry Eagleton has pointed out, for the first time in two centuries almost no eminent British poet, playwright or novelist is prepared to question the foundations of western actions, let alone interrupt, as DJ Taylor once put it, all those "demure ironies and mannered perceptions, their focus on the gyrations of a bunch of emotional poseurs ... to the reader infinitely reassuring ... and infinitely useless". Harold Pinter and Ronan Bennett are exceptions.

Britain is now a centralised single-ideology state, as secure in the grip of a superpower as any former eastern bloc country. The Whitehall executive has prerogative powers as effective as politburo decrees. Unlike Venezuela, critical issues such as the EU constitution or treaty are denied a referendum, regardless of Blair's "solemn pledge". Thanks largely to a parliament in which a majority of the members cannot bring themselves to denounce the crime in Iraq or even vote for an inquiry, New Labour has added to the statutes a record 3,000 criminal offences: an apparatus of control that undermines the Human Rights Act. In 1977, at the height of the cold war, I interviewed the Charter 77 dissidents in Czechoslovakia. They warned that complacency and silence could destroy liberty and democracy as effectively as tanks. "We're actually better off than you in the west," said a writer, measuring his irony. "Unlike you, we have no illusions."

For those people who still celebrate the virtues and triumphs of liberalism - anti-slavery, women's suffrage, the defence of individual conscience and the right to express it and act upon it - the time for direct action is now. It is time to support those of courage who defy rotten laws to read out in Parliament Square the names of the current, mounting, war dead, and those who identify their government's complicity in "rendition" and its torture, and those who have followed the paper and blood trail of Britain's piratical arms companies. It is time to support the NHS workers who up and down the country are trying to alert us to the destruction of a Labour government's greatest achievement. The list of people stirring is reassuring. The awakening of the rest of us is urgent.