Symbols of British cultural identity were constantly displayed during the Olympics, the Diamond Jubilee and throughout 2012. Alongside the fluttering Union Jacks, the inconvenient signs of economic decline, recession and falling living standards were in clear view – or would have been if the television cameras had swung round from the Olympic Stadium and zoomed in on Tower Hamlets or any other centre of urban poverty.

This backdrop made it all the more necessary that an inclusive ‘we’re all in this together’ narrative of national unity was pushed by the media and received by the British public.

This wasn’t, however, just a vacuous nationalism promoted by a right-wing press. The social democratic left has embraced its own ‘story’ of Britain, based upon a kind of ‘people’s history’. Danny Boyle’s opening Olympic ceremony, which celebrated the NHS and key British social movements, beautifully elucidated this powerful, but increasingly distant, vision. The Labour party’s new ‘One Nation’ platform is a similar attempt at forming a new progressive account of Britishness.

There have long existed competing accounts of British identity, from the Tory narrative of a moderate and limited Burkean state to the national democratic socialism of Tony Benn.

As Benedict Anderson famously argued the nation is an ‘imagined community’. He asserts that the nation is always constructed subjectively. It is an idea that is socially produced and therefore always unstable. It is necessarily open to challenge. Different groups will attempt to mobilise their own accounts of national identity for their own political purposes.

Is one of the competing narratives of Britain ‘truer’ than any other? Is the ‘real’ Britain that of Clement Attlee or Enoch Powell? This is to look at the question in the wrong way. A thousand stories of Britain can be told. The proper question to ask is: how do these competing accounts of national identity reproduce structures of power and domination in today’s society?

Take the financial breakdown and the responses to it. The coalition defined its own raison d’être as governing in the ‘national interest’ during a time of economic crisis. This was intended to suggest that there is just one unified British interest which holds throughout the country.

But, as we know, the effects of austerity are not distributed evenly. In fact, London and the South-East, the two areas which benefited most from the neoliberal growth model that produced the crash, are the only two regions which have not seen an increase in unemployment since.

British nationalism has deep roots. The industrial revolution didn’t just produce steel and linen; it also produced the guiding ideology and the key intellectual contours of Britain as we know it today (a point, incidentally, not lost on Danny Boyle.) In its imperial form, the legitimacy of the British state rested on its capacity to maintain its influence over its internal territories while at the same time securing access to markets abroad – whether by military force or capitalist expansion.

This dialectic of internal incorporation and external expansion has left an entrenched institutional legacy that remains at the centre of British political culture. The heritage of empire – of Britain’s colonial past and its early capitalist development – still structures the context within which our politics unfolds today.

One example of this is the continuing dominance of the financial services sector in the British economy. In the mid-19th Century London was the focal point of international trade and finance. With a need to extend credit to foreign countries to create markets for British exports, the dominance of the City became a precondition of British power.

In more recent history the world has changed, but British nationalism hasn’t moved on with it. The Soviet Union collapsed years ago, and yet Britain retains its Cold-War nuclear weapons system. It continues to maintain the fourth largest military budget in the world as a proportion of GDP. It over-stretches itself in foreign military adventures and champions an arms industry that produces weapons of mass destruction for sale to corrupt Middle-Eastern dynasties.

Eroded from below by nascent sub-nationalism, from within by the cold logic of austerity, and from above by the institutions of the European Union and the global order, the outward confidence of the British political classes rests on their ability to maintain, legitimise and protect this unrepresentative model of crony capitalism.

Already in 2013, with the government’s questioning of Britain’s relationship with Europe, we see clearly the shadows of Britain’s past in the making of its future.

There can be no doubt that the EU is an institution in need of substantial reform. But the Euro-scepticism of the right-wing of the Conservative party – the constituency which forced David Cameron’s hand in the recent referendum announcement – is rooted in the nationalist desire to restore a lost greatness to Britain.

And what powers would these Tories seek to repatriate? Primarily, those associated with the European Social Chapter: policies designed in other words to protect workers’ rights. From this perspective, Britain should have the sovereign right to pay its workers less and employ them under worse conditions, while maintaining the same access to markets as any other EU state. Such logic may, however, not sit so well with other EU countries.

Today’s Tory nationalism might be wrapped up in the benign symbolism of a guffawing Boris Johnson or the polished PR technique of an Old Etonian. But don’t let anyone tell you that this isn’t a form of nationalism. It is in fact the dominant nationalism at work in Britain today.

Those who do not adapt to change tend to end up on the wrong side of history. Challenging the dominant construction of British nationalism in progressive ways is vital if we are to avoid this fate.

This article was first published on SPERI Sheffield Political Economy Research Institute.