Anglo-American intelligence scandals, such as the one that preceded the Iraq war, are usually smothered or buried in an endless, unpublished inquiry. Normal service soon resumes and everyone gets to keep his job. But the issues thrown up by the Guardian's Prism revelations couldn't be more clear-cut. Did GCHQ make use of NSA's Prism system to bypass British laws and spy on the public through covert access to internet giants such as Google and Facebook?

All that is needed from William Hague and Theresa May, the ministers who oversee the intelligence agencies, and the head of GCHQ, Sir Iain Lobban, is straight answers about what they knew and who authorised an operation that generated 197 intelligence reports last year. No obfuscation.

No cover-up. No inquiry yet.

That way, we will know that the proper checks and balances on Britain's intelligence agencies are finally being activated.

Nothing less will do. Assurances from Sir Malcolm Rifkind, the head of the compliant Commons intelligence and security committee, will not be enough, particularly as he has hinted at his support for the mass surveillance proposed in the communications data bill. Incidentally, the revelations point up the strange politics surrounding that measure. Why did the Home Office and so many MPs push for the bill, when GCHQ apparently had all the access it needed? Was this all part of the subterfuge or were they simply concerned to legitimise a state of affairs that already existed?

We should not allow a cabal of grave-faced, middle-aged politicians and spies to bury this scandal with the usual national security response – "Best leave these weighty matters to us, old horse." The internet generation needs to know that its future is free from surveillance as well as connected, which is why the reaction of the big internet companies involved in Prism is so disappointing, though hardly surprising. They have all issued denials, saying they are unaware of any back doors to their systems that would allow the NSA, and so GCHQ, to range freely across the American and British public's communications data. What happened? Did they simply look the other way?

In their failure to be utterly convincing, we may read a serious message for us all. Governments and the internet companies have a mutual interest in acquiring information about our communications and drawing conclusions from our behaviour on the web. In effect, they are in total but undeclared sympathy with each other's aims.

The vital issue now is how the American and British public react. The unconstitutional nature of the system and the secrecy surrounding the proceedings of the US foreign intelligence surveillance court, which allowed acquisition of data from Verizon phone records, where only the US government was represented, should be a concern to all those interested in maintaining a free society. This is about transparency and protection from unjustified suspicion, not merely the mysteriously demeaned right of privacy.

Yet there is genuine outrage in blogs about Prism, which perhaps indicates a generational divide. Where can this opposition find political expression? On both sides of the Atlantic, the two main parties largely support mass surveillance. A Democrat president nurtured and used the system that has its origin in Bush-era warrantless surveillance, and Dianne Feinstein, the Democrat chair of the Senate intelligence committee, last week warbled about "keeping the homeland safe" and supported the retention of phone records, just in case people became terrorist suspects in the future.

Mass surveillance becomes mass suspicion in a blink of a Democrat's eye.

In Britain, Nick Clegg has admittedly blocked the communications data bill, but it seems that even he had to be persuaded at the outset that there was something deeply illiberal about it. The Conservative and Labour hierarchies mostly don't have a problem with mass surveillance, especially New Labour's authoritarian old guard. David Davis is a vocal exception among Tories.

It's difficult to know what long-term impact this story will have. Societies have changed in the past 20 years. Whereas communications such as letters were once considered inviolate, digital information is more fluid, its life and ownership less certain. That is true of photographs and videos posted on social networking sites. Such sites have rights over this material and there is little to stop the NSA using it for any purpose the agency sees fit in the future – a databank for facial recognition technology, for instance.

We obscure meaning with technical language and sleights of hand. Feinstein talked about metadata, as if mass surveillance was some kind of impersonal survey of trends, while in Britain politicians such as Alan Johnson stress that the intelligence agencies simply want to collect the peripheral communications data, not the content, of people's interactions. Actually, the value of data and content is nearly the same.

That's why the NSA has been at pains to keep its operations secret.

Today, we are more susceptible to the security chill and less certain about what we should think on the security versus liberty debate. In a monumentally silly piece in the Financial Times two weeks ago, the writer suggested that the liberal democratic cause, which, after all, has little enough representation in either Congress or Parliament, and is thin on the ground in the media, was responsible for kneejerk obstructionism. After Prism, it is difficult to see how liberals have been guilty of impeding the NSA, the FBI and GCHQ at the expense of national security.

The kneejerk reactions and unquestioned orthodoxies are more likely to lie on the other side of the argument, precisely because governments have moved to more authoritarian postures and formal opposition is hard to find. So this series of revelations should be welcomed for the light it casts on the ways the west has changed and on the nature of the secret powers that were exercised by democratic governments. If there are stories to tell about the value of the intelligence, the lives saved, let's hear them, but the fact is that executive powers are apparently no more hindered in the UK and US, in this regard, than they are in China.

On Friday, President Obama was closeted in talks with President Xi Jinping of China. With a record that includes drone attacks, the continued incarceration of terror suspects at Guantánamo, the building of a massive NSA data centre in Utah and this latest story about Prism, Obama can claim very little of the ground once owned by the leader of the free world, let alone a Democrat president.

It is striking how the west and China are moving incrementally towards each other, especially in the practice of mass surveillance. But unlike the Chinese, for the moment at least, we have the option to oppose what's happening.