The small-town, provincial life of Northern Ireland is changing. In the proddy territories that I hail from, the red-white-and-blue paint on the kerbsides and lamp posts is being removed. The bunting is coming down. The schools are being slowly de-segregated.

The fragile Northern Irish statelet, governed by an uneasy coalition between historic opponents, Sinn Féin and the Democratic Unionist party (DUP), is aiming for "business friendly". And indeed the businesses are coming. This is most visible in the patterns of retail. Where once few "mainland" companies or multinationals would fancy settling in an urban shopping centre in Northern Ireland, the local Crazy Prices and poky little shops have been replaced by Tesco and Sainsbury's. And frankly, to this extent, I can see an upside to globalisation.

Yet the sectarian gangs still operate, the murders continue and, as reported in the Guardian last week, the intimidation is escalating. Why? Because the above only tells a fraction of the story. The state that emerged out of the Good Friday compromise is still a sectarian one, with representation structured around nationalist or loyalist identifications. Resource competition is predicated on an assumed war between Protestants and Catholics. If a hospital is faced with closure, the first question is not whether it will be closed, but will it be closed in a unionist or a nationalist area? Housing segregation remains entrenched.

And in the context of neoliberal austerity, a great deal of Northern Ireland's infrastructure is being dismantled. Since the six counties depend more on the public sector than any other part of the UK, the cuts are going to hit harder here. The "bedroom tax" is also a heavier burden in the context of segregated housing, which restricts mobility. The impact of the economic crisis is also politically complex. On the one hand, the British state's legitimacy is about to be severely tested. On the other, the south of Ireland hardly looks appealing. Sinn Féin once looked to the Irish Republic's spiv-driven boom as the inspiration for a neoliberal north; now it is left administering neoliberalism but without the glamorous "Celtic Tiger" to emulate. If unionism is looking embattled, republicanism has almost completely given up.

This brings us to the paramilitaries. The sharp rise in violence and evictions by them is mainly, though not exclusively, accounted for by the activities of loyalists. Certainly, Republican "dissident" groups have been active, but they are far more marginal. What do they have to offer but a return to the very politics and methods that led to this impasse?

The important thing to understand these groups, which tended to dominate some of "the estates" when I was growing up, did have a certain popular base. heir aura of austere, self-righteous menace obviously attracted a significant minority of Protestant working-class adults too. In the context of the Troubles, their actions – however stomach-churning – had a certain legitimacy for some, and at least made sense to others.

There has always been a question about what these gangs would do once the ceasefire had been institutionalised. The obvious solution would be to become outright criminal rackets. Had that been the case, there would be a bit less to worry about. In fact, they have been reluctant to give up their political base. They often behave as sub-state apparatuses, implementing "law and order" solutions the police are unable to – "punishment beatings" of joyriders, drug dealers and sex offenders, for instance. And when turf wars have broken out over residential areas, most infamously in the case of the Holy Cross school, the paramilitaries have been there.

The loyalists have also branched out into racist terror, attempting to drive out Chinese residents. This, and the recent escalation in evictions of Catholics from their homes perpetuates the logic of "the estate", which materially embodies at a base level the very sectarian divide that is institutionalised in Stormont.

These localised ethnic-cleansing initiatives are therefore not simply the activities of "criminal elements", as police blandly suggest. Certainly, there are pecuniary motives, drugs wars and so on, involved. Chiefly, however, they are a form of racial-nationalist class politics, rooted to a degree in sections of the Protestant working class. And in the era of austerity, this is potentially lethal.