One reason the middle-class debate is so fraught in the UK is that the phrase means very different things to different people. Is it used in the snobbish sense – sharp-elbowed, privately educated, fee-paying parents? Or is it used in the American sense – anyone neither extraordinarily rich nor experiencing grinding poverty?

Sociologists such as Mike Savage have shown how "middle class" now has cultural definitions, not just economic ones. But it is still complicated.

Recent studies show that the people claiming to be working class often earn more than those claiming to be middle class. And it certainly isn't about private education (only 7% of schoolchildren are educated privately).

Most indicators suggest that the American definition is winning. The old definition – you are middle class if you have a "white-collar job", paid monthly – would apply to most people working these days. So when Ed Miliband or Nick Clegg talk about the middle classes, as they did last week, they do so as a way of are categorising the majority of people in the UK, if not the vast majority.

So why use class labels at all? Partly because "middle class" or the "squeezed middle" is a useful way of framing a broader narrative about the cost of living. It elevates complaints about this week's bills to a more serious level. And when Miliband acknowledged, bravely, that the trends behind the current middle-class "crisis" began before the coalition took power, the term allows us to look beyond immediate political advantage. That is important, because we need to look back at least 30 years to see how this crisis began.

Some of the trends are global. Organisations are now flatter, with none of those middle tiers where the middle classes eked out their careers; and competition is global. Spare a thought for those graduating in 2025 when there will be 260 million other students in the world (compared with 150 million now). No wonder there is panic about schooling: children are no longer competing to get into a burgeoning middle class; they are struggling to crowbar themselves into a shrinking global elite.

But some of the trends are peculiarly British. The 30-year housing bubble has priced the middle classes out of the neighbourhoods they grew up in, not just in London but in many other cities. It will also price their children out of the neighbourhoods they are growing up now.

Despite all the political rhetoric in their support, the middle classes find themselves without effective pensions, sidelined by an aggressive international class of mega-rich, their professional judgment shunned by targets and compliance, and – however hard they work and successful they become – there is a banker half their age whose bonus makes them look ridiculous.

These are not unique to the UK, but they are coming home to roost here because of flawed political decisions, taken sometimes for good reasons.

Like the 1983 decision to deregulate the City, which unbalanced the UK economy and corroding the middle class values of thrift and hard work. Or the 1986 decision to create personal pensions, flinging most of us into flimsy, unreliable, expensive savings schemes and creating the opportunity for the speedy abolition of final salary pensions.

Or most of all, the 1980 decision to end "the corset", which regulated the amount of money flooding into the mortgage market. Without exchange controls, it had to go, but nothing replaced it. The cascade of mortgage cash – from three times one salary to four or five times two salaries – has been the main factor, not housing shortages, that put us on the path towards 40-year mortgages, shrinking homes, indentured servitude to landlords and mortgage debt. So if politicians really mean to get to grips with this, to hang on to the middle layers of the economy, then they will have to unpick some of our received economic truths.

It means ratcheting down the price of property, rescuing pensions and standing up to the financial elite and those who seek total economic efficiency – for whom the relative independence of a middle tier is a glaring inefficiency, just as the working class was before them.

But the most important factor in the survival of the middle classes is going to be their own entrepreneurial zeal, to create the local businesses, local banks and local institutions we need – their ability to carve themselves a sustainable niche in the economy.

For that, they will need powerful political support to protect them from aspiring monopolies that would devour them – and it isn't clear whether they will get it.