It has become commonplace in the early 21st century to insist that America was once great at an unspecified period. Some on the American Right claimed that the country lost its way in the Social Liberalization of the 1960s, whereas others on the American Left claimed that it was actually the Economic Liberalization of the 1980s. Meanwhile, this Treatise consistently maintained that it was the 1970s, the decade between the 1960s and 1980s. Barring the obvious fact that the Democratic-Republican Party was still in power, the Empire of Liberty was nearing the height of its power around the 1970s when the Death of Bretton Woods happened. The Counterculture had failed to become something more coherent and well-organized, the Culture Wars were in full swing, and the Vietnam War and Watergate Incident undermined institutional trust in the Federal government. Automation, Globalization, Deindustrialization, and other notable problems emerged in the 1970s, becoming prevalent over the next few decades.
Aside from the Death of Bretton Woods and everything else to be covered in future Treatises, the 1970s was a pivotal decade in the history of American Federalism. The significance of American Federalism in the 1970s is related to the preceding conclusions about the Constitution in “America as Perpetual Union.” To understand why is to realize how America developed over the centuries under the Democratic-Republican Party.
To begin, the Articles of Confederation established the idea that America is a Perpetual Union of States, a concept that the Federalists sought to realize despite never explicitly mentioning it anywhere in the Constitution. Recall in “Goals of the Federalist Worldview” that the Federalist Party advocated American Federalism to promote a centralized Federal government as a means to an end. Nowhere was this made obvious than in the Judicial Branch, the Supreme Court.
While the rest of the Federalist Party were trying to cultivate an American National Culture, the Supreme Court under John Marshall were outlining the parameters of American Federalism. A well-known example of this trend occurred during Marbury v. Madison, a landmark case that expanded Federal power and refrained from explicitly favoring the Federalists backing William Marbury and the Democratic-Republicans supporting James Madison. It was in this case that the Supreme Court maintained that the Constitution was and will always be the highest law of the Union. Any laws passed by Congress and the States will be judged according to their constitutionality, and any unconstitutional laws will be struck down by the Supreme Court.
Dual Federalism
Between the early years of the Union and the years after the Civil War, the Federalist Era and the Reconstruction Eras respectively, American Federalism was defined as a “Dual Federalism.” It is the idea that National Sovereignty is split between the Federal and State governments. There are vested powers in the Federal government and there are powers vested in the State governments which are recognized under the Constitution.
The role of the Supreme Court during this phase was to further elaborate on which powers belong to the Federal government and which powers belong to the States. Political-economic governance of the Union is maintained by each State that is under the purview of the Federal government. The Federal government cannot intervene in the affairs of any State unless it was explicitly stated in the Constitution and upheld by the Supreme Court.
Under the Work-Standard, the arrangements of Dual Federalism can be identified. It can be discerned from the categorization of economic organizations within the conceptual template of a VCS Economy as well as the Work-World.
In a basic VCS Economy, there are “State Enterprises” (SAEs and SOEs), “Social Enterprises” (NSEs, POEs, and PDEs), and “Foreign Enterprises.” Dual Federalism adds a fourth category of economic organization, a “Federal Enterprises,” whose governance falls under the authority of the Federal government. The presence of Federal Enterprises implies the existence of specific economic activities which cannot be subject to State and Municipal governments and therefore must be overseen by the Federal government.
In the Work-World, there are sources of Arbeit and Geld which are being contributed to the Life-Energy Reserve by the Federal and State governments. A State government’s contributions of Arbeit alone are separate from other States and those of the Federal government, only interacting when those same contributions affect the Federal government or another State. Often, it is an economic activity that crosses State jurisdictions.
These two characteristics form the constitutional basis of the “Commerce Clause,” which stipulates that American economic governance is split between Federal and State governments. Economic activities that affect more than one State will eventually be subject to Federal law. When that happens, any given economic activity ceases as “State Commerce” and becomes “Interstate Commerce,” serving as a reflection of the fact that American economic governance is split between the Federal government and the States.
Dual Federalism continued in spite of the issue of Slavery and the subsequent Civil War. It also survived the First World War, only being replaced by another form of Federalism when America experienced the Great Depression. The Great Repression and the New Deal programs under the FDR Presidency facilitated its replacement by “Cooperative Federalism.”
Cooperative Federalism
It is notable that the Commerce Clause continued to be relevant when Cooperative Federalism became the norm between the 1930s and the 1970s. The Supreme Court during those decades relied on looser interpretations of Amendment X. The argument was that Amendment X did not grant any additional powers to the States, setting the precedent in which the States must view their relationship between themselves and the Federal government as a partnership.
To maintain the balance of its partnership with the States, the Federal government must be allowed to intervene in the affairs of the States. Important policies related to the New Deal and Civil Rights were justified on the basis that the Federal government has the constitutional authority to act outside of its own jurisdiction whenever the States themselves have failed to act. For various New Deal and Civil Rights policies to succeed, the Federal government needed to gain the cooperation of the State and Municipal government, especially those that may not agree with whatever policies were being passed in Congress and signed into law by the Presidency.
The power of the Federal government to intervene outside its jurisdiction and with the approval of the State governments is the defining characteristic of Cooperative Federalism. The Supreme Court had to expand the parameters of constitutionality in order to further its aims. At the same time, the Supreme Court decided where and when it became necessary for the Federal government to intervene in State jurisdictions. It also decided where and when economic governance should be left to the States and not the prerogative of the Federal government.
Under the Work-Standard, Cooperative Federalism resembles a top-down arrangement where the Federal government is allowed to take over State Enterprises or Social Enterprises, converting them into Federal Enterprises when they fail to perform as expected. The Federal government may intervene in the economic governance of the State governments, yet the State governments cannot intervene in the economic governance of the Federal government.
As one could surmise from that simple implication, the State governments lack the autonomy to act on their own initiative, even if doing so will help the Federal government’s policies or further the interests of the American Union as a Totality. These limitations would form the basis behind the next changeover of American Federalism.
New Federalism
The current arrangement of American Federalism is referred to as “New Federalism” or “Fiscal Federalism.” Economic governance was shifted away from the top-down approach to a bottom-up approach where State governments are encouraged to pursue their own policies. The ability to pursue their own policies was allowed as long it remained constitutional and could be sustained by the finances of the State governments. From the perspective of the Federal government, the Intents of Command and Obedience have been brought into question. The Intents of Command and Obedience were implied to be a given in Dual Federalism and Cooperative Federalism.
In Dual Federalism, the Intents of Command and Obedience were wielded by the Federal government under the Constitution. As long as the Constitution required the Federal government to wield the Intents and Command and Obedience and respected the integrity of State jurisdictions, any given Federal policy could be deemed constitutional.
In Cooperative Federalism, when the Federal government wields the Intents of Command and Obedience, it has done so with the approval of the Supreme Court and the cooperation of State governments. Only the Federal government could wield the Intents of Command and Obedience. None of the States could do the same to the Federal government.
What New Federalism did differently from the previous two was a redistribution of power and authority to the State governments by the Federal government. States are able to acquire funding from Congress as long as they adhere to its spending mandates. It is possible for one State to have radically different forms of economic governance that deviate from other States. It is likewise conceivable for all States to not abide by any federal policy that is binding on the entire Union unless the Supreme Court justified the federal policy as necessary and proper.
Consider, for instance, the legal age at which Americans are allowed to consume alcohol. States used to maintain their own drinking ages following the passing of Amendment XXI. A State could set the drinking age to be 18, while another State had its drinking age at 21. Although one could assume that Congress should pass a federal policy to establish an official drinking age at either 18 or 21, such a policy proposal cannot be achieved under New Federalism because that policy itself can be considered unconstitutional because it is not necessary and proper. In Neoliberal terms, the States have to be “incentivized” before they could consider setting the drinking age to be 21.
That was the whole rationale behind the National Minimum Drinking Age Act of 1984, which established the official drinking age. A State is technically ‘free’ to have its drinking age to be any age except 21, but doing so also means that it loses any chances of receiving any funding from Congress. Federal funding of interstate highways could be withheld from any State that fails to enforce the drinking age at 21. Every State adopted that drinking age limit by 21 because to insist on the drinking age being anywhere between 18 and 20 meant losing out on additional sources of funding.
The fundamental problem of New Federalism is that it tries to replace the Intents of Command and Obedience with the Incentives of Supply and Demand. On paper, it claims to allow the States to share in the economic governance of the Union, freeing the Federal government to focus on other policy issues. In practice, it resembles a perversion of Cooperative Federalism where the Federal government cannot intervene in State jurisdictions without justifying it as necessary and proper first, and the State governments are given the false illusion of autonomy.
Rather than a relationship that resembles a partnership or a bifurcated conception of National Sovereignty, New Federalism instead posits a relationship where Federal and State governments are two parties in a transactional sale. But instead of a transactional sale of goods and services, the Federal government pitches to the State governments why they must enforce its policies, and the State governments are not rewarded for acting on their own initiative. Under the Work-Standard, we can envisage a problematic scenario:
Suppose for a moment that the Federal government had successfully implemented State Capitalism in the American Union. The national economy is no longer a Market Economy; it is now somewhere between a Mixed Economy and a Planned Economy. However, not every State wanted the Union to adopt State Capitalism. Even though more than half of the States maintain State Capitalist economies within their jurisdictions, a dozen adopted Corporatist economies, several decided on Syndicalist economies, and the rest embarked on Socialist economies.
- Should the States be allowed to choose between Corporatism, Syndicalism, State Capitalism and Socialism or should all of the States agree to either of those four?
- Should they maintain separate economic governance and economic organization?
- Should they be allowed to implement their own versions of economic planning?
- Should they be allowed to transfer their Enterprises to the Federal government, especially when they are unproductive or have not demonstrated themselves worthy of ascending to the highest Social Rank?
- Should they take control of each other’s Enterprises or any Federal Enterprises?
- Who wields the Intents of Command and Obedience, the States or Federal government?
In New Federalism one comes away with the impression that its reputation as a “‘devolution revolution’” is not too far from the truth. Instead of giving allowing the Intents of Command and Obedience to be reciprocal enough to be shared between the Federal and State governments, what has happened in reality is that neither the Federal government nor the State governments got what they rightfully deserved. Bluntly put, New Federalism is too decentralized in the wrong places and too centralized in the wrong places. If the Work-Standard is to be properly implemented in the Union, a more appropriate conception of American Federalism is needed to reevaluate the relationship between the Federal and State governments.
Categories: Compendium
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