Federalism and Interdependence

Autonomy means the ability of a community, organization or government to decide on its own affairs without the intervention of a higher authority. In a federation, the concept refers to the power assigned to constituent units to make and implement laws independently of the federal government.

The economic theory of federalism also relies on the autonomy of govern­ments. Traditional fiscal federalism considers that governments are autono­mous in a policy field if they dispose of powers to legislate, to implement and to raise revenue to finance the relevant tasks. The principle of ‘fiscal equiv­alence' requires that all three powers should be concentrated at the level of government which is responsible for a policy. The need for intergovernmental coordination should be avoided by an appropriate allocation of powers or a reorganization of territories, so that external effects of policy making are min­imized. Autonomous governments should be motivated to efficient policies by interjurisdictional competition (Tiebout 1956). The new economic theory of federalism takes into account the need to manage interdependence (Breton 1996), but the old idea still affects reform debates in politics.

In theories of multinational federalism, autonomy refers to the ability of specific communities and their governments to protect their particular inter­ests against a majority in society and majority rule in politics.

These concepts identify autonomy with federalism. They are based on the assumption that federalism aims at separating powers. Yet, powers which are divided between levels of governments regularly overlap, and when govern­ment apply their powers, they often interfere with the powers of other govern­ments. Decentralizing legislation on public services or environmental policy is likely to hamper free trade in a federation, whereas federal legislation pro­moting free trade constrains decentralized legislation in these areas. If federal or sub-federal governments autonomously raise taxes, they reduce other gov­ernments' scope for taxation. Federal fiscal policy affects regional economies and the related policies of regional governments, whereas decentralized taxa­tion and spending influences the national economy and the effects of central government's economic policy. Irrespective of whether powers are separated or shared, therefore, they can neither constitute nor justify autonomy of gov­ernments in a federal polity. In a complex society characterized by interde­pendence between individuals, organizations, communities, and territorially defined jurisdictions, division of powers always leads to interference of pow­ers, and even a ‘watertight' separation of powers does not prevent interdepen­dence from materializing in politics and policy making.

For this reason, autonomy cannot be considered as a feature character­izing a federal system.

This is not to argue against the concept of autonomy in theories of feder­alism. Certainly, a federal constitution has to define spheres of competence for governments, and to allocate significant powers to constituent states of a federation. Moreover, autonomy is indeed relevant. It should be considered, though, not as a principle of federalism, but as a fundamental prerequisite of democracy and as a principle which becomes reality under democratic gov­ernance. In a federal democracy, autonomy appears as an essential analytical concept and as a standard for evaluating the quality of government at the different levels; federalism, meanwhile, is about managing interdependence between levels and jurisdictions.

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