1984? Orwell knew more about the way politics works than basically anyone else I've read. The proles were free, absolutely so- as Winston said in there, were the Party to have become too bothersome they could have shrugged them off with virtually no effort at all. What kept them in subjugation was no power the Party exerted over them, but merely their own apathy- like people the world over, since time immemorial, they simply didn't know, didn't care, and didn't want to be bothered to improve their lives. Nothing had to be "hidden" from them, no real deception or oppression was necessary, just some quick diversions (i.e. the war) to keep the mildly perceptive few from noticing anything else and keep the rest busy.
To paraphrase another good (though lesser, and far less famous) writer, all the majority of people care about is decent television, spare change for some booze, and a blowjob every Saturday night. Anything beyond that is outside of their range of interest- the proles weren't oppressed in 1984, they were freely ****ing themselves with their own lack of motivation. This is the same thing Orwell, and indeed most perceptive observers of the political scene, have seen since the beginning of time- politics, the greater issues, things like "freedom" and "rights", are fought between a miniscule minority of the populace. At the utmost, the rest of the population will occasionally be dragged reluctantly into the fray by a really serious war, and even there they manage to make themselves ineffectual and largely sedentary.
The Outer Party members, on the other hand, do care- they're the ones who'd provide a threat to stability, the intellectuals who aren't actually in power, but may at some point wish to become so or influence those who are. And that's why all the horrific... "attentions" described in the book are directed at them- they're the danger. And they are not free- through a brilliantly clever combination of fabrication, police state, and manipulation of humanity's own worst characteristics (they're petty, they distrust one another inherently, they're concerned almost solely for their own safety and well-being; such a group will never rise to power, or indeed anything else). It's partly self-inflicted injury, but nothing they really could help even were they aware of it and were they to desire to, so there's no freedom there.
One thing I think Orwell missed a bit is the potential danger of Inner Party members. It's practically a truism that when you have absolute power shared among a group of individuals, there are going to be a lot of dead tyrants in very short order- megalomaniacs don't share power well. It's something that's touched upon, but not really emphasized in the book, because after all Orwell was writing it for the modern equivalent of the "Outer Party" and "Proles".
Also worth noticing is the structure that he sets up in the book isn't exclusive to Socialist dictatorships, tyrranies, or much of anywhere else- every government has an oligarchy that maintains its power, to one extent or another, by the same strategies he describes. It's a little bit silly to say it's about Communism, or Socialism, or Fascism, because whatever his intent (and he was more than clever enough to have noticed the parallels to his own government, and those around him) it's every government, and specifically every bad government, that's ever existed.
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