Saturday, February 4, 2017

Does Federalization Equal Centralization?

To Understand, First Define

First, a series of definitions. A unitary government is sovereign over all regions. A confederacy/confederation also known as a confederal government vests sovereignty in the regions aside from the functions the regions willingly delegate to the confederal government. A federation also known as a federal government places sovereignty over the regions into both the regional and federal governments, with policy-setting powers split between them based on a joint understanding.

The Power Grab At the Beginning

In the United States of America, the States existed before the Federal Government and jointly established the Federal Government. Indeed the first form of the Federal Government of the United States was technically a Confederation, due to its founding document, the Articles of Confederation. The trick, then, for the established American nationalist elite was to centralize American government in the teeth of opposition by the masses, who were backed by dissidents within the American elite themselves.

When the Articles of Confederation were replaced by the drafting of a Constitution that went into effect when ratified by the original Thirteen States, the first steps to centralization were taken. The new Constitution established a free trade zone. This allowed the wealthy elites to invest beyond their home states without hindrance. The pinnacle of such investment was through banks which were soon bound into a cartel through their supervision by the Bank of the United States. This brought the power of the purse into the hands of the federal government and into the hands of the private interests able to control the federal government.

At the same time, the ambiguity of the Constitution gave the federal government whatever power it was politically expedient to grab. On the one hand, the Bill of Rights reserved whatever powers were not explicitly in the Constitution to the States and to the People. On the other hand, the fact that the original Articles of the Constitution granted Congress the power to do whatever was necessary and proper meant that it could do whatever it could enforce.

Sectional and Populist Rights

Ironically the assertion of sectional and popular rights rendered much of the Constitution’s broad grant of federal power moot, at least for the first decades. The Bank of the United States eventually went down in flames due to populist and popular opposition though the federal government did maintain a Mint to shape gold and silver into coinage.

At the same time, rival sectional interests between the free-state, industrial North and the slave-state, agrarian South meant that politicians, in order to align the established laws with their state’s sectional interests, advocated “states’ rights” over the exercise of power by the federal government. It is true that the conventional wisdom holds that the Civil War transferred power from the state governments to the Federal Government. But even the shift in power caused by the Civil War was far from smooth, occurring in fits and starts.

In the American historical era of Reconstruction, occurring during the Civil War and in its immediate aftermath, placed state governments in the defeated and dissolved Confederacy under the control of the federal military. But the low-level insurgency in those states combined by a collapse of unity in the political coalition of the occupying authority, both in the Reconstructed state governments and in the Federal Government above them, meant that power over state governments returned to unrepentant “former” Confederates.

This in turn further broke the victorious political coalition in control of the Federal Government. Thus the “former” Confederates put in power state governments under the Democrat Party and in league with Northerners put the Democrat Party into power at the federal level as well for many of the decades after Reconstruction. Naturally then, the Federal Government became less assertive in the face of politics advocating for states’ rights.

Industrialization Brings a Renewed Push for Centralization

Although states’ rights replaced centralization as the organizing principle of American sovereignty in the immediate aftermath of Reconstruction, it came to pass that the Progressive Era, spanning the decades from the 1890s to the 1920s, was the start of a renewed push for centralization. This was due, in no small part, to the prior economic centralization was enabled by the free trade zone and “internal improvements”—roads, railroads & canals—financed by the tariff revenue accumulated by the federal government due to Civil War legislative reform. This was brought to fruition by two reactions to economic centralization.

On the one hand, Big Business was unstable, due to how its reliance on the demand of distant markets. This exacerbated the boom and bust cycle. To fix the boom and bust cycle, authority figures in finance and government sought to transfer the production of money to the Federal Reserve Bank, a central bank whose shares were owned by the other banks of the nation and whose top officials would be appointed by the Federal Government. The Federal Reserve Bank would issue paper currency whose backing in gold and silver would then be increasingly undermined by federal policy seeking to build the power of the purse for the Federal Government and for the private interests exercising influence over the policies of the Federal Government.

On the other hand, the Progressive Era was the signal for a paradigm shift in the minds of Americans. Big Business outcompeted small business through superior market efficiency; likewise Big Labor and Big Philanthropy came together to handle Big Business. Big Government in turn would be a regulatory force managing Big Business, Big Labor and Big Philanthropy and it would by necessary be ensconced in the Federal Government wherein Constitutional authority existed to regulate interstate commerce.

To make this possible, the Progressives in Federal Government, as explained above, established the Federal Reserve Bank but also instituted the progressive income tax to further enhance the gargantuan wealth to be placed within the Federal Treasury. Subsequent expansions of Federal Government authority flowed from the establishment of the Federal Reserve and the progressive income tax, spurred on by international wars and economic crises.

Again: Does Federalization Equal Centralization?

It is true that the faction(s) in American politics advocating centralization speak of federalism and describe themselves as Federalists. Still this self-description provokes skepticism on the part of opponents, due to how the ultimate conclusion of centralization is a unitary rather than federal government. And yet in the United States, centralization occurs without a unitary government in the traditional sense of the word. The States possessed more bureaucratic and police personnel and powers than the Federal Government when they created it and they still do. Legal and regulatory authority is imposed on land and people through bureaucratic and police personnel so this places direct authority over the land and the people in the hands of the state governments within the United States of America.

On the other hand, these bureaucratic and police personnel within the state governments are financed through the Federal Government which then exercises the power of the purse over the state governments. Furthermore such joint authority over the regions contained by state boundaries has been built up methodically over the centuries from the original condition of the United States in which the Union was a confederation rather than a federation. Therefore in terms of American politics if not the politics of other times and places federalization and centralization often amount to the same thing.


  1. What does "states rights" mean? Or "big government"? People complain about both but to clarify the issue, let us discuss federalism.

  2. In other words, American federalism combines both states rights and big government--allowing both to exist at the same time. Contrary to the assertions of secession advocates, big government is not a betrayal or distortion of federalism but produces federalism when it coexists with the conflicting tendency of states rights.