Federalism

Federalism is a normative concept that emphasizes a diffusion of political authority among levels of government. Federal political systems are political organizations marked by shared power among their constituent units. Some examples of federal political systems include unions, constitutionally decentralized unions, federations, confederations, federacies, associated states, condominiums, leagues, and joint functional authorities. As Ronald Watts has written, a federation

In contrast, a confederation is more dependent on its constituent governments, is composed of delegates from the member states, and relates directly to its constituent governments and only indirectly to the citizens of those member states. This section examines the contributions of federalism and confederation to liberty in theory and in practice.

The Articles of Confederation established the structure of the first national government for the 13 former English colonies. The proponents of the Confederation believed liberty required republican government, but, following Montesquieu, they argued that republics could only extend over a small territory. That implied that the states, not a national government that extended over a large area, would act as the foundation of liberty in the new nation. The intent was for the states to create a national government with powers that would affect only the states and not their citizens. As a creature of the states, this confederation would be controlled and limited by its constituent member states, each of whom had equal voting power. In this way, the size of the new American nation could be reconciled with the demands of liberty and republican government. Those who supported a confederation of this nature were concerned that the Constitution of 1787 would create what they called a consolidated government, a national government that wholly subsumed the powers and independence of the states.

One major stream of Federalist thinking begins with the arguments put forward in The Federalist Papers and runs through much of the political history of the English-​speaking world. Notably, James Madison did not see a necessary relationship between republics and liberty. In Federalist no. 10, he noted that “popular government” is prone to factions. Factions comprising a majority are especially dangerous to “the public good and the rights of other citizens.” Indeed, he continued, many had noted “that our [state] governments are too unstable; that the public good is disregarded in the conflicts of rival parties; and that measures are too often decided, not according to the rules of justice, and the rights of the minor party; but by the superior force of an interested and over-​bearing majority.” For Madison, a confederacy of republics would not do because majoritarian democracies governing a small territory would endanger the rights of the individual. The sheer size of the new nation offered some protections against the threat posed by the states. The states, in turn, would limit the national government.

The federal form of government defended in the pages of The Federalist Papers seems to be a compound republic comprising both national and state powers, a halfway point between confederacy and consolidation. In Federalist no. 39, Madison pointed out that each state, acting as a sovereign body, would ratify the new Constitution. The state governments would have representation in the national government both in the Senate and in the election of the president through the Electoral College. Madison noted one other federal element in the new Constitution. The power of Congress would extend only to “certain enumerated objects” while leaving “to the several States a residuary and inviolable sovereignty over all other objects.” In operation, however, the powers of the national government would be such that it directly operated on individual citizens and not just on the state governments. To that extent, the new government was national and not federal. In summary, “the proposed Constitution … is in strictness neither a national nor a federal constitution; but a composition of both.” Familiarity should not lead us to underestimate the novelty of this diffusion of authority. Prior to 1789, most theorists assumed that sovereignty required a unitary government. In federalism, as in many other matters, the framers of the Constitution saw the virtues of complexity and diffused authority, virtues that would serve the cause of liberty.

For a century and a half after the ratification of the U.S. Constitution, the states were the primary units of government in the nation. The concept of dual federalism governed the relationship between the states and the national government. Dual federalism meant that the states and national government had separate and proper spheres of authority. This notion was consistent with the founders’ view that the states retained specific powers not delegated to the national government.

The New Deal brought a final end to dual federalism. In its place, the New Dealers promoted “intergovernmental relations,” which focused on cooperation between the national and state governments “in providing an undifferentiated set of common governmental services.” The new doctrine rejected constitutional limits on the national government that were based on a distrust of centralized power. After 1941, the national government had plenary powers constrained only by specific rights explicitly mentioned in the Constitution and unspecified political rights. The commerce clause, in particular, provided constitutional justification for sweeping regulatory control over the states by the national government. From the Great Depression, through World War II, to the Great Society and its aftermath, the authority of the national government subsumed that of the states as it relentlessly centralized authority. This centralization depended on several factors, including public faith in the benevolence and competence of the national government and dismay at the racial segregation legalized by several states.

Beginning in the 1990s, the pace of centralization of power in Washington slowed. The states became genuine “laboratories of democracy” that created and tested important new policy innovations like welfare reform. The states also began to shed their image as racial backwaters as a new generation of politicians, many African American, took office in the South. The Supreme Court’s expansive reading of the commerce clause had encouraged expansion of the federal government’s powers. In 1995, however, in the case of United States v. Lopez, the Rehnquist Court limited the reach of the federal government under the commerce clause. More generally, a majority of the Rehnquist Court appeared to respect the federal nature of government in the United States by imposing limits on the centralization of power. At the same time, as the states rose in influence, the public’s trust of the federal government decreased, reaching bottom in 1994. As a consequence of these changes, a revitalized federalism seemed possible as the United States entered the 21st century.

European justifications for decentralizing government differed radically from Federalist theories embraced by Americans. Most European accounts of the state have concluded that sovereignty is indivisible and that the national state must be the source of all political authority and power. Thus, European theory precludes the possibility of more than one government in a nation. All subsidiary governmental bodies possess their authority and powers solely by delegation from the central authority. The result is that the European tradition of Federalist thought necessarily builds on the idea of subsidiarity. To the extent that lower levels of government can best perform certain governmental acts, the authority to do so must be assigned to them by the central authority. Decentralization of political power is tolerated in the interests of administrative effectiveness, rather than political liberty. Political power is unified, not diffused, and lower-​level governments do not limit the power of the central authorities.

In recent years, the European Union has come to comprise a free trade area and an increasingly unified government. In 2003, the member states submitted a draft constitution for Europe for approval by the governments of the member states. Part I, article 9 of the constitution stipulates three principles that are to govern the powers of the new central government in relation to the member states: conferral, subsidiarity, and proportionality.

Part IV of the draft constitution includes a “Protocol on the Application of the Principles of Subsidiarity and Proportionality.” Part I, article 9 states that “the Union shall act within the limits of the competences conferred upon it by the Member States in the Constitution to attain the objectives set out in the Constitution. Competences not conferred upon the Union in the Constitution remain with the Member States.” This language recalls the American doctrine of delegated and enumerated powers enshrined in the 10th Amendment: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.” The 10th Amendment has proved to be at best a limited constraint on the consolidation of government in the United States, and there appears no reason to believe that political events in Europe will take a different course.

The exclusive competences of the new European government include monetary policy, common commercial policy, a customs union, and the conservation of marine biological resources. In time, the limits of the powers of the Union may be defined by the objectives of the Constitution, which include peace, the well-​being of its peoples, freedom, security, justice without internal frontiers, a single market where competition is free and undistorted, sustainable development of Europe based on balanced economic growth, a social market economy, environmental protection, scientific and technological advance, equality between women and men, solidarity between generations, children’s rights, economic, social and territorial cohesion, and solidarity among member states. The conferral principle seems unlikely to restrict the powers of the central European government of the future.

The European Constitution also lists many powers shared with the member states, including virtually all policy areas. The Union may exercise a shared power when “the objectives of the intended action cannot be sufficiently achieved by the Member States.” The member states are free to object that a proposed action by the central government violates the principle of subsidiarity. If one-​third of the member states object, the European Commission is constitutionally required to review its proposed act, after which it “may decide to maintain, amend or withdraw its proposal.” Thus, the constituent members possess no effective veto over the centralization of power in the new European state.

The principle of proportionality states that “the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Constitution” (part I, article 9). This principle seems more a general aspiration for the new government than an effective limit on its powers.

The new European Constitution seems unlikely to sustain a form of government that can properly be called a European confederation. Like many of its member states, the European Union will have few legal barriers to consolidating political power and transforming its member states into efficient administrators of centrally determined policies. Of course, the member states in question may successfully resist their subordination to Brussels. If they do, their success will owe much to realpolitik and little to constitutional restraints.

The European Constitution explicitly refers to liberty, together with several other cardinal values. The first objective of the Union, we are told, is the promotion of peace and the well-​being of its peoples. Indeed, the economic interests of the member states are a driving force toward union. Liberty is only one among many values pursued by the new Europe. Given the absence of effective restraints on the central government, it seems unlikely that the institutions of a united Europe will give much weight to individual liberty in the decades to come, especially if expansion of the central state serves the economic interests of some member states in the short term.

Federalism, as it has been understood in the United States, represents a balancing of objectives, not the least of which is occasioned by the fear of centralized power and a strong consolidated government. It has been suggested that our current concern with multiculturalism might revive this fear. Multiculturalists insist on protections for minority cultures and, at least theoretically, on limits on the uses of political power. Most multiculturalists, however, seem unlikely to embrace a renewed federalism. Where American federalism sought decentralized institutions as a way to protect liberty, multiculturalists aim at other values like diversity or recognition of a people or culture. Moreover, the multiculturalist aims at vindicating the cultural rights of peoples, rather than the right to liberty of individuals. Multiculturalists, like many contemporary critics of liberalism, see personal identity as collectively defined, rather than individually determined. Moreover, their efforts may contravene republican equality and the rule of law. That said, a least one political theorist has argued for a “multiculturalism of fear” aimed at preventing violence, cruelty, and institutional humiliation against disfavored groups. This multiculturalism bears a family resemblance to the traditional motivations of classical liberal theory.

In Europe, the question of consolidation depends on the willingness and ability of nation-​states to constrain the new central government. In that struggle, the central government will have two major advantages: The new European Constitution does not effectively limit the central authority, and European tradition suggests sovereignty must be unitary. In the United States, the tragic attacks of September 11, 2001, made homeland security and war making, two responsibilities of the national government, the central concern of American politics. More generally, some scholars argue that Washington should take a larger role in redistributive policies like health care and welfare spending. Others continue to seek institutional changes that might protect liberty by reviving a federalism of mutual constraint between the national government and the states. The success or failure of that search may go some distance toward deciding the fate of liberty in the new century.

Further Readings

Conlan, Timothy J. From New Federalism to Devolution: Twenty-​Five Years of Intergovernmental Reform. Washington, DC: Brookings Institution Press, 1998.

Derthick, Martha. Keeping the Compound Republic: Essays on American Federalism. Washington, DC: Brookings Institution Press, 2001.

Dinan, John J. “The Rehnquist Court’s Federalism Decisions in Perspective.” Journal of Law & Politics 15 (Spring 1999): 127–194.

Levy, Jacob. The Multiculturalism of Fear. New York: Oxford University Press, 2000.

Moravcsik, Andrew. The Choice for Europe: Social Purpose and State Power from Messina to Maastricht. Ithaca, NY: Cornell University Press, 1998.

Niskanen, William A. On the Constitution of a Compound Republic (Cato’s Letter no.14). Washington, DC: Cato Institute, 2001.

Peterson, Paul E. The Price of Federalism. Washington, DC: Brookings Institution Press, 1995.

Pollack, Mark. “Theorizing the European Union: International Organization, Domestic Polity, or Experiment in New Governance?” Annual Review of Political Science 8 (June 2005): 357–398.

Samples, John, ed. James Madison and the Future of Limited Government. Washington, DC: Cato Institute, 2002.

Whittington, Keith. “Dismantling the Modern State? The Changing Structural Foundations of Federalism.” Hastings Constitutional Law Quarterly 25 no. 4 (Summer 1998): 483–527.

Federalism in Proudhon and Ostrom, written by David S. D’Amato