History rarely announces itself when it turns. Empires do not collapse in a single dramatic moment; they erode over time, often unnoticed, until one crisis exposes what has long been true. For Britain, that moment came in 1956 during the Suez Crisis. For the United States, the warning signs are already visible — and working people are the ones most likely to pay the price.
In 1956, Britain still appeared to be a global power. Its flag flew across continents, its navy dominated key sea lanes, and its political leadership acted as though empire had merely paused, not ended. Then, in the span of 11 days, that illusion collapsed. Not because Britain lost a war — it did not — but because it discovered that it no longer controlled the economic foundations of its power.
When Egypt nationalized the Suez Canal, Britain joined France and Israel in a military intervention to reclaim what it viewed as a strategic asset. British forces performed well on the battlefield. But military success proved irrelevant. The United States, now the world’s dominant financial power, opposed the invasion. Washington threatened to sell off its holdings of British pounds, block emergency loans from the International Monetary Fund, and allow the currency to collapse. Britain’s foreign reserves drained rapidly. Within days, the government faced economic disaster and was forced to withdraw.
This was not a loss of confidence in the abstract, but the use of financial power to enforce political compliance.
The message was unmistakable: Britain could no longer act independently of its creditors, because the economic foundations of its power had shifted away from production and toward finance and debt. The empire was not defeated by an enemy army — it was constrained by debt and financial pressure.
What followed is the part labor should pay closest attention to.
Britain’s decline did not begin in 1956. For decades, it had been living on borrowed prestige. In the 19th century, the pound sterling was the world’s reserve currency. That status allowed Britain to borrow cheaply, run persistent trade deficits, and finance empire without immediate consequences. But by the early 20th century, the United States had surpassed Britain economically. British industry lagged, productivity fell behind, and investment increasingly flowed toward finance and empire rather than rebuilding domestic production. The system continued not simply out of habit, but because the existing structure still served financial and imperialist interests even as it stopped serving working people.
World War I accelerated this process. Massive borrowing transformed Britain from the world’s leading creditor into a debtor nation. Rather than restructuring its economy around rebuilding productive capacity and protecting employment, the British state prioritized defending financial credibility. In 1925, it returned to the gold standard at an unrealistic exchange rate, placing the burden of adjustment on the domestic economy.
Gold has never brought stability in times of crisis. Tying a currency to gold limits how governments can respond when the economy is under strain. In Britain, defending the pound in this way meant raising interest rates, cutting spending, and forcing wages down, leading to prolonged unemployment and hardship for working people while banks and creditors were protected. The United States operates under a different monetary system today, but the pattern is familiar. When stress builds, those with wealth are shielded first, while workers are asked to absorb inflation, austerity, and sacrifice in the name of stability.
The consequences in Britain were severe. High interest rates strangled growth. Unemployment surged, especially in industrial regions. Exports collapsed. When the pound finally broke free of gold in the 1930s, adjustment came abruptly and harshly. Wages stagnated, imports became more expensive, and living standards declined for decades. The reckoning was swift precisely because it had been delayed—and because workers had already absorbed years of sacrifice.
The Suez Crisis revealed how far that process had already gone, exposing the gap between Britain’s imperialist posture and its economic limits.
This history matters because the United States now occupies a similar position in the global system.
The dollar remains the world’s reserve currency. That status allows Washington to borrow cheaply, run chronic trade deficits, and maintain a vast global military footprint. But the foundations beneath that privilege are under strain. U.S. debt continues to rise, and interest payments consume a growing share of the federal budget—resources that could otherwise fund health care, housing, infrastructure, and education. At the same time, deindustrialization and financialization have hollowed out large sections of the economy, leaving workers more exposed to shocks.
As with Britain, political leaders promise that global power will compensate for economic imbalance at home. But imperialist reach cannot resolve the contradictions of an economy increasingly shaped by financial extraction, military spending, and declining productive capacity.
Reserve-currency status is treated as a guarantee rather than a condition sustained by material power. In reality, that status depends on sanctions, military reach, control over credit, and the ability to enforce compliance. When pressures mount, the system does not adjust evenly. Capital finds protection first, while workers face rising prices, reduced services, and demands for restraint.
Nowhere is this contradiction clearer than in U.S. policy toward Palestine, Venezuela, and Iran — three cases where militarism and economic coercion impose costs abroad while draining resources at home.
In Palestine, U.S.-backed military campaigns, including the destruction of Gaza, have devastated infrastructure and livelihoods, pushing entire working populations into poverty and dependence. While Palestinians bear the immediate human cost, U.S. workers also pay indirectly, as billions in military aid flow outward while domestic needs go unmet.
Militarism abroad is not separate from scarcity at home; it helps produce it. Billions in military aid flow outward as a matter of priority while domestic needs go unmet — not because resources are scarce, but because militarism remains central to sustaining U.S. imperialist power.
Venezuela offers a parallel example through economic warfare. Years of sanctions, asset seizures, and financial isolation have inflicted severe damage on the country’s ability to trade and invest, with devastating effects on workers. These measures are often presented as cost-free tools of pressure, but in practice they work by cutting off trade and finance, driving up prices, limiting access to fuel and supplies, and costing working people their jobs — both in the targeted country and at home.
Iran demonstrates the long-term effects of this approach. Decades of sanctions targeting banking, oil, and trade have fueled inflation and job losses that hit Iranian workers first. At the same time, U.S. workers are told there is no money for universal health care, debt relief, or rebuilding infrastructure, even as vast sums are allocated to weapons systems, military readiness, and the permanent war economy.
These are not abstract foreign policy debates. They are material choices about who bears the costs of sustaining empire.
When imperialist systems overextend or monetary arrangements come under strain, the effects are not shared equally. Those with wealth and mobility are better positioned to protect themselves. Workers are not. Inflation erodes wages and savings. Governments respond by cutting social programs and labor protections, insisting there is no alternative. Britain followed this path. Its working class paid the price.
The most dangerous similarity between Britain then and the United States now is not simply denial, but the belief that past dominance guarantees future security. By the time Britain’s limits were openly exposed at Suez, adjustment could no longer be managed gradually. It was imposed through crisis.
The United States has not yet reached its Suez moment. But many of the conditions that made Britain vulnerable — industrial decline, reliance on finance, overextended military commitments, and political refusal to confront systemic limits — are increasingly present. When confidence finally gives way, it will not do so gently.
For labor movements, the lesson is clear. Imperialist decline is not an abstract geopolitical issue. It shapes whose schools are funded, whose hospitals are built, whose jobs are protected, and whose communities are abandoned. If working people do not organize around an alternative — one centered on rebuilding productive capacity, reducing militarism, and prioritizing human needs over global dominance — they will once again be asked to absorb the shock.
Britain believed it was too big to fail. That belief proved costly. U.S. workers would be wise not to share it.
Michel Shehadeh is a Palestinian American writer and activist. He immigrated to the U.S. in 1975 and was a defendant in the landmark “Los Angeles Eight” case, a 20-year deportation battle that ended in a major civil rights victory. A former director of the American-Arab Anti-Discrimination Committee (ADC) and the Arab Film Festival, his work has appeared in Al Mayadeen, Electronic Intifada, the Middle East Eye, Rai Al-Youm, Al-Adab Magazine, and others.
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