To get ahead in Blair's Britain it was essential for the ambitious to swear they were the enemies of elitism. Their power and wealth weren't privileges but the hard-won wages they earned from their humble service for 'the People'. Peculiarly, politicians, businessmen, post-modern academics and culture managers insisted that the elite wasn't in power or close to being in power. The real elitists, the true enemies of the People, were men and women with no more hope of receiving a peerage from Downing Street than being made director-general of the BBC.

Sceptics were elitist because they refused to share the People's grief at the death of Princess Di. Critics of business were elitist because they clung to standards other than making money and presumed to know better than hundreds of millions of consumers. Fox-hunters were elitist because they wore fusty uniforms. The knowledgeable on any subject from flower-arranging to foreign policy were elitist because they knew more than the ignorant. Judges were elitist because they were judgmental. Broadsheet readers were elitist because they looked down their noses at tabloid readers. Tabloid readers were elitist because they looked down their noses at blacks and gays. The bookish were elitist because they thought that 'great' writers were 'better' than 'bad' writers. Authors who didn't put 'great', 'better' and 'bad' in inverted commas were elitist because they assumed that their subjective standards had a wider validity. To be in a minority was to be in the elite, and by definition those who disliked MTV or Classic FM or Pop Idol or Britart or piped music in restaurants or Andrew Lloyd Webber or the National Lottery or cars or racist language or anti-racist language or sloppy grammar or ready-to-eat meals or America or McDonald's or alcopops or homeopathic hocus-pocus or chicklit or lad-mags or newspapers or television or advertising or public nudity or football were elitist because they disagreed with others who did. If only for a moment, everyone was elitist. Except the elite.

At the 1999 Labour Party Conference, Tony Blair promised to fight 'the forces of conservatism, the cynics, the elites, the Establishment'. Like Margaret Thatcher before him, Blair was accused of being presidential. He was far grander than that. Presidents in democracies were bound by written constitutions. Britain didn't have a written constitution, and the first-past-the-post system ensured the Prime Minister could control the legislature with an enormous majority even if he had failed to win a majority of the vote. 'Presidential' was too tame a description. Like Thatcher, Blair was monarchical. He looked, sounded and smelt like the leader of an elite. Yet here was the elected monarch, fountain of tens of thousands of quango jobs, peerages and favours, announcing he was the sworn enemy of the Establishment.

The British plutocracy was as brazen. Gerry Robinson, the chairman of Granada, who gave a tiny part of his fortune to New Labour - and received the chairmanship of the Arts Council from New Labour - told artists that 'for too long performers have continued to ply their trade to the same white, middle-class audience. In the back of their minds lurks the vague hope that one day enlightenment might descend semi-miraculously upon the rest, that the masses might one day get wise to their brilliance'. The patronising cultural aristocrats he lectured would be lucky to make in a lifetime what Robinson pocketed in a year, but he saw himself as the tribune of the masses. Gavyn Davies, chairman of the BBC's Board of Governors, denounced complaints about falling standards as a plot by the white, southern middle classes to 'hijack' the BBC. Gavyn Davies was white. He lived in London. To be strictly accurate, he wasn't middle-class. Estimates of the size of his stash hovered between £100 million and £170m. Nevertheless when he looked in the mirror he saw a defender of working-class, ethnic yoof.

George Walden, the cultural critic, identified the absurdity of a prolier-than-thou establishment. 'Machiavelli wrote that the only way the minority could rule the majority was by force or guile - the methods of the lion, or of the fox. Today we have the foxiest elite ever: one that rules in the people's name while preserving the lion's share of the power. For the first time in Western democratic history society is dominated by an elite of anti-elitists... [They are] prone to describing themselves as committed egalitarians, but the problem with egalitarians is that they are so rarely on the level.'

The new elite's hypocrisy was indeed a pleasure to mock. Their opponents, however, had troubles of their own. When politicians and business leaders were criticised, they hit back with a very good question: what was wrong with giving people what they wanted? The size of the piles of Davies and Robinson was neither here nor there, they argued. You could laugh all you wanted at their revolutionary pretensions, but their wealth didn't make the elite elitist because its members' performance was judged every day by customers in the direct democracy of the marketplace. Nor was it wrong for political parties to look to corporations that marketed brands which had conquered the world. Why shouldn't politicians imitate their successful strategies?

Blair was taken in and turned Labour into a convincing imitation of a corporation. He gave 'annual reports' as if he were chairman of the board. Philip Gould, his advertising guru, said his job was to protect and promote the 'New Labour brand' with 'holistic' campaigns, which were 'a vast, multi-dimensional structure moving forwards and backwards, upwards and downwards, meshing abstraction and concreteness, policy with presentation, future to past'. People like me found his gibberish insulting, but couldn't deny that it followed the gibberish from marketing departments with puppyish loyalty. Gould and his kind weren't insulted by the comparison. If a corporate Labour Party behaved like Sainsbury's and pleased the People, why should anyone but a snob wince at that? Wasn't pleasing the People the point of a democracy?

But the People weren't pleased. At some level many realised that they were being conned. By the 2001 election it was clear that it would take soldiers with fixed bayonets to persuade millions to enter polling stations. The base ingratitude behind the refusal to make the token gesture of voting was all the more hurtful because Downing Street had tried so hard to ingratiate itself with the masses. It followed com mercial crowd-pleasing techniques to the letter, but was met with cynicism.

Since the 1970s, psychiatrists had served business by using focus groups to identify the subconscious desires of niche 'lifestyle' markets. Their organisers weren't interested in social class or gender. Rather, they wanted to know how to associate their products subliminally with the subconscious desires of potential consumers. The typical focus-group question - 'If X plc was a car, what type of car would it be?' - wasn't as silly as it sounded. Companies had to know if they were seen as dashing or clapped out. In a developed world awash with goods, subliminal associations with sexy nonconformity helped a line shoot off the shelves.

I don't want to pretend that Thatcher and Reagan were innocent parties in the debasement of public life that the transfer of marketing techniques to politics brought. But gimmickry was taken to the extreme by Blair and his mentor, Bill Clinton.

In his campaign to be re-elected to the US Presidency in 1996 Clinton authorised the probing of the emotions of America. Under conditions of strict secrecy, hundreds of researchers were sent to hit the phones at offices in Manhattan and Denver. They were instructed to conduct a 'neuro-personality poll' which would map the electorate's psyche. Their questions had nothing to do with politics as it was conventionally understood. 'Do you go to parties?' asked the pollsters. 'Which spectator sports do you prefer? Are you happy with your current situation? Are you spontaneous or organised? What would you do on a romantic weekend?'

Voters were placed in niche categories - vaguely liberal types in university towns, for instance, or lovers of the outdoors. Clinton's Democrats liked rap, classical and Top 40 music. Republicans preferred the golden oldies of the 1970s. Wavering voters included a large number of anxious parents. Clinton soothed them with neuro-policies which showed he felt their fears. He declared his support for curfews, school uniforms and for V-chips in televisions, which stopped children watching porn. Like New Labour's growls at squeegee-merchants and beggars, Clinton's stances meant little or nothing in practice. All they did - all they were intended to do - was calm barely articulated worries. Will my children's innocence be protected? Is that hunched figure in the shadows staring at me? The distribution of power, the old stuff of politics, didn't get a look-in. Clinton was re-elected in 1996 with a landslide. Focus-group politics appeared to work.

By the early years of the new century, it was being seen through. Clinton was meant to have said that the most powerful citizens in America were members of focus groups. Philip Gould claimed that focus groups empowered the consumer by enabling 'politicians to hear directly the voters' voices'. Neither noticed that government wasn't a business. Unless you are very unlucky, what you buy in a supermarket won't kill a member of your family. If you have a son or brother in the Army, the Government can finish him off by declaring war. A miscalculation by the Asda board shouldn't lose you your job or home, unless you happen to work for Asda. The Treasury could deprive you of both if it continued its blundering tradition and swapped the pound for the euro on the wrong terms. Government is meant to be about what matters, and most of what corporations sell doesn't matter in the least. Focus-group politics was an attempt to reduce political debate to commercial questions as banal as 'Do you prefer Pepsi to Coke?' Millions refused to vote because they realised that the 'issues' and 'talking points' they were meant to choose between were ephemeral.

The anti-elitist elite was interested in distracting people, not empowering them. It proved its duplicity when it was confronted with focus groups with genuine power: juries. Authoritarian governments had always hated the idea that a random collection of citizens could gather together and reach verdicts which might contradict official policy. Lord Devlin, a Law Lord from the old Establishment, warned in 1956: 'The first object of any tyrant in Whitehall would be to make Parliament utterly subservient to his will, and the next to overthrow or diminish trial by jury. [It] is more than an instrument of justice and more than one wheel of the constitution: it is the lamp that shows that freedom lives.'

His Lordship was prescient. The tyrants from the new Establishment had little time for Parliament and no time for juries. The assault began when Michael Howard acted on the 1993 Royal Commission on Criminal Justice's proposals to remove rights to trial by jury for theft, burglary, dishonesty and minor sex and drug offences. The crimes weren't of the highest seriousness, but they carried prison sentences and could destroy the careers and good names of defendants. New Labour was scandalised by the dimming of freedom's lamp. Tony Blair said: 'Fundamental rights to justice cannot be determined by administrative convenience.' Jack Straw declared that Howard was 'not only wrong but short-sighted'.

Blair and Straw assumed power in 1997. Together they tried to implement all the cuts to jury rights that Howard had proposed, and then went further. Three-quarters of jury trials were to go. None of the Government's justifications for the removal of popular power stood up to scrutiny. Only one explanation made sense: the populist elite despised the People, and was a little frightened of them. Obviously, it couldn't come out and say that. So Straw explained that by taking away the right of the People to decide whether a citizen was innocent or guilty New Labour was in fact giving rights to the People. The true elite wasn't a government which threatened liberty, rather it was 'BMW-driving civil-liberties lawyers' who tried to protect juries. It remains a wonder of the age that this line of humbug can still be spouted after all these years.

Disillusioned New Labour idealists grew sick of it long ago. Derek Draper, who had been an aide to Peter Mandelson, looked back with contempt on the energy he wasted on the manipulation business. For all its flaws, the Labour movement was once 'a countervailing power' to the Establishment, he said. To replace it with 'eight people drinking wine in a focus group in Kettering' and pretend that they could counter the influence of the big battalions was laughable. Focus-group politics 'suits big business, suits entrenched interests and suits the status quo'.

· Nick Cohen's Pretty Straight Guys is published by Faber and Faber on Thursday at £14.99. Observer readers can buy the book for the special discounted price of £12.99 by calling the Observer Book Service on 0870 066 7989.