Theoretical Problems of Federalism

Abstract

Federalism as a method of organizing collective decision-making in the public sector has existed for a large number of years and though the number of countries organized on that basis did remain fairly small after the first successful experiments, that number has been increasing rapidly since the end of the last World War. Despite this fact, it remains true that there is still no accepted theory of federalism, no accepted notion of the “essentials” of that form of political organization, not even an agreement on what constitutes its major positive and normative theoretical problems. The main reason for this state of affairs is, I submit, that federalism is usually thought to be a second —or worst—best solution to difficult political problems and is seldom seen as a method that would be adopted for Utopia. This is a fatal weakness for, as Professor Stigler has already pointed out, second-best considerations, like those about index-number problems and imperfections-in-the-capital-market problems, are terminal concepts, that is, concepts that bring a discussion to a more or less abrupt conclusion instead of being a spur to the creative imagination !