No, we're really not living in an open and free society anymore, though it isn't fully closed yet, either. Yes, our freedom has been co-opted.
Rather than Orwell, I'd read Naomi Wolf on the subject. There are 10 steps every democracy turned dictatorship takes--sometimes quickly and sometimes less quickly--in closing an open society. But it's not an accident, it's happened every time, and we are well along that path ourselves. I think the Occupy movement proves we're not complacent, we've just failed to learn from what we've seen, time and again, around the world and throughout time.
10 STEPS TO CLOSE AN OPEN SOCIETY
1. Invoke an terrifying internal and external enemy
People who are afraid are willing to do things and accept things that they wouldn’t otherwise.
2. Establish secret (unaccountable) prisons where torture takes place
In a secret system, the government does not have to provide any proof of wrongdoing by those it holds, so it can incarcerate anyone it wants.
3. Develop a paramilitary force
A private military force — under the exclusive direction of the “commander in chief” with no accountability to Congress, the courts, or the public — blurs the line between a civilian police force and a militarized police state.
4. Surveil ordinary citizens
People who believe they are being watched are less likely to voice opposition. To scare a population into silence, the government need only monitor the activities of a few to make everyone fear that they are being surveilled. Every closed society keeps a “list” of so-called opponents it tracks.
5. Infiltrate citizen’s groups
Spies in activist groups put psychological pressure on genuine activists by undermining their trust in one another. They may also disrupt legal activities, undermining the effectiveness of group efforts.
6. Detain and release ordinary citizens
Detention intimidates or psychologically damages those arrested and also lets everyone know that anyone could be labeled an “enemy combatant” and “disappeared.”
7. Target key individuals
People are less likely to speak out when those who are highly visible, like journalists, scholars, artists, or celebrities, are intimidated or have the livelihoods threatened. Targeting those who are especially visible makes it less likely that people will speak out and robs society of leaders and others who might inspire opposition.
8. Restrict the press
The public is less likely to find out about government wrongdoing if the government can threaten to prosecute anyone who publishes or broadcasts reports that are critical of the government.
9. Recast criticism as espionage and dissent as treason
People who protest can be charged with terrorism or treason when laws criminalize or limit free speech rather than protect it.
10. Subvert the rule of law
The disappearance of checks and balances makes it easier to declare martial law, especially if the judiciary branch continues to exercise authority over individuals but has no authority over the Executive branch.