The shadow chancellor was speaking at a People’s Assembly event as part of its Take Back Manchester festival on Monday evening. He said: "When Labour goes into government, we all go into government. We are a movement."
Mr McDonnell blasted Chancellor Phillip Hammond's address to Tory Party conference on Monday, during which he "wasted 40 minutes" making personal attacks on himself and Jeremy Corbyn and said it showed the Tories "had run out of ideas."
"They are in government but they are not in power," Mr McDonnell charged. "I wish they would just step aside and let us get on with running the country."
He praised the People's Assembly for hosting a week of discussions that stood in "stark contrast with the bankruptcy of debate at Tory conference."
With Boris Johnson and Jacob Rees-Mogg seemingly vying for the Tory leadership, he told the audience: "I can recognise a coup when I see one.
"What they are discussing is the future of their own party. Not the future of our country or our class," he added.
The meeting opened with speakers from a number of national disputes including RMT's campaign against driver-only operated trains (DOO) and the McDonald's strike by BFAWU members.
Mr McDonnell pledged that under Labour these disputes would not happen because of its plans to pay a minimum wage of £10 an hour, restore trade union rights and collective bargaining and lift the public-sector pay cap.
He said the "government is failing on every criteria" in ensuring access to food, housing, education and healthcare.
Mr McDonnell said the reasons nurses are using foodbanks were "not complex. They're not being paid enough. It's as simple as that.
"We have a government for the 1 per cent," he said, slamming Prime Minister Theresa May's recent defence of neoliberalism. "It's not a free market, it's a rigged economy."
But, Mr McDonnell said: "People have seen through the Tories. “[Labour is] ready for government. We've been ready for a long time."