Who was deceived? Peter Mandelson said the 37 heavy-hitting businessmen were "deceived" by the Conservatives. Surely not. They know exactly what they are doing – rooting for the low tax, small state, cut-the-public-services party. Some are Tory donors, some like Sir Christopher Gent famously said they would leave Britain if Labour won in 1997; but here they still are.

All are phenomenally highly paid. Their righteous protests that the national insurance rise is a "tax on jobs" is good cover but they heard David Cameron's dog-whistle promise (when circumstances permit) to abolish the 50% tax rate. Genuine concern about unemployment would consider the cascade of £12bn worth of public service jobs that will be lost to finance this tax cut.

No, it was Labour that was deceived. Some of these businessmen (all are men) are on the PM's business council. Courted assiduously, they gave nothing in return, like the shameless Digby Jones who took a peerage and ran off after a year to rubbish his Labour benefactors. Cameron says their support marks "a very important moment" – and so it is. This is his real "big society", not a photo opportunity with volunteers but a gathering of the Tory clans. All Labour did with its prawn cocktail charm offensive was strike a deal: honours, praise and no new taxes on the rich in exchange for a muting of their overt assaults. But, just like Murdoch, once these wealthy few had a credible candidate, out came their guns.

The deal meant Labour never confronted the worsening dysfunctions of modern capitalism. Powerless or negligent shareholders chasing short-term profit provided no effective governance of these signatories. The crisis has brought warnings from all sides; even the CBI chief admonishes big company bosses who "occupy a different galaxy". The governor of the Bank of England, the head of the FSA, Lord Myners and the head of the Treasury select committee all express widely held anxiety that lessons have not been learned, risking a terminal crash next time.

But why should these masters of the universe listen? They personally are at no risk: bankers paid no price. These deregulators and anti-taxers are by nature monopolists, as Labour supporters will find if they try to boycott their businesses. Lacking tough government control, they manipulate markets, bully politicians and harry regulators. Pontificating, most are economically, politically and socially ignorant of their country. They are absolutely unaccountable to the public. If they venture into a studio, they get kid-glove respect compared with politicians – but in general they shun public appearance for fear of questioning on why, in only a decade, their pay has risen from 47 times to 81 times the average.

Looking back now, it's odd how insecure Labour was back in 1997, despite a mighty Commons majority, overwhelming good will, a strong economy, nothing to fear. Labour had the brains to know what should be done – but it flinched. As long as money from business and the City flowed into the Treasury to spend on tax credits, Sure Start, schools and hospitals, then that deal held. No criticism on pay, no scrutiny, no troubling their tax havens, no probing failed corporate governance. Not until the bubble burst has Labour dared make slight recalibrations. From Cameron, nothing; the "change" man offering no change at all.

This is the real class war, as old as the hills. Never mind Eton collars – Conservatives represent money in all its forms, old and new. Always did, always will. Labour colluded in the deception of the public, pretending "middle Britain" was bigger and richer than it was. It is only just dawning on the true middle that they didn't share in the growth of the fat years. As 65% of people earn below average, the median earners – the real middle on around £23,000 – gained little. They did get better public services, but now risk losing those if the current deficit mania groupthink really leads to tougher cuts than Thatcher's. Let's hope all parties are bluffing: such brutalism is politically impossible without strikes and riots. "Efficiency saving" as a euphemism for cuts is the worst deception.

What might Labour do? Still wrangling over the manifesto, their only hope is to be the change that Cameron isn't. Even adopting a few of the beacon policies to be published next week by Compass would energise Labour support – and the opinion polling proves it. Electoral reform to break the Westminster stalemate (65% support), splitting banks to shed their casinos (68%), cut Trident (63%), take back the railways (70%), ban advertising to children (77%), replace fees with a fairer graduate tax (88%), a Robin Hood tax on bank transactions (53%), cap loan shark interest rates (89%), create a high-pay commission (65%) – and a living wage (58%).

Take just one of these, the living wage. Escorted round the Ocean estate by London Citizens community organisers, Cameron was confronted with hard truths. Before his election, this group lobbying for a living wage cornered Boris Johnson into keeping Ken Livingstone's pledge to pay £7.60 a hour to all GLA staff and contractors. This week London Citizens cornered Cameron too so he blurted out: "Boris has done a brilliant job by going for a living wage and I think government departments should all consider that." There! Bank it, Labour. Make a manifesto promise to phase it in.

Tucked away in last month's Low Pay Commission report is research by the Institute for Fiscal Studies, estimating that for every 10% the minimum wage rises, the state saves between £560m and £680m in credits and benefits. With the minimum at a puny £5.91, the taxpayer is subsidising employers such as those signatories to pay people non-survivable wages.

When I talked to 14-year-old Tia this week, she burst into tears as she said she described going without lunch at school. Her family of five is just above free school meal limits, but high rent, council tax and debts leaves them eating mostly soup and lentils. One brother reluctantly left school to work as a hotel cleaner, the next is about to leave, though wanting to go to college. Her mother and grandmother have worked together for 12 years for an office cleaning contractor. "They are treated like slaves!" Tia says. Her grandmother has bad osteoporosis but has to keep earning, yet despite fearing for their jobs they joined the London Citizens campaign. Where do they work? They clean the chancellor's office in the Treasury.