Have we ever been so badly served by the press? We face multiple crises – economic, environmental, democratic – but most newspapers represent them neither clearly nor fairly. The industry that should reveal and expose instead tries to contain and baffle, to foil questions and shut down dissent.

The men who own the corporate press are fighting a class war, seeking, even now, to defend the 1% to which they belong against its challengers. But because they control much of the conversation, we seldom see it in these terms. Our press re-frames major issues so effectively, it often recruits its readers to mobilise against their own interests.

Crime and antisocial behaviour are represented as the predations of the poor on each other, or on the middle and upper classes. "Blonde millionaire's wife raped in luxury home by asylum-seeking benefits cheat" is the transcendental form of a thousand tabloid headlines, alongside "Pippa Middleton's bottom gets £1m makeover from top designer". Though benefit fraud deprives the exchequer of £1.1bn a year while tax avoidance and evasion deprive it of between £40bn and £120bn, the tabloids relentlessly pursue the petty crooks, while leaving the capos alone.

On Monday the rightwing papers applauded government plans to cut benefits for people in social housing who have more rooms than they need. The "growing scandal of under-occupation", the Mail observed, contributes to the housing crisis, depriving larger families of the homes they need. The Express told us that "it is only right that decisions such as this must be taken". But what about the private sector, where there's a much higher rate of under-occupation, especially among the wealthy? When this column suggested that these under-used homes should be taxed, the corporate press went berserk. Only the poorest should carry the cost of resolving our housing crisis.

Not a day passes in which rightwing papers fail to call for stiffer regulation of protesters, problem families, petty criminals or antisocial teenagers. And every day they call for laxer regulation of business: cutting the "red tape" that prevents companies and banks from using the planet as their dustbin, killing workers or tanking the economy.

The newspapers' own criminal behaviour, more of which is being exposed before the Leveson inquiry as I write, looks to me like the almost inevitable result of a culture that appears to believe that the law, like taxes and regulation, is for little people. While portraying the underclass as a threat to "our" way of life, the corporate papers ask us to celebrate the lives of the economic elite. Saturday's Telegraph devoted most of a page to a puff piece flogging the charming jumpers being sold by a Santa Sebag-Montefiore (nee Palmer-Tomkinson) from her "white stucco Kensington House". She works – if that's the right word for it – with someone she met at Klosters, where she and her family "ski with the Prince of Wales and Princes William and Harry". So far they have managed to sell 40 of these jumpers, which somehow justifies an enormous photo and 1,400 breathless words.

I mention this sycophantic drivel not because it is exceptional but because it is typical. A friend who used to work as a freelance photographer for the Telegraph stopped when he discovered that most of those he was sent to photograph were the well-heeled friends and relatives of people on the paper. Journalism is embedded in the world it should be challenging and confronting.

These papers recognise the existence of an oppressive elite, but they frame it purely in political terms. The political elite becomes oppressive when it tries to curb the powers and freedoms of the economic elite. Take this revealing conjunction in the Daily Mail's leading article on Saturday: "David Cameron yesterday finally said no to the European elite – vetoing plans for a treaty that included an EU-wide tax on financial transactions." In other words, Cameron said yes to the British elite. But it cannot be explained in those terms without exposing where power really lies, which is the antithesis of what the rightwing papers seek to achieve.

As the theologian Walter Wink shows, challenging a dominant system requires a three-part process: naming the powers, unmasking the powers, engaging the powers. Their white noise of distraction and obfuscation is the means by which the newspapers prevent this process from beginning. They mislead us about the sources of our oppression, misrepresent our democratic choices, demonise those who try to challenge the 1%.

Compare the Daily Mail's treatment of the Occupy London protesters, confronting the banks, to its coverage of the camp set up by people of the charming village of Meriden, confronting some gypsies. "Desecration, defecation and class A drugs" was the headline on the Mail's feature article about Occupy London. Published on the day on which the City of London began its attempts to evict the protesters, it deployed every conceivable means of vilifying them and justifying their expulsion.

The Mail's Meriden story, on the other hand, was headlined: "Adding insult to injury: now villagers who have protested against an illegal travellers' camp for 586 days are told: YOU are facing eviction." The story emphasised the villagers' calm fortitude and the justice of their cause. Presumably they don't defecate either.

Press barons have been waging this class war for almost a century, and it has hobbled progressive politics throughout that time. But the closed circle of embedded journalism is now so tight that it has almost created an alternative reality.

Ten days ago, for example, the Spectator ran a cover story that could not have been crazier had it been headlined: "Yes, Father Christmas does exist, but he's been kidnapped by lizards". A serial promoter of mumbo-jumbo called Nils-Axel Morner, who claims he has paranormal dowsing abilities and that an iron-age cemetery in Sweden is in fact the Hong Kong of the ancient Greeks, was given 1,800 words to show that sea levels are not rising. Citing "evidence" that was anecdotal, irrelevant or simply wrong, explaining that it was all a massive conspiracy, Morner ignored or dismissed a vast wealth of solid data from satellites and tide gauges.

The Spectator kindly gave me space to write a response last week, but it strikes me that a story like this could not have been published five years ago. It first required a long process of normalisation, in which evident falsehoods are repeated until they are widely believed to be true. The climate talks in Durban were slotted by the papers into the same narrative, in which climate scientists and the BBC conspire to shut down the economy and send us back to the stone age. (And they have the blazing cheek to call us scaremongers.)

It's not just Murdoch and his network of sleazy crooks: our political system has been corrupted by the entire corporate media. Defending ourselves from the economic elite means naming and unmasking the power of the press.

• A fully referenced version of this article can be found on George Monbiot's website