Johann Hari: Class still rules in Britain - as the Lib Dems should remember when choosing their leader

Britain has hardened into a caste society where birth decides worth (and death)
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In the mid-1990s - quick, put "Things Can Only Get Better" on the jukebox - there was a twin-set of political clichés that ruled supreme. Class was dead, and talking about politics in terms of left and right was a dusty anachronism. Britain was a shiny meritocracy where anybody can make it and - as Tony Blair put it - "we are beyond left and right". Anybody who insisted on clinging to these old terms was trapped in traffic on the road to Wigan Pier, believing in a Britain of flat-caps and feudal lords.

At first glance, their arguments have a catchy beat. Class is no longer so visually apparent: the landed estates and council estates of Britain have merged into a stylistic hodge-podge, with matching mockney accents and fake designer jeans. And we only think in terms of left and right because in one of the French legislative assemblies after the revolution, the royalists who pined for a restoration sat to the right, while their opponents - the cheerleaders for revolution and equality - sat to the left. Do we really still live in the French Legislative Assembly of 1791?

But 10 years and a thousand crumpled lines on the Prime Minister's forehead on, class and the left/right distinction are still standing. Without these essential building blocks, political debate is reduced to a blanded-out spreadsheet in which the electorate picks its CEO for Britain PLC. In this column, let's clutch at a straw in the political wind - the Liberal Democrat leadership contest - and show how it is incomprehensible without exhuming these supposedly dead concepts.

So far, the Liberal Democrat contest has focused on two of the least fascinating topics in human history - the proclivities of Mark Oaten and Simon Hughes. But the outcome of this contest is too important to be reduced to the cretinised trivia of the News of the World. The decision made by Lib Dem members next month might determine the next government of this country. There is a slim but real possibility of the next election producing a hung parliament with Ming or Simon or Chris clutching the balance of power, forced to choose between creating a Brown or blue government.

Most of us think the choice is obvious - aren't the Lib Dems manifestly a party of the centre-left? But a very significant chunk of the party - the cheerleaders for the 2004 privatise-the-NHS Orange Book - would want to hand David Cameron the keys to No 10. Mark Oaten would almost certainly have steered in this direction - and some believe Chris Huhne might be swayed that way too. Menzies Campbell has already made concessions to this über-marketeering clique, dropping his commitment to a 50p top rate of tax. If Lib Dem members want to ensure their party would install Gordon Brown if it came to it, they should choose the unequivocal candidate of the left - Simon Hughes.

Ah, but what do these terms actually mean? Do left and right simply boil down to nodding towards Labour or Tory? These terms are confusing because their policies change over time. In the early 19th century, the Chartists spoke for the radical left when they demanded the vote for all adult men over the age of 21. If anybody advocated that programme today, they would be seen as unimaginably right-wing. Left and right are not determined by concrete policies but by class - whose interests do you put first?

For all the chatter that Britain has moved beyond class, recent studies have found that it determines the life chances of British people more today than at any point since the Second World War. An authoritative London School of Economics study has found that social mobility in Britain - the chances of a poor kid growing up to be rich, or vice versa - has simply ground to a halt. A child born into a rich family in Britain will almost certainly live and die rich, while a child born into a poor family will almost certainly live and die poor.

These are not arid academic questions. They can be weighed by the bluntest possible measure - dead babies. A baby boy in skint Hackney is twice as likely to die in the first year of his life as his cousin born in plush Bexley. This gap runs from cradle to grave: the poor die on average six years earlier than the rich, and health inequalities are now at their highest since Victoria was on the throne. As a recent King's Fund study put it: "There are six stops on the Jubilee Line between Westminster and Canning Town. As you travel east, each Underground station marks a year less of life."

So beneath the meritocratic sheen and the mockney voices, Britain has hardened into a caste society where birth decides worth (and death). The social escalator that carried so many people in my parents' generation from the working class into a comfortable suburban existence ground to a halt in the Thatcher years, and although the emergency alarm has been sounding for more than a decade, few people seem to hear it.

Some people have tried to blame the abolition of grammar schools for this collapse in social mobility, but the evidence does not seem to back this up. The countries that have very high social mobility - Sweden, Norway, Canada - have comprehensive schools with a real class mix. It isn't educational structures that drag social mobility to a halt. It is low taxes, low investment and redistribution, and growing inequality. In every country, Thatcherising has poured cement onto existing class structures.

Simon Hughes is of the left because he recoils from this. He believes politics should be about helping the people at the bottom by taxing more at the top. The Orange Book-ers, by contrast, are on the right because their decisions are oriented towards helping those who already have wealth and power. (It is common to hear this group insist class doesn't exist while they claw and tear to get their children into a school purged of working-class kids). Ming and Huhne seem to hover somewhere inbetween.

Without left and right, how could this difference be described? Even Tony Blair - the loudest exponent of ditching the distinction, once upon a time - has not been able to wriggle free from this vocabulary. A few weeks ago, he was challenged by Andrew Marr about his NHS reforms, and he said: "There's nothing right-wing about saying to an old age pensioner, who is waiting in pain, we can get you your operation quicker, free at the point of use - that's not right-wing, that's left-wing."

Left and right are not arthritic concepts - they are inescapable. But by stigmatising them as "old-fashioned", the right has made it harder to make sense of the world and their domination of it. In the movie The Usual Suspects, Bryan Singer says: "The greatest trick the devil ever pulled is convincing the world he doesn't exist." The greatest trick the rich - and their cheerleaders on the right - ever pulled was convincing the world that class didn't exist. Out here in the real world, it is more real and rigid than it has been for a century.