Why Federalism: The Problem that Needs to Be Solved

By Benjamin Studebaker

Introduction to the Series

In this series of posts, I’ll argue that a supranational federal republic is necessary to provide the kind of political order in which war can be avoided and interstate commerce can be sustained. But I’ll also argue that a supranational federal republic is necessary to unlock new social and cultural modes of life, new forms of cooperation, that point beyond anything before witnessed in human history. Too often, only the first kind of argument is emphasized. Pragmatic arguments can be persuasive, but they are rarely moving. To motivate a real commitment, we need to appreciate and emphasize the sense in which federalism is beautiful and liberating. It is not merely useful.

Comparative empirical studies that focus on intrastate federalism, on federalism within the confines of the modern nation-state, bound by the structure of the international system to engage in military and commercial competition with other modern nation-states, do not come within sniffing distance of these possibilities.[1] They are unable to produce the necessary commitment in people, the willingness to commit one’s life to a political project. Supranational federalism is only weakly analogous to intrastate federalism. The two do not perform the same functions and will not be achieved by the same means.

This first post lays out the core functions supranational federalism needs to perform, the problem it needs to solve. Subsequent posts in the series will describe how precisely federal institutions can solve these problems and what kind of institutions are necessary to legitimate a functional federal system.

The Insufficiency of Internationalism

Federalism is the only way to solve all sorts of problems that people have. It’s the only way to overcome war. It’s the only way to manage the ecological crisis. All of this has been said many times, in many ways, going all the way back to the 18th century, or even earlier.[2] The trouble is that while many of these arguments are persuasive, they are not convincing in the relevant sense – they do not generate the kinds of social and political action that are necessary to actually construct a federal system. They are persuasive, but they are not motivating.

Political scientist Daniel Elazar treats this problem of motivation as a problem of political will, of the “will to federate.”[3] In a world where only some peoples possess a “federal political culture,” he argues, there will be insufficient political will to federate or to maintain a federation that has been reluctantly accepted. More stridently, political theorist William Scheuerman argues that without a “supranational society” there can be no supranational state.[4] A supranational federalist politics is therefore delayed indefinitely, until the relevant form of society or political culture arises. We federalists are continuously reassured that over time, participation in international institutions, in an international commercial society, in an online discourse, will gradually produce not just a society of states, but a world society that will generate the missing will.[5] Liberals are often drawn to Benjamin Constant’s view that commerce socializes states and peoples, that participation in trade and the international institutions that facilitate trade not only make war undesirable, but create in people a willingness to cooperate across national borders to make war a thing of the past.[6]

The trouble is not just that this isn’t happening, but that it is increasingly obvious to everyone that it isn’t happening. Instead, conflicts about capital and labor mobility – about trade and immigration – are intensifying. We are not witnessing the gradual creation of supranational society; we are doing nothing while the world regresses slowly and steadily into nationalist and civilizational thinking. Theorists have discussed this problem using the term “glocalization.”[7] The more global problems intensify, the less interested people become in global solutions to those problems. Instead, they run in the opposite direction, toward localist approaches that are totally inadequate. Economic integration is not producing political integration – it is producing political disintegration. It is not creating a world society; it is annihilating the possibility of any such thing.

This is what I will refer to as “the contradiction” of commerce. The problem is not simply that nationalist and civilizational approaches lead to war. It’s that without political integration, economic integration leads to nationalist and civilizational thinking. In attempting to escape war through commerce, we come back to war. Federalism is not just a solution to war, it’s a solution to the contradiction of commerce. But because it is a solution to the contradiction of commerce, it cannot be brought about merely by affirming the value of commercial cooperation, by passively waiting for commerce to deliver the social and cultural conditions for federal structures. Left to its own devices, ungoverned economic integration produces political antagonisms that lead to war. Federalism – and, particularly, the “compound republic” – is a political technology for governing, among other things, “interstate commerce.”[8] It therefore is created not simply through an affirmation of commercial society, but also through a critique of it. In this sense, federalism is a dialectical solution to the rewards and challenges of economic integration.

An awareness of the limits of commercial society can motivate people to construct federal systems. But what if there is no organized federalist political movement ready to take up the frustration with commercial society? What if federalists have acquiesced to the idea that social and cultural change will precede political change? If there is no positive alternative to commerce, if federalists appear to be on the side of the internationalist status quo, discontent instead takes the form of pure negation. It becomes nationalist and civilizational. The nationalists and civilizationists penetrate the party system, win elections, and use the nation-state to further run down the legitimacy of all forms of supranationalism and internationalism, including federalism. Over time, this exposes the limits of the international institutions, generates enmity among nation-states, and prepares the way for war.

It is not enough to issue warnings about the consequences of allowing this regression to take place. For federalism to be relevantly motivating, it needs to be a positive political project – it cannot merely be about preventing war, about maintaining security. It needs to articulate a compelling vision for human life that goes beyond commerce. This vision has to outcompete nationalist and civilizational visions. It is for this reason that reformism is not realistic. Reforms intended to conserve or gradually extend the existing international system do not grasp the degree to which that system is in the process of losing legitimacy. It’s too bureaucratized, too distant from the people it purports to serve.[9] In trying to shore up the existing system, they associate federalism with a political dead end, tainting it with the status quo it must help us work through and overcome.

What is needed instead is a serious, prolonged, intense struggle to revolutionize the supranational system. People have to dedicate their lives to this – they have to really believe in it. They have to think of the political not merely as an outgrowth of the social or the cultural but as the means by which new forms of society and culture become possible. A supranational federal republic is not the culmination of social processes, the cherry on top of the sundae. It is the beginning of a new phase of human development. 

This can and must be understood in both realist and romantic terms. It is for reasons of realism that the federal republic is the only way to escape catastrophe. But it is the romantic side that ultimately motivates people to solve the real problems – it is their belief that a federal republic will unlock latent human potential that makes them care enough to struggle for it. The increasing dependence of federalist arguments on fear and pragmatism is, ironically, totally unpragmatic. They succeed only at persuading academics and bureaucrats. They motivate no one to do anything that makes any difference.

The Role of Political Order

On the level of sheer realism, a supranational federal republic is a form of political order. To understand the problem that federalism solves, it is therefore necessary to first understand the function political order performs. Political order is necessary to, as Bernard Williams put it, create “the conditions for cooperation.”[10] Before order is instantiated, cooperation relies on social trust. That trust is difficult to scale. As David Hume pointed out, we tend to betray strangers to benefit our family and friends.[11] The logic of kinship relations only allows for a relatively modest level of cooperation.[12] In the absence of political order, trusting beyond kinship appears foolhardy. But once some form of order is established that can credibly commit us to upholding the agreements we make with strangers, it becomes reasonable to trust them. In this way, order produces trust. Trust is required for many kinds of human relationships. And so, it is necessary to establish political order to make new kinds of relationships possible, to expand cooperative possibilities.

Some forms of political order do this better than others. In antiquity, there were in some places and periods large numbers of small states. These small states competed with each other militarily with great intensity. This competition made it difficult for these states to cooperate with each other. But more importantly, it made it difficult for the individuals living in these states to cooperate. The citizens of Sparta struggled to cooperate with the citizens of Athens. Instead of facilitating cooperation, citizenship obstructed it – it forced the citizens of Sparta and the citizens of Athens to confront one another as enemies, even when they would otherwise have reasons to cooperate.

In many places in antiquity, these small states were regularly attacked by the nomads of the Eurasian steppe. The small states could not contend with these attacks while competing militarily with each other. They had to find a way to come together to secure themselves against the horse lords. The quickest way to do this was to construct a large imperial state – of the kind we might associate with Rome, Persia, China, or India. These empires facilitated cooperation over a much larger territorial expanse. But they did this through a process of subordination. Individuals had to submit to kings and emperors. Kings and emperors often prioritized their family and friends over their subjects – reinscribing the problem of kinship. The subjects were protected from competition with each other, but their potential for cooperation went unrealized.

Attempts to reform these traditional states, to make them more inclusive and dynamic, tended to create internal conflicts that could then be exploited by the horse lords. To maintain competitiveness with the nomads, the empires had to maintain a level of internal cohesion that stifled their development. As Walter Scheidel has argued, this meant that instead of developing, traditional empires would become internally divided, succumb to external invasions, and then be reconstituted.[13] This cycle was one of great stagnancy.

Traditional empires fall.

The Advantages of the Modern State as a Form of Political Order

For Scheidel, Western Europe enjoyed a geographical advantage – its lack of flat plains limited the ability of the horse lords to regularly penetrate that far west. Attila famously entered Gaul and Italy, but was forced to retreat. Very few nomads followed him that far. This allowed for political experimentation in Western Europe. New forms of political order were able to develop because Western Europeans were not subject to the same intense competition faced by the settled people living in China, India, Persia, and the Eastern Mediterranean. When a Western European state faced demands for inclusion, there was no horse lord ready to take advantage. Internal conflicts were free to play out and to produce new political forms.

Internal competition eventually allowed for a new form of political order based not on an alliance of landed aristocrats, but on the free associations of artisans and merchants. The emerging modern state was not focused purely on competing militarily – it also responded to the commercial needs of this new class. Increasingly its military was put at the service of commerce, used to secure markets or to expand a zone of free trade. As the prosperity of states depended more on commerce and less on agricultural output, wars for agricultural land ceased to make sense.[14] A struggle for agricultural land that disrupts trade would cost the participants far more than they would stand to gain. The states that figured this out quickly benefitted enormously, building immense commercial empires on the high seas. This modern, maritime imperialism was much more competitive than the old, traditional imperialism that still prevailed in Persia, India, China, and the Eastern Mediterranean. The traditional empires were prepared to compete with nomads – with Turks, Huns, and Mongols – not with modern states.

Today, the modern state has spread all over the world. While some of these states still try now and then to grow by conquest, the military of the United States is used to defend and extend what is sometimes called the “free world,” a world that has been made safe for trade and for commercial cooperation across national borders. This era of peace and prosperity is rightly regarded in the west as a hard-won achievement.

The modern, commercial state rises.

The Limits of the Modern State as a Form of Political Order

In recent years we have pushed up against the limits of that achievement. Just as the logic of military competition among small states or among traditional and nomadic empires limits the development of human cooperation, so too does the logic of commerce. When money flows very easily across national borders, those who own a lot of money have a lot of political leverage. They have a free choice about where to invest their money, and that means that modern states have to compete with each other for investment. Such economic competition limits the freedom of the individuals living in modern states to adopt forms of life that are “uncompetitive,” that make fiscal demands on rich people that those rich people would prefer not to meet. An overdependence on markets limits the ability of individuals living in modern states to experiment with new forms of cooperation. They are only able to engage in the forms of cooperation that attract flows of money. As soon as they deviate from this competitive logic, they pay a heavy price.

In this way, individuals in modern states face the same kind of problem individuals faced in traditional empires. If reformers in traditional empires went too far, the disorder they created would lead to a successful nomadic invasion. If reformers in modern states go too far, the disorder they create leads to capital flight, bond runs, inflation, and unemployment. Electoral defeat – or worse – is sure to follow. But if reformers do nothing, if they accept the competitive logic as natural and inevitable, they are subjugated by a class of wealthy masters. Those masters will prioritize their families, friends, and frivolous priorities over the needs of ordinary citizens, whom they will regard as strangers. Those citizens forgettable, and before long, forgotten.

In recent years, there have been many arguments that our system is ossifying into a kind of feudalism.[15] That isn’t quite right – this system is still based on trade, on commercial competition, and that is very different from a system based on war, on military competition for agricultural land. But the intensity of our commercial competition is having a stultifying effect. It is reducing the freedom of individuals to experiment with new forms of cooperation. This is making it increasingly difficult to solve problems, particularly problems that stem from commercial activity itself.

Climate change is often offered up as the key problem. But while environmental problems are important, eco-federalists rely too much on fear. The argument is that if we don’t cooperate, something terrible will happen to us: the same argument traditional empires made for themselves – if you don’t submit, you will be victimized by the horse lords. If you don’t submit, you will be the victim of climate catastrophe. By relying on terror, rather than reason, this argument produces submission rather than new cooperative modes. Those who wish for free cooperation chafe against this kind of argument, because they recognize that it can be used to dominate rather than liberate.

The real reason to pursue a new kind of political order is not fear. It is the social and political possibilities that new forms of order are necessary to unlock. The kind of polity that can secure the support of individuals interested in liberty must be a kind of polity that unlocks human values, that unlocks new ways of pursuing happiness.

Right now, people around the world feel unable to contend with global capital flows. These ungoverned flows not only prevent them from raising taxes on the rich, they prevent them from raising wages. Stagnant wage growth pushes both governments and ordinary citizens to borrow money and become heavily indebted. Heavy debt burdens enable creditors to control public policy, to push people into jobs they wouldn’t otherwise agree to do, for wages they wouldn’t otherwise accept.

China and the United States increasingly disagree about trade.[16] To develop its economy, the Chinese state pushed down wages to attract industry. This means that China now produces far more than its workers can consume. At the same time, competition from China creates drag on wages in other countries, making it harder for workers in those countries to consume China’s production surpluses. To keep things humming along, there has been an explosion of public and private debt in the United States. Managing this debt and its consequences has been difficult and destabilizing. It’s also made it hard for the US government to support public services and maintain infrastructure. At the same time, Chinese workers are underpaid relative to the value of what they produce. Their standard of living has risen at a slower pace because of the means by which the Chinese government created their jobs. There’s a need for individuals in the United States and China to cooperate to rectify this situation. New rules could benefit ordinary citizens in both countries. They could also provide a more stable foundation for global consumption. But the governments of the two states are trapped in a competitive logic. They view the dispute in terms of the logic of commerce as a competitive struggle for access to international capital flows.

As the 21st century wears on, this commercial logic invites both China and the United States to entertain the possibility of war. Rich people and political elites in both states know that a diplomatic solution would be difficult. It takes years to negotiate new trade rules, and in the intervening years new elections can scupper the work. Blaming the other state for adhering to the competitive logic to which all states are now subject is a much easier route, but one that, over time, creates enmity. It makes it harder for individuals living in China and the United States to trust each other. It not only prevents us from moving beyond the commercial logic, it risks regressing us into the logic of military competition, the logic of war.

It shouldn’t be this way. The citizens of China and the United States have a lot in common – they’re both underpaid and overworked. They both lack the freedom to explore cooperative arrangements that contradict the commercial logic. It should be possible for them to find a way to work together. But this possibility is excluded by the logic of our times. It appears to us as unviable, as impractical, as romantic.

In antiquity, political orders were structured based on the fear of violent death. You submit to the empire because otherwise some khan may kill you. In modernity, you submit to creditors and bondholders out of fear of inflation and unemployment, of runs on currencies and government bonds. We submit to the commercial logic because we don’t believe we can have prosperity outside of it. What if we come to realize we cannot have prosperity inside it, either? When people lose belief in commerce, they turn back to war and to the kinds of political orders optimized for warfighting.

There are historical precedents. In the Gilded Age, rapidly expanding commercial empires ran out of new markets to integrate.[17] Unable to generate the internal dynamism necessary to restructure their economies and provide for a new generation of growth, the European empires went to war. These wars – wars among modern, commercial states, not ancient empires – were among the most terrible in all of human history. The World Wars should have been unnecessary. They should have been prevented by a new kind of political order, an order that qualified not just military competition, but commercial competition, too.

An explosion of commerce pushes the modern state to its limits.

The Federal Union as New Form of Political Order

That new kind of order goes by an old name – a federal union.[18] A federal union makes economic integration sustainable, by delivering the political integration necessary to make it work. It “regulates interstate commerce.” It secures the transition from the logic of military competition to the logic of commercial competition. But it doesn’t just do that. By qualifying the logic of commercial competition, it unlocks the possibility of disciplining commerce, of putting commerce into the service of the human soul. A federal union doesn’t just protect us; it empowers us to realize our values in the world.

Other forms of political order can only gesture at these possibilities. We saw a glimpse of them in the post-war era, when there was trade, but not too much. It was possible to build the highways and the airports, the universities and the healthcare systems. There was money for the arts and sciences. There was money for housing, for schools, for the next generation. But it was all built on a flimsy footing. It only began because of the disruption to trade caused by the world wars. It never produced robust federal institutions capable of defending the cooperative scheme. The Bretton Woods system rested on a contingent agreement among nation-states. It was based on little more than social trust. In time, elections could and did deliver a US government willing to unilaterally abandon it.[19] And from the very start of the post-war era, the goal was to increase trade to drive prosperity. The GATT trade rounds and the WTO produced trade that was enormously beneficial to people all over the world. But this trade was never governed through federal structures. Instead, it operated through a framework of international negotiation.

What is needed is not another period of militarism and war, but a real, concerted effort to create a new kind of political order capable of taking us further. To have trade, we had to qualify war. But to have love, we have to qualify trade. When everything is a transaction, nothing can be done for its own sake. All sorts of human energies and values are excluded and left out. Individual freedom is mutilated, it appears only in a stunted, incomplete form.

With the upcoming series of essays, I’ll argue for a federal system that governs commerce for the purpose of emancipating the individual, of emancipating human love. It’s a vision of federalism that is motivated not mainly by fear of war or climate change, but by a belief in human possibility, by love for humankind, and the value of mutual dedication. That might seem romantic to you, but I think we need a little bit of that. Indeed, I think it’s unrealistic to imagine we can motivate ourselves – let alone others – without it.

Federalism is a mechanism for overcoming interstate conflicts instead of a mechanism for deepening them. When we insist on a fixed political culture or supranational society as a precondition for federalism, we exclude China and many other key partners. By framing these states as fundamentally different, we aid and abet nationalist and civilizational frames. We dump gasoline on emerging enmities. In particular, the trade volume with China – and its positive historical relationship with the United States – merits a concerted effort at inclusion. Elazar made the case that China needs federal structures just as much as any other large state.[20] A well-designed federation does not need to exclude it, and I shall argue further to that effect over the course of this series.

Benjamin Studebaker received his PhD in Politics and International Studies from the University of Cambridge in 2020. He works on political legitimacy and is the author of two books, The Chronic Crisis of American Democracy: The Way is Shut (Palgrave, 2023), and Legitimacy in Liberal Democracies (Edinburgh University Press, 2024).

---

[1] For further discussion of the importance of this distinction, see Robbie J. Totten, “Security, Two Diplomacies, and the Formation of the U.S. Constitution: Review, Interpretation, and New Directions for the Study of the Early American Period,” Diplomatic History 36.1, 2012, pp. 77-117.

[2] Daniel J. Elazar, “Federalism as a Grand Design,” Publius 9.4, 1979, pp. 1-8; Catherine Lu, “World Government,” Stanford Encyclopedia of Philosophy, ed. E.N. Zalta, 2021, https://plato.stanford.edu/archives/spr2021/entries/world-government/ 

[3] Daniel J. Elazar, Exploring Federalism, Polity Press, 1987, p. 195.

[4] William E. Scheuerman, The Realist Case for Global Reform, Polity Press, 2011.

[5] Alexander Wendt, “Why a World State is Inevitable,” European Journal of International Relations 9.4, 2003, pp. 491-542.

[6] Benjamin Constant, “On the liberty of the ancients and the liberty of the moderns,” in Constant: Political Writings, ed. B. Fontana, Cambridge University Press, 1988.

[7] David R. Agrawal, Jan K. Brueckner, Marius Brülhart, “Fiscal Federalism in the 21st Century,” Annual Review of Economics 16, 2024, pp. 429-54.

[8] Vincent Ostrom, The Political Theory of a Compound Republic: Designing the American Experiment, Lexington Books, 2008, p. 99.

[9] Elazar warns about the dangers of getting mixed up with the bureaucrats. See, Elazar, Exploring Federalism, Polity Press, 1987, p. 264.

[10] Bernard Williams, In the Beginning Was the Deed, Princeton University Press, 2005.

[11] David Hume, A Treatise of Human Nature, eds. D.F. Norton & M.J. Norton, Oxford University Press, 2000.

[12] Elazar highlighted the ability of federal institutions to transcend the limits of kinship. See Elazar, Exploring Federalism, Polity Press, 1987, p. 110.

[13] Walter Scheidel, Escape from Rome: The Failure of Empire and the Road to Prosperity, Princeton University Press, 2019.

[14] Benjamin Constant, “On the liberty of the ancients and the liberty of the moderns,” in Political Writings, ed. B. Fontana, Cambridge University Press, 1988.

[15] E.g., Yanis Varoufakis, Technofeudalism: What Killed Capitalism, Bodley Head, 2023; Cédric Durand, How Silicon Valley Unleashed Techno-Feudalism: The Making of the Digital Economy, Verso, 2024; Richard Westra, The Political Economy of Post-Capitalism: Financialization, Globalization and Neofeudalism, Taylor & Francis, 2024.

[16] Michael Pettis and Matt Klein, Trade Wars are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace, Yale University Press, 2020.

[17] J.A. Hobson, Imperialism: A Study. James Pott & Company, 1902.

[18] Clarence K. Streit, Union Now: A Proposal for a Federal Union of the Democracies of the North Atlantic. Harper & Brothers, 1939.

[19] The Nixon administration scrapped Bretton Woods beginning in 1971.

[20] Elazar, Exploring Federalism, Polity Press, 1987, p. 111.