You might be forgiven for thinking that, with this degree of economic difficulty and social distress all around them, the full attention of the political class in both the United States and the United Kingdom would be focused on these two features of life alone. But, of course, the full attention of those who govern us is not so singularly focused, because in each case those in power in Washington, DC and in London do more than govern internally. They also move around the world stage as important and intrusive players. They each supervise economies, one major export of which are armaments sold to governments and individuals abroad;* and they each rely on societies, part of whose stability is underwritten by both the legacies and the contemporary practice of empire. There is an external dimension to the flaws of contemporary capitalism in both the UK and the US. We therefore need both to understand the linkage between external role and internal weakness in each case, and to see that – in consequence – going beyond the internal flaws of each economy and society will require, as one element of reform, a major resetting of those external roles.

The most immediate costs of empire are most visible in the empire which is most immediate: namely the American one. The British empire is now very much a thing of the past, and the British like to think of themselves as fully post-imperial. But to the degree that they do, they partially delude themselves: because the economy and the society of the contemporary UK continues to be shaped by the legacies of an empire now gone. Those longer and more subtle costs of empire await America down the line; which is why here it makes sense to focus on the immediate costs of empire through American data and the longer consequences of empire through British data.

The lesson that we learned from Britain’s 2016 referendum on the European Union is that European integration is experienced differently in different places. This is obviously true across countries, and always has been the case. The British referendum revealed the extent to which such distinctiveness is also true within member states. The British vote was surprising because of the concentration of support for membership in the European Union in places like London, Oxford and Cambridge. It was also surprising for the concentration of desire to leave the European Union in many parts of Britain outside of those major cities. There were of course important exceptions. Scotland and Northern Ireland were most prominent among these. And, in the immediate aftermath of the vote, there was considerable concern that Scots might take advantage of the difference in attitudes to push for another referendum on independence. That seemed to be the most potent source of division within the United Kingdom.

What few observers recognized at the outset, however, were the full implications of the Northern Irish case. To say that Northern Ireland’s relationship with European integration is “distinctive” is an understatement. The Northern Irish peace process was framed by European Union membership both for Ireland and for the United Kingdom. In the two decades that followed the Good Friday Agreement, the people of Northern Ireland grew accustomed to being able to interact freely both with the British and with the Irish economy thanks to this European Union membership.

The decision of the British people to leave the European Union threatened much of this new freedom. In doing so, and inadvertently, that decision also threatened the post-conflict stabilization of Northern Ireland. This potential disruption was difficult to appreciate for any but the closest observers of Northern Irish politics. Even within the British government, the distinctive position of Northern Ireland relative to European Union membership was under-explored. This became all the more true in the aftermath of the May 2017 British general election.

Modern economies can be very similar in their basic principles of organization and in their associated strengths and weaknesses, and still sustain very different kinds of societies. Economies have their logics, but societies also have their histories. The logics may be similar but the histories can be different – and in the US and UK cases they most definitely are. They are different in the ways in which the two societies were originally constructed and have developed over time. They are also different in the ways in which they now struggle to cope with the common set of economic problems released upon them by the shared nature of their flawed capitalisms. This overlap of the similar and the different is what allows so rich a cultural exchange between the two societies, with the similarities facilitating the exchange and the differences making the exchange perennially fascinating. Americans play baseball. The English play cricket. Nothing could be more different than that; and yet each sport carries the marks of a shared experience of imperialism. American baseball calls its end-of-season play-offs “The World Series”, although only North American teams are permitted to participate. The Japanese and the Cubans play baseball too – a legacy of previous decades of American dominance – but they are not invited. The English now regularly lose at cricket to teams from countries that only play the game because once they were British colonies. In the heyday of empire and as late as the early-1950s, the English always won at cricket, unless playing teams from the white dominions; but as this is being drafted, the national test team just lost a series of five-day games 4-0 to the Indians.

The Northern Ireland conflict and related political difficulties are well-known and well documented. The most immediate and visible impact has been in terms of lives lost, injuries sustained and hardship endured. The Troubles, however, reached into every facet and dimension of Northern Ireland society, and the local economy in particular was a serious casualty. Economic decline during the Troubles contrasts with the early years after the partition of the island of Ireland, when the Northern Ireland economy was strong (Rowthorn 1981: 3): “When Northern Ireland was created [in 1920] it was seen as an integral and self-supporting component of Britain’s imperial system, able to generate a surplus and help finance the military and other expenses involved in running the Empire.”

Agriculture, ship-building and a thriving linen industry were the backbone of Northern Ireland’s indigenous industrial base. However, the downturn in the manufacturing industry from the 1970s onwards hit Northern Ireland’s home-grown industries badly. The economic decline that followed also coincided with the onset of the conflict. During the 1970s and 1980s, the regional economy was in the doldrums. Against the backdrop of violence and serious political instability, foreign investment dried up, manufacturing stalled, outward migration grew and growth halted. Northern Ireland’s focus on local arguments was producing an introverted form of politics that was seriously undermining its economic well-being.

For a sustained period during the Troubles, the Northern Ireland economy lagged behind the rest of the UK and has persistently been the poorest performing of the UK’s 12 regions. From the 1990s onwards, the achievement of the peace process and the signing of the Belfast Agreement signalled a turning point in Northern Ireland’s economic fortunes. Since the 2000s, the so-called “peace dividend” may not have fully materialized (see Coulter 2014; O’hearn 2008), but nevertheless economic opportunities that presented themselves in the context of the peace process were an important factor in rejuvenating the Northern Ireland economy. In particular, inward investment increased, and there was also some growth in the construction, tourism and services sectors. The global economic crisis did dent the region’s longer-term recovery, and crucially, persistent structural problems continue to beset the Northern Ireland economy.

The EU referendum result was met with widespread shock and surprise. The narrow win for Leave was largely unexpected. The following day the Belfast Telegraph (25 June 2016) front page declared “A step into the unknown”. The value of sterling had plummeted in response to the vote and the UK Prime Minister David Cameron had resigned. In Northern Ireland, the immediate response from unionism and nationalism exposed a clear difference between the two communities. DUP First Minister Arlene Foster declared: “I think this is a good result for the United Kingdom. Our nation state has made a clear definition as to where they want to go forward.” Deputy First Minister, Sinn Féin’s Martin McGuinness, reacted very differently and viewed the result as justification for pushing a different future for Northern Ireland: “I think there is a democratic imperative for a border poll”. The strong vote in favour of Remain in Scotland was interpreted by First Minister Nicola Sturgeon as: “a sign of divergence between Scotland and large parts of the rest of the UK in how we see our place in the world”. For its part, the Irish government was dismayed by the result and the then Taoiseach Enda Kenny moved to immediately recall the Irish parliament. In a joint statement by EU leaders and the Netherlands presidency of the EU, the three presidents and prime minister expressed regret at the decision but were clear in their commitment to the future of the European project. They voiced a desire to see the UK move swiftly to give effect to the referendum result. A combination of regret and resilience also featured in the responses of German Chancellor Angela Merkel and her French counterpart, François Hollande, to the vote.

The referendum result meant that the UK was now facing a period of political and economic turmoil and possibly sustained instability. The mammoth and unprecedented task of steering the UK out of the EU was to be led by the new Prime Minister Theresa May, who was installed in July 2016.

After a prolonged period of conflict spanning four decades, political violence in Northern Ireland has dissipated. Agreement on the creation of power-sharing institutions was achieved in 1998 and has been followed by a lowering of tensions between the nationalist and unionist communities. Relations between Northern Ireland and the Republic of Ireland, and between the UK and Ireland have simultaneously been transformed. Economic growth and prosperity has materialized on both sides of the border. All of these positive developments have happened against the backdrop of joint Irish and UK membership of the European Union (EU).

The June 2016 referendum decision to exit the EU represents a critical moment for the UK, and for its constituent parts. The outcome and aftermath of the vote revealed the existence of marked political, ideological, socio-economic, demographic and geographic divisions across the UK. The Northern Ireland electorate voted for the UK to remain in the EU. Of those who voted in Northern Ireland, 55.8 per cent supported the UK’s continued membership. This result is at odds with the overall UK referendum result, which narrowly supported the Leave position. Like Scotland, London and Gibraltar, the Northern Ireland preference for Remain was subsumed by the UK-wide preference for Leave. The suspension of Northern Ireland’s devolved institutions in early 2017 followed in May by elections to the Northern Ireland Assembly and then shortly after that a UK general election added an intriguingly unexpected dimension to the question of how to deal with Northern Ireland interests during and after UK withdrawal. A loose political pact between the Conservative Party and Northern Ireland’s Eurosceptic Democratic Unionist Party (DUP) prompted very real concerns about the impact of such a move on the shape of the UK’s Brexit deal and on what the new UK government arithmetic might mean for political stability in Northern Ireland.

Given Northern Ireland’s geographic situation, its close economic and institutional ties with the Republic of Ireland, its political history of conflict, and the existence of a communal divide on the question of EU membership, the implications of the overall Leave vote were more profound for Northern Ireland than for any other part of the UK.

Unlike any other major industrialized economy, the American one sits on top of a consciously-created society, one put together after 1620 by a mixture of voluntary and involuntary migration – the trans-oceanic movement of immigrants and slaves – into a land mass whose native inhabitants were an early casualty of that migration. Carefully editing US history to downplay the ethnic cleansing and forced slavery elements within it, contemporary American apologists regularly assert that – precisely because of its unique design – the society so consciously created turned out to be morally, socially and economically superior to the societies that the first generations of American transplants had left behind. As the American national anthem has it, the United States understands itself to be “the land of the free and the home of the brave” – understands itself, that is, as a country that possesses a unique trio of advantages: a unique set of dominant values focused around individualism and personal freedom, a uniquely prosperous economy based on private ownership, and a uniquely open social order in which individuals can progress entirely through their own merit. The continuing influx of immigrants seeking precisely those freedoms, prosperity and social mobility then only serves to reinforce the conviction – visible across the entire US political class, but particularly well-embedded in the belief systems of American conservatives – that the United States remains “the shining city on the hill” which all other countries and peoples seek to emulate.

The reality behind such claims is much more complicated than their advocates imply: but in one regard at least the claim for American superiority has, until recently, had enormous force. For over the postwar period as a whole, living standards in the United States have been significantly higher than those enjoyed by the mass and generality of people living in other major industrial economies – not to mention higher than the living standards of those unfortunate enough to be marooned either in former communist countries or in the underdeveloped world.

It is not too great an exaggeration to say that there was a time, in the decades immediately following the Second World War, when across the advanced capitalist world as a whole the vast majority of people looked to the United States as a model economy and society – one to whose affluence, freedoms and stability so many of them then aspired. It is also not too much to say that, in the decades since, America has continued to enjoy that status in the eyes of at least the more conservative sections of the electorate in each major industrial economy with which the United States now competes. But even in those circles, America’s reputation abroad is now no longer what it once was. There are flaws in the contemporary character and performance of the US economy – and in the society which that economy sustains – which are now too visible to be easily ignored. And because they are, if we are ever fully to grasp the contemporary Anglo-American condition and its resolution, it is essential that we begin with a careful examination of exactly why the American economy was once so untarnished a model, and why it is untarnished no longer.

The rise and fall of the initial postwar settlement

As we have just noted, the American economy in the immediate post-Civil War period was a catch-up one, industrializing behind a substantial tariff wall as it borrowed technology and capital from the United Kingdom and a labour force drawn from primarily Europe.