For two generations Britain has been in the grip of an identity crisis. Are we Europeans or not? Are we closer to the US and the rest of the English speaking world, the "Anglosphere," or to our continental neighbours? This rift underpins most of the contradictions in our politics. We seek European levels of public provision, with US levels of tax. We aspire to US-style flexible labour markets, but our attitudes to risk and mobility are far closer to European practice. We talk of Britain as a multicultural society like the US, but we are still attached to European notions of identity and nationality.
Successive British governments have sought to present such schizophrenia as a strength, none more so than the present one, with its mid-Atlantic "third way." But, notwithstanding our sympathy and solidarity with America after the recent terror attacks, this is a terrible weakness. It makes strategy impossible. We are like a business which does not know what business it is in. Britain has been getting the worst of both worlds. Our economy has neither America's commercial creativity through low taxation, small government and the fostering of an individualistic ethic, nor France or Germany's strategic stability based on high government spending, a protective regulatory environment and the fostering of a nationalistic ethic. Britain is split down the middle between sectors and companies which are dollar or euro oriented and is thus increasingly incapable of being run coherently.
We have allowed our manufacturing sector to decline too far. (Marconi is just the latest disaster.) Even in those services, notably international finance, where we have ridden the tiger of globalisation more effectively than our continental competitors, it has been at the price of losing control to overseas interests. In a boom, that does not matter. But in a bust? A big reduction in city employment by US and continental investment banks would devastate the economy of the southeast, the main engine of national wealth creation.
Our productivity and investment levels are disappointing both by US and European standards. So is our per capita GDP. We work longer hours for less pay than any G7 country. Most of our problems have been masked over the last few years by an exceptionally benign international economic environment. But if that were to change, no economy is more vulnerable to severe retrenchment than Britain's.
Our society is neither bound together by a shared dream of individual self-fulfilment on the US model, nor insists upon the assimilation of diversity within a dominant culture along continental lines. Our culture is more secular than any other in the EU, nevertheless it suffers more inter-faith tensions than any other. We have rejected both the disciplines of religious belief which are so central to US identity and the traditions of family and locality, the touchstone of continental identity. We are left with an enormous spiritual emptiness.
Some of our deepest divisions have been around for so long that they have ceased to occasion the outrage they deserve, like the crisis in Northern Ireland. Some, like the new assertiveness of the governments in Scotland and Wales, are only beginning to exert their powerful centrifugal force. But it is within England that the fissures are most threatening. The difference between London and the rest of the country is far greater than that between any other big capital city and its hinterland. In its values, its diversity, its ethnic tolerance, in its bizarre mix of private affluence and public squalor, London is the part of Europe most like the US. The gap between London and, say, Bradford, dwarfs the differences between Paris and Perpignan, or Berlin and Lindau. It dwarfs even that between New York and Baton Rouge. The countryside revolt may be led by hobby farmers whose wealth comes from the city (and who merely seek an imaginary rural idyll in the country) but it feeds off deep hostility to the centre.
Another alarming indicator is the increase in racial tension. We are seeing the younger generation of our ethnic minority communities, especially those from Islamic countries, more discontented than their parents, in sharp contrast to developments on the continent. But nowhere are the consequences of this failure to define who we are and what values bind us together, more poignant than in the fact that Britain has the highest rate of family breakdown, teenage pregnancy and child poverty of any G7 country. Ultimately, even a national identity crisis is a very personal matter.
There is a coherent case for wholeheartedly embracing America and all her ways. The most serious opponents of European integration are those Atlanticists who sincerely believe that Britons should, like Americans, be bound together by nothing more than the belief that this is a relatively good place to earn a decent living. Illusions of roots and the enmities to which they give rise should be cast aside, in favour of a sense of being at home anywhere in the world. They imagine that our economy could prosper as a fully integrated part of the US economic zone, as members of Nafta and as de facto users of the dollar. They wish to reject social democratic welfarism and community responsibility in favour of private provision. In short, they think that all of Britain should become like London writ large. Since the advent of the Bush administration, it is a case that has won powerful adherents in Washington, where it is seen as part of a far greater global battle to ensure that the world becomes like America.
If there is any power on earth capable of resisting the US over the next two decades, it is not stagnating Japan, nor China, with an economy barely the size of Spain's, nor the impotent rage of wounded Islam. It is Europe, with its scale and blueprint for expansion, that is best placed to become an alternative pole of attraction; a different model for the developing world and the future direction of globalisation. Europeans want regional economic integration secured by binding international law, rather than broader global free trade secured by US power. Europe believes in balancing individual responsibility with collective solidarity, economic growth with its many costs. They wish to preserve their cultural particularism, notably their languages, instead of bowing to an Americanised global culture.
The battle between these American and European models will be fought out in Britain. If we join the euro, with all this implies for our commitment to the continent, the US will be forced to accept an equal, maybe one day a superior. If we do not, America's global dominance will be secure. Indeed, the whole EU experiment in international integration of the past 40 years could then be at risk. Compared to the Atlanticists, the leaders of Europe show no confidence in the strength of their cause, nor any sense of its global significance. Technocracy rules. Small wonder then, that popular support for closer integration is eroding even in France, Germany and Ireland. And attempts at reform-from petty barriers to cross-border takeovers to over-dependence on subsidies in agriculture-are increasingly hard to manage.
The continentals do not have the British problem of identity: they know they are Europeans. But they have not yet found the confidence to define what sort of EU they want, or why. Above all, this is because they have not yet found the will to make it democratically legitimate. But if we in Britain have a referendum on the euro, the European project will be put to the people as never before. It will be tested by the most sceptical electorate, against the most determined and coherent opposition to integration to be found anywhere in the EU.
Of course, we pro-euro partisans will concentrate on Britain's national interest. We shall show that roots and a sense of community still matter to the British people. That happiness and fulfilment are to be found not just in individual successes but in the shared advancement of locality, region and nation. That our economy will perform better and our control over the mechanisms which generate our wealth will be far greater, if we choose to be fully part of the continental market, composed of a number of roughly comparable states, rather than one separated from us by 3,000 miles of ocean, which is a single, dominant polity. We shall demonstrate that the divisions in these islands can be resolved by a federal constitution which devolves power from London, not just to Edinburgh and Cardiff, but to Newcastle, Birmingham, Manchester and other centres, and makes possible a wider communion with the Irish Republic. And that if we are viscerally hostile to our French and German neighbours, we will also find it hard to show real respect to our Asian or Caribbean fellow citizens.
But if we win, the victory will not be for ourselves alone but for the whole of Europe. We have been in this position before. In the 17th century, Britain faced a protracted constitutional crisis. This combined profound internal economic social and ethnic divisions with a decisive choice of external orientation between the absolutist, Catholic superpower of Louis XIV's France and the oligarchic, Protestant international order inspired by Holland. The Glorious Revolution established not just the shape and strategy of the British state, which has only now, since the loss of empire, run its course, but also all modern notions of parliamentary democracy: our greatest gift to the world.
Democracy is again the heart of the matter. However much it is vilified as undemocratic, the EU remains the only attempt to create a true, international democracy-principally indirect, in the council of ministers, but also direct, in the European parliament. It is pioneering the democratisation of the new global economy, just as much as the imperfect oligarchy of Westminster in 1689 was pioneering the democratisation of the then new national economy.
We pro-Europeans believe that international democracy is possible. Atlanticists, here and in Washington, believe it is not. They believe that the demos must be national. If they win there will be no prospect of matching the great international economic forces created by globalisation with political processes of comparable reach and power. There will be no possibility of restoring the balance between the market and the ballot box which is the foundation of freedom. And that might be the least of our problems. The world would be dominated by the strongest superpower, which might not always be the basically friendly, if flawed, force that is America. If we win, "one dollar one vote" will be checked by "one person one vote." The structures to secure international liberty and justice will have been established.
Nothing could be more fitting than that it should fall to Britain to carry forward the cause of global democracy.
