This will be the year of the intrusive, oppressive state. Obviously, this will not much distinguish it from 2013, 2012 or 2011. But still: fundamental issues of government and its reach into our lives are now bubbling away as never before, and may well reach boiling point over the next 12 months.

The fallout from Edward Snowden's revelations goes on: in the US, the latest stories concern a National Security Agency programme aimed at breaking all forms of digital encryption, while the debate about legislating to curtail surveillance powers rages. Here, by contrast, there is something jaw-dropping about how little the three main UK parties have to say. Britain has blazed a trail for the collection of enormous amounts of personal data, with a blase attitude proving that the prospect of any oversight has been far from the thoughts of those in charge (witness a choice bit of advice for GCHQ staff from a memo about its Tempora programme: "You are in an enviable position – have fun and make the most of it"). But aside from such Lib Dems as Julien Huppert and Vince Cable, and the Conservatives' David Davis and Dominic Raab, who speaks out?

Meanwhile, the modern Conservative party evidently wants to accelerate Britain's progress towards being a country of spot checks and roving billboards instructing illicit migrants to hand themselves in, and the rest of us to grass them up. Large parts of the welfare state increasingly look not like a safety net, but a mess of traps, intended to enforce complete obedience under pain of destitution. Doctors, nurses and teachers work to central diktat as never before. And from the role of private firms in our penal and borders system to the ties that bind the internet's corporate providers to government (something at the heart of the storm over data collection, and now the government's seemingly pernicious "porn filter"), it is increasingly hard to tell where government ends and the private realm begins: what blurs the two is effectively a shadow state, which gets bigger and bigger.]

The political right has big problems here: it uses the rhetoric of small government but enforces its opposite. But so too does the left. Far too many on my side of politics still have their heads in the sand, holding on to a ragbag of notions that now bears no serious examination: that so-called civil liberties should always come a distant second to schools, hospitals and such like; that the centralised, snooping, target-driven state can be our friend, so long as it can be once again captured by Labour and put to the correct uses; and that from the NHS to the BBC, so long as giant and unwieldy institutions can be kept away from the private market, all will be well.

At the heart of all this is an attachment to the achievements of the Labour government of 1945-51, and a stifling myth it is time we buried. Sorry to Ken Loach and everyone else who still gets dewy eyed at the mention of Attlee, Bevan and the rest, but 1945 was the high point of a kind of statecraft that has little to teach us today. (There may be a few lessons to be learned about how to amass a coalition of support behind a political project, and the necessity of working outside a single party. But in a modern context, the idea of socialism handed out from the centre and the sound of dropped bedpans in Tredegar reverberating around Westminster is absurd.) Yet its legacy is still here, across the left spectrum, in the politics that reduces socialism to higher taxation and bigger government; that screams "nationalise it" when corporate interest messes up and "ban it" when it encounters something it doesn't like. It reeks of the 20th century, when the world outside is speeding somewhere else entirely.

If you doubt this, consider what the essential functions of the modern state look like to any politicised person under 30. The state comes to the rescue of banks while snatching away benefits. It strides into sovereign countries, and commits serial human rights abuses. It subjects doctors, nurses and teachers to ludicrous targets. It watches us constantly via CCTV, and hacks our email and phone data. It farms out some of its dirtiest business to private firms. This is not a vision of modern government invented by the current lot: in Britain, it decisively came to life thanks to Tony Blair and Gordon Brown. Whether knowingly or not, they demonstrated an essential modern truth: that contrary to the vanities of the "free market", neoliberal capitalism needs the big centralised state to clear its way and enforce its insanities.

In December last year, I closely followed an upsurge of protest on university campuses across the UK, and spoke to some of the young people involved. They were socialists, to all intents and purposes: they wanted a more equal society, and an education system oriented around something higher than the idea of maximising their earning potential. But they had no illusions about how much of their focus was on the clunking fist of state power: their recurrent cry was "Cops off campus", and they testified to such ingrained parts of modern university life as spot checks on foreign students by police and Border Agency personnel, and the bonds that tied the cops to private security contractors. They were all experts on the surveillance state. Moreover, they are part of a generation whose meetings have no platform speakers, who insist the world should take on the horizontal characteristics of social media. The big state, whatever purposes it is put to, is anathema to them.

In orthodox politics there are occasional flashes of recognition of how much we need to tame, and then radically remodel, government. Localism, when it actually amounts to something coherent, is part of the noise. So is (was?) the big society, and the radical ideas about the devolution of power that Jon Cruddas is trying to bring to the Labour party. If you want a flavour of the journeys that need to be taken, have a look at Compass: once broadly aligned with the Brownite wing of Labour but now a breeding ground for a new kind of creative, non-hierarchical, left politics. You know the signs of something different when you see them: if you're in the right company, people talk passionately about housing co-operatives, autonomous local poverty projects and sustainability initiatives, and credit unions. They want the revival of local councils. Crucially, they also argue for what's missing from the left's agenda: a cutting down of the surveillance state, exacting oversight of the security services, and strict limits on data collection.

None of this is an argument for anarchism or the stupid form of Tory politics which believes that so long as public spending can be pushed below a certain share of GDP, liberty will be assured. It is not intended to overlook what only the state can do: redistribute income; confront corporate power; forge the international agreements we need to fight everything from climate change to corporate tax avoidance. But there is no argument for extending those truths into the kind of boundless leviathan that Britain has ended up with. The truth is that the arrogant, centralised state is as much of a problem as the out-of-control market, and the dominion of one is symbiotically related to the tyranny of the other. From that, all else follows. The future politics of the left will either be pluralist, localist and libertarian, or it will shrivel.