vallierojas: This scandal has exposed the scale of elite corruption

Cameron wants to bury the collusion uncovered in the hacking revelations but it's part of a growing crisis of official Britain

The Tory operation to bury the phone-hacking scandal in spin and official inquiries is now in full flow. On his way back from Africa, David Cameron declared it was essential to get the whole business into perspective, echoing Rupert Murdoch's insistence that his competitors had got up "this hysteria". Today, the prime minister chided Ed Miliband for "chasing conspiracy theories" and claimed it was really Gordon Brown who had been in the pocket of the global media billionaire.

Meanwhile, News International pundits and others with their own reasons to stem the flood of revelations have been loudly insisting that the political clout of Murdoch's corporate colossus has been exaggerated. The hyper-regulated BBC is the real media monopoly, they say, and in any case the current fixation with phone hacking has meant no one is discussing bankers' bonuses and the threat of another financial meltdown. This is a "frenzy that has grown out of control", the Daily Mail complained.

But the real frenzy isn't the exposure of the scandal ? it's the scale of corruption, collusion and cover-up between News International, politicians and police that the scandal has revealed. As the cast of hacking victims, blaggers and blackmailers has lengthened, and the details of the incestuous payments and job-swapping between News International, government and Scotland Yard become more complex, it's easy to lose sight of the bigger picture that is now emerging.

If it were not for the uncovering of this cesspit, the Cameron government would be preparing to nod through the outright takeover of BSkyB by News International, taking its dominance of Britain's media and political world into Silvio Berlusconi territory. But what has been exposed now goes well beyond the hacking of murder victims and dead soldiers' families ? or even the media itself. The scandal has lifted the lid on how power is really exercised in 21st-century Britain ? in which the unreformed City and its bankers play a central part.

Murdoch's overweening political influence has long been recognised, from well before Tony Blair flew to Australia in 1995 to pay public homage at his corporate court. What has been less well understood is how close-up and personal the pressure exerted by his organisation has been throughout public life. The fear that those who crossed him would be given the full tabloid treatment over their personal misdemeanours, real or imagined, has proved to be a powerful Mafia-like racket.

It was the warning that News International would target their personal lives that cowed members of the Commons culture and media committee over pressing their investigation into phone hacking too vigorously before the last election. Barely a fortnight ago, Ed Miliband was warned that Murdoch's papers would "make it personal" after he broke with the political-class omerta towards the company. The same vow of silence meant that when Rebekah Brooks told MPs in 2003 her organisation had "paid the police for information", the bribery admission sank like a stone.

The Sopranos style is deeply embedded in the Murdoch dynasty. When the New Labour culture secretary Tessa Jowell broke up with her husband in 2006 as he faced Berlusconi-linked corruption charges (he was later cleared), Brooks took her out, letting her cry on her shoulder ? just as News International was hacking into the couple's phone. Jowell has now called in her lawyers, but that didn't stop her attending Elisabeth Murdoch's lavish Chipping Norton party earlier this month, along with David Miliband and other Blairite luminaries. The family demands respect ? even from those it has punished.

Of course, the British press has a long history of megalomaniacal, reactionary and criminal proprietors. Some, such as Conrad Black, ended up in prison ? or, in the case of Robert Maxwell, would have done if he hadn't died. Others, such as the migrant-and-Muslim-baiting pornographer Richard Desmond, merely emphasise how narrow and dysfunctional media ownership is in Britain.

But Murdoch is a case apart, not only because of his commanding position in both print and satellite TV, but because of the crucial part he played in cementing Margaret Thatcher's political power and then shaping a whole era of New Labour/Tory neoliberal consensus that delivered enfeebled unions, privatisation and the Iraq war. His role in breaking the print unions at Wapping in the 1980s by sacking 5,000 mostly low-paid workers is still hailed in parts of the media as a brave blow for quality journalism.

It was nothing of the kind. The golden age of new titles never materialised, and it's certainly no coincidence that journalists were prevailed upon to resort to systematic illegality in a company that has refused to recognise independent trade unions ever since. Over those years, News International has used its grip on the political class to rewrite media regulation in its own image. As we now know, it has also suborned politicians and the police and operated as a freelance security service ? not to expose the abuse of power, but to carry it out.

These revelations should ram home the reality that Britain has become a far more corrupt country than many realise. Much of that has been driven by the privatisation-fuelled revolving door culture that gives former ministers and civil servants plum jobs in the companies they were previously regulating.

But the scandal has also created a powerful opportunity to weaken the unaccountable corporate power that has dominated the British press and create the space for a freer, more diverse media. The Labour leader has naturally been attacked by News International journalists for his call to break up the Murdoch empire and limit media concentration as though he were unaware of the decline of print and the rise of the web. In fact, that shift makes public action more urgent and necessary ? and if the Liberal Democrats recognise their own interests, even politically possible.

But several of these opportunities have come and gone. First the official deception of the Iraq war, then the collapse of a deregulated banking system, then the exposure of systematic sleaze in parliament revealed a growing crisis in the way the country is run. Now that crisis has been shown to have spread to the media and police. Official Britain isn't working. Sooner or later, pressure for change will become unstoppable.