Margaret Thatcher was nothing if not ambitious. As part and parcel of one of the most audacious attempts at social engineering in British history, her government set about stripping class – 'a Communist concept' – from the nation's vocabulary. Even as wealth and power became increasingly concentrated at the top, the conspiracy to deny class has faced few challenges. Both New Labour and the Tories alike preached the myth that – as Tony Blair put it – 'we're all middle class now'". Narrow definitions of 'aspiration' and 'social mobility' have encouraged the idea that being working class is something to escape from.

Things have begun to change: there's nothing quite like an economic crisis to highlight profound injustices in the distribution of wealth and power. When the paypackets of FTSE 100 directors go up by a third, while the average working Briton suffers the biggest squeeze in living standards since the 1920s, denying the existence of class becomes a form of Flat Earth-ism.

That's not to say class has been entirely squeezed out of the nation's conversations, but it often emerges in a deeply pernicious form. A few years ago I sat at a dinner table surrounded by middle-class professionals when one quipped: "It's a shame that Woolworth's is closing. Where will the chavs buy their Christmas presents?" It's a scenario that many will recognise. Chav-bashing by those from pampered backgrounds is a continuing national scandal and must be opposed. But – whether people use the word "chav" or not – there's a deeply distorted, but entirely mainstream, view of class that must also be challenged. It was most eloquently summed up by The Daily Telegraph's Simon Heffer: "Something called the respectable working class has almost died out. What sociologists used to call the working class does not now usually work at all, but is sustained by the welfare state."

For the right, those outside the new supposed middle-class majority were the "underclass", whose numbers were expanding because of supposed behavioural defects and the collapse of marriage. But New Labour's spin on it – "social exclusion" – has had an equally damaging effect on the popular view of class. With class no longer an accepted way of describing divisions in society, those at the bottom of the pile were held partly responsible for their lot in life.

It's a theory that's trickled into popular culture. Take TV comedy: it either showcases nice middle-class people, like My Family; or, on the other hand, grotesque or one-sided caricatures of working-class people, like Little Britain's feckless Vicky Pollard or The Only Way is Essex, which caricatures the supposedly "tacky aspirational" working class who can't spend money with the taste and discretion of the middle class.

But the real working class – the 16 million manual workers, clerks and sales assistants who make up half the workforce – has been all but airbrushed from existence. Part of the confusion is down to the fact that the working class looks a lot different than it did thirty years ago. Before the Thatcherite assault on industry, more than 7 million worked in manufacturing; today, it's little over 2.5 million. Instead of working in factories, mines and docks, most working-class people now earn their keep in call centres, supermarkets and offices. There are a million call centre workers: that's as many as worked in pits at the peak of mining. A woman who works part-time in a supermarket is as good a symbol for working-class Britain as any: but she is all but invisible as far as our politicians, journalists and TV programme-makers are concerned.

Denying class has proved all-too-convenient in ignoring the concerns of working-class people. We don't talk about the fact that people from unskilled backgrounds are ten times more likely to be unemployed than professional people or that five million working-class people are languishing on social housing waiting lists. Nothing makes sense without class. If we don't talk about it, millions will remain disenfranchised, marginalised and ignored. Thatcherism closed the national debate on class: now is the time to re-open it.

Owen Jones is author of 'Chavs: The Demonization of the Working Class' published by Verso today