I think that real happiness requires freedom. Orwell's famous final line of 1984 seems on the surface to indicate that Winston has accepted his slavery with all his heart, but what it really shows is that he has been broken, he is no longer capable of freedom even in his soul.

Orwell knew that real brainwashing isn't a matter of telling people what to think, it is about getting them to self censor at source; not spying on them, but getting them to spy on themselves and each other. That's what the novel is about.

In the GDR, about 2% of the population were full time informants and about 15% informed on each other part time. That was a pretty successful controlled society for a long time, but I doubt very much that it was happy.