Federalism, Contractualism and Equality

6. Federalism, Contractualism and Equality1

Andrew Shorten – University of Limerick

In this chapter, I discuss a strand of federal theory that has recently begun to receive attention, which I dub the theory of ‘federal contractualism’.2 Because there is not yet a fully fleshed out ‘federal contractualist’ theory, one of my aims is to sketch the outlines of what such a theory might contain. The ambitions of these parts of the chapter are as much ‘contractualist’ as ‘federalist’, and I hope to make some suggestions about how contractualists should reason about the jus-tice and legitimacy of federations. Meanwhile, I also seek to address substantive questions about the relationships between political autonomy, distributive justice and equality in a federation, and in so doing defend two claims. First, that the contractualist method for reasoning about distributive justice, when applied to federations, can deliver substantively egalitarian principles. Second, that contrac-tualist ideas about stability suggest some distinctively federal reasons for limiting inequality. If I succeed in defending these two claims, and if contractualism pro-vides a plausible theory of federalism, then the implication of my argument is that there may be good reasons to believe that stable and just federations should be broadly egalitarian. Throughout the chapter, I focus on the special challenges faced by existing ‘multinational’ federations, such as Canada and Belgium, as well as potential ‘multinational’ federations, such as the European Union. As such,

1 Helpful comments on earlier drafts of this paper were received at the annual meeting of the Association for Legal and Social Philosophy (Belfast, 2012) and at the Recognition and Re-distribution in Multinational Federations Workshop (KU Leuven, 2013). I would particularly like to thank Siba Harb and Johan Olsthoorn who served as commentators at the latter event, Brendan O’Leary and the other referee for this edited collection, and Adina Preda, who sug-gested some of the examples I discuss.

2 See, for example, Wayne Norman (1994, 2006), Andreas Føllesdal (2000, 2001, 2006), Percy Lehning (2001), Helder de Schutter (2011) and Loren King (2005).

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much of what I say will have only limited (if any) relevance for ‘territorial’ feder-ations, such as Germany and the United States.3

The theory of federal contractualism, at least as I develop it, has two related strands, both of which take their cue from the work of John Rawls.4 One strand, which I call the ‘federal contractualist theory of justice’, draws on Rawls’s Theo-ry of Justice as well as his Law of Peoples, and has been suggested in very differ-ent ways by Andreas Føllesdal (2001, 2006), Wayne Norman (1994, 2006) and Rawls himself (1999). Here, contractualist ideas are used to evaluate the justice of federal institutions. I focus on this strand in Parts 2 and 3 of this chapter. The other strand, which I call the ‘federal contractualist theory of stability’, draws on Rawls’s Political Liberalism and has been developed by Wayne Norman (1994), Percy Lehning (2001) and Helder De Schutter (2011).5 Here, the key concern is to explain how people with different national identities can endorse a shared fed-eration for moral reasons and not as a mere modus vivendi. I focus on this strand in Part 4 of this chapter.

This chapter is arranged as follows. In Part 1, I draw on historical and contem-porary sources to supply a preliminary exploration of the complex relationships between federalism and equality. In Part 2, I set out the federal contractualist the-ory of justice and develop a rough typology of alternative federal contractualist methodologies for selecting principles of justice. In Part 3, I apply my preferred approach to argue that federal contractualists cannot endorse a principle of equal shares but can endorse background principles of egalitarian justice. In Part 4, I outline a federal contractualist theory of stability and argue that it bolsters the preceding case in favour of equality.

1. Federalism and equality

Federations are designed to combine shared rule with meaningful self-govern-ment for regional or national subunits. Consequently, they contain at least two tiers of government – a central (or ‘federal’) government and multiple regional (or ‘national’) governments, each of which possesses final authority over some

3 For this distinction, see Kymlicka (2001: 91-119). 4 A slightly different version of this distinction is suggested in De Schutter (2011: 178-179). 5 Whilst Norman and De Schutter are primarily concerned with long-standing multinational

societies, like Belgium and Canada, Lehning focuses on the European Union.

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specified and significant domain. In the following, I take the basic case for mul-tinational federalism to be that it offers the possibility of ‘accommodating, pre-serving and promoting distinct identities within a larger political union’ (Watts 2008: 8).6 Recently, this case has been canvassed by political theorists such as Norman (1994, 2006) and Will Kymlicka (1995, 2001). On this account, fed-eral political arrangements are attractive as they can potentially secure political stability amongst multiple national groups, enable the preservation of minority languages and cultures, and deepen democracy by empowering territorially con-centrated minorities to govern at least some of their own affairs.

As this rationale makes clear, federalism potentially promotes equality in at least one sense, by ensuring that some otherwise vulnerable minorities have a greater say in how their affairs are governed and by protecting them against the threat of majority domination and/or assimilation. However, and regardless of its rationale, federalism’s commitment to subunit autonomy also potentially under-mines equality in another sense, if it compromises the realisation of substantively egalitarian principles of distributive justice. Føllesdal has argued that political autonomy does undermine equality in this sense, observing that federal citizens who reside in ‘different subunits often enjoy systematically different standards of living conditions, partly as a result of the political powers enjoyed by these sub-units’ (Føllesdal 2001: 236). Federal political autonomy might upset egalitarian distributive justice in at least two different ways. First, different subunits might choose to adopt different economic, social, welfare or education policies, leading to substantial discrepancies in income-levels, opportunities and social services across the federation. Second, citizens divided by subunit loyalties might be tied by weak bonds of affection or solidarity, making them less willing to make sacri-fices for one another or to contribute to federation-wide insurance schemes. This might result in a ‘levelling-down’ in the provision of federal social services, if the members of wealthy subunits are reluctant to subsidise the least well-off in other subunits.

Historically, some advocates of federation have taken this seeming incompat-ibility between subunit autonomy and egalitarian justice to be a key point in its favour. For example, one of James Madison’s arguments for federalism was that it would prevent central governments from pursuing the ‘improper or wicked’

6 Both historical and contemporary writings contain a number of different arguments in favour of federalism. For some overviews see Karmis and Norman (2005), Weinstock (2001) and Norman (2006).

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project of ‘an equal division of property’ (Madison, quoted in Føllesdal 2001: 237). However, whilst some federalists regarded federalism as a welcome bulwark against sinister egalitarian projects, others argued that some kinds of inequality could jeopardise a federation. For example, John Stuart Mill identified approxi-mate equality of strength as one of the necessary conditions that must be satisfied if federation is to be ‘advisable’ (Mill [1861] 1993: 398). Mill did not argue that each individual or each subunit in a federation needed to be equally strong or wealthy, and he seems to have taken it for granted that the members of some subunits would be ‘more populous, rich, and civilised than others’ (Mill [1861] 1993: 399). However, he gave two reasons against unlimited inequality within a federation. First, in order to prevent domination, he thought that it was essential that ‘there should not be any one State so much more powerful than the rest as to be capable of vying in strength with many of them combined’ (Mill [1861] 1993: 399-400). Second, in order to secure stability, he thought that there must be ‘a sufficient amount of mutual sympathy among the populations’ (Mill, 1993 [1861]: 398). Taken together, these anti-domination and mutual sympathy con-ditions generate a presumption that there may be specifically federal limitations to how much inequality a political community can tolerate. Nevertheless, it is clear that Mill’s own view was compatible with an unequal distribution of re-sources, opportunities and bargaining power across a federation.

In this chapter I try to demonstrate why federal contractualists should be less permissive about inequality than Mill was. In Parts 2 and 3, I will argue that at least some egalitarian principles of justice are compatible with federal respect for political autonomy. One implication of this argument is that egalitarian justice and subunit autonomy need not be traded-off against one another, as Føllesdal suggests. Instead, principles of ‘background justice’ are compatible with respect for political autonomy, and these principles can be meaningfully egalitarian. Meanwhile, in Part 4, I suggest that views such as Mill’s underestimate the de-mands of federal solidarity. I defend this claim by appealing to the federal con-tractualist theory of stability in order to suggest that a widespread sentiment of ‘federal fraternity’ may be necessary in multinational federations. Because this is a demanding and fragile civic virtue, I argue that it is incompatible with some forms of inequality of condition.


2. Federal contractualism and distributive justice

Federalism raises difficult questions concerning distributive justice. For exam-ple, would justice in a fully federal European Union require a strict ‘solidarity’ principle, redistributing wealth between member states to ensure approximate equality of condition? Must wealthy provinces in Canada contribute ‘equalisa-tion payments’ to poorer provinces? Is it acceptable for Scottish citizens to have educational and healthcare opportunities on different terms to their fellow citi-zens elsewhere in the United Kingdom? In this section, I explore the possibility of developing a theory of federal contractualism to help address questions such as these.

Contractualism refers to a method of moral justification, and it has been defended by a number of contemporary moral and political philosophers (e.g. Rawls 1971, Barry 1995, Scanlon 1998). In its most general form, it says that moral principles are justified either if people would agree to them under certain idealised conditions (Rawls) or if they lack grounds to reasonably reject them (Scanlon, Barry). Whilst contractualism potentially applies to all forms of social morality (or of ‘what we owe one another’), the federal contractualist theory of justice has a more limited focus. First, as a theory of justice, it is not concerned with morality broadly conceived, but only with the justification of principles to evaluate social, political and economic institutions. Second, as a federal theory, it focuses on justifying principles that potentially apply to federal institutions. I begin by briefly discussing the first limitation, before moving onto some of the puzzles to which the second gives rise.

Emphasising institutions has an established pedigree in contractualist political thought. For instance, in A Theory of Justice (1971), Rawls argues that princi-ples of justice apply to the ‘basic structure’ of society, which includes the consti-tution, the legal system, and the other major social and economic institutions. These institutions are significant because they are coercive, inescapable, and have a profound and pervasive effect on the lives and prospects of individuals. As such, they stand in special need of justification. In this respect, there is no significant difference between federalism and other coercive forms of political association, though of course the institutions themselves, and the principles appropriate for evaluating them, may differ in important ways.

According to Rawls’s version of contractualism, the institutions that make up society’s basic structure can be justified if they can be shown to be compatible with principles that satisfy the requirements of hypothetical consent. This means

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that rational parties would agree to these principles if they were situated in cer-tain idealised conditions, which Rawls calls the ‘original position’. These condi-tions include being hidden behind a ‘veil of ignorance’, so that parties are unaware of their social position, their natural attributes, their conceptions of the good, and so forth. The idea is that if we imagine ourselves to be shielded from import-ant information about ourselves and our place in society, then we will agree to impartial principles to regulate our common institutions. These principles, ac-cording to Rawls, are principles of justice.

An alternative version of contractualism, suggested by Thomas Scanlon (1998) and defended by Brian Barry (1995), replaces Rawls’s test of ‘hypothetical con-sent’ with the test of ‘reasonable rejection’. As Scanlon formulates this view, ‘[a]n act is wrong if its performance under the circumstances would be disallowed by any set of principles for the general regulation of behaviour that no one could reasonably reject as a basis for informed, unforced, general agreement’ (Scanlon 1998: 153). Like Rawls, Scanlon emphasises that principles of justice should be the product of free and reasoned consent (or ‘informed, unforced, general agree-ment’). However, unlike Rawls, Scanlon does not hide the parties who are enti-tled to reject proposed principles behind a veil of ignorance. Instead, they are real people, aware of their own interests and identities, who want to ‘act in ways that could be justified to others’ and ‘to live with others on terms that they could not reasonably reject insofar as they are also motivated by this ideal’ (Scanlon 1998: 154).

The different versions of contractualism defended by Rawls and Scanlon and Barry were developed initially to address the problem of distributive justice in a unitary nation state. As Rawls acknowledged when he later turned his attentions to international society, the details of the contractualist method will need to be modified if they are to apply to alternative forms of political association. In his case, this meant that the ‘original position’ should be ‘properly adjusted for the case at hand’ (Rawls 1999: 32). One attempt to make such an adjustment for the special case of federation has been suggested (but not endorsed) by Norman. This modification proposes an alternative original position, in which principles are ‘agreed upon, under reasonably fair and favourable circumstances, by parties representing the citizens and constituent units of the federation’ (Norman 2006: 152). It is worth noting three important differences between Rawls and Nor-man’s original positions. First, whilst Rawls locates the parties in an initial po-sition of equality, Norman settles for circumstances that are ‘reasonably fair and favourable’. Second, whilst Rawls’s parties are representatives of free and rational


individual persons, Norman says they represent ‘citizens and constituent units’. Third, whilst Rawls hides his deliberators behind a veil of ignorance, Norman does not specify what kinds of information should be made available to them.

The differences between these two original positions can be explained by the fact that they have different purposes and are designed to answer different prob-lems. Whilst Rawls was initially concerned with the justification of principles to regulate the affairs of a single well-ordered society, Norman’s federal original position concerns the justification of principles to regulate co-operation amongst the citizens and constituent units of a federation. Because the constraints under which parties deliberate will influence the principles that it would be rational for them to adopt, the two original positions are likely to deliver substantively different principles.

For the moment, I want to set aside the question of what principles might emerge from Norman’s federalist modification of the Rawlsian contractualist method. Instead, I want step back and ask whether or not Norman’s description of a federal contract is the one that federal contractualists should endorse. This question arises because there are at least four alternative methods available to fed-eral contractualism. On the one hand, as we have seen, federal contractualists could adopt either the test of hypothetical consent or that of reasonable rejec-tion. On the other hand, the principles of federal distributive justice could be addressed either to individual members of the federation or to its constituent ‘peoples’. Putting these two pairs of alternatives together delivers the following typology:7

Alternative Federal ContractsContracting PartiesIndividuals Peoples

Criteria for Principles

Acceptable in an Original Position

Option 1 Option 2

Reasonable Rejectability Option 3 Option 4

The alternative one selects will depend on how one understands the nature and purposes of both contractualism and federation, and the most appropriate meth-od for settling this issue is that of reflective equilibrium (Rawls 1971: 20). Below I discuss each of the alternatives in turn, setting out a tentative case for Option 3.

7 In fact, things are more complicated than this, since some of the different positions can be combined (for instance, Norman’s contract incorporates elements of both Options 1 and 2).

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According to Option 1, federal principles of justice are those that it would be ra-tional for parties representing free and equal individuals to accept, if they were sit-uated in an appropriately adjusted original position. The main shortcoming of this option is that adjusting the original position, so that the parties will accept federa-tion, seems to come at the cost of endorsing a controversial theory of personhood. Consequently, Option 1 is not a promising starting point for deriving principles of federal justice. Why should this be the case? Recall, in his ‘original’ original posi-tion, Rawls stipulates that mutually disinterested participants, concerned to maxi-mise their share of the social primary goods, should be shielded from information about themselves (such as their social position, natural attributes, conception of the good, etc.). Even if one grants that such a procedure will yield principles of justice for a unitary state, the participants in Rawls’s original position lack infor-mation about national identities, and so the rationale for favouring federation that I outlined earlier in this chapter will not be apparent to them.

This problem might be solved by following Kymlicka (1989: 166), and stip-ulating that national or cultural membership is a primary good. Accepting this would give the parties in an original position a reason to take nationhood into account when selecting principles of justice, even if they were unaware of their own identities. However, thus formulated, this solution would not yield a case for federation, if it is the case that national cultures can be preserved without granting political autonomy to subunits. Meanwhile, we could bolster the case for federation by adding an appeal to the ‘social bases of self-respect’, identified by Rawls as ‘perhaps the most important primary good’ (1971: 440). One com-ponent of self-respect is having dignity (described by Rawls as ‘a person’s sense of his own value’, 1971: 440). If the parties in the original position were concerned to ensure that social institutions supported the dignity of citizens, and if they accepted that cultural identities were significant for individual dignity, then they would have a reason to favour some form of cultural recognition. Although this too falls short of supplying a reason for political autonomy, the other component of self-respect – ‘a confidence in one’s ability (...) to fulfil one’s intentions’ (Rawls 1971: 440) – could potentially do the required work, if it was assumed that mem-bers of national minorities would be more confident about being able to fulfil their intentions if they had their own political institutions.

Regardless of whether a more refined version of these modifications would actually convince the parties to accept federation, it is worth noting that such a strategy can only succeed if one accepts the idea that people ‘need’ their cultural identities in some deep sense (either because a stable cultural membership is a pri-


mary good or because cultural identities are closely connected to human dignity). However, critics of such views point out that some people are capable of lead-ing flourishing lives without access to their ancestral cultures or a stable cultural identity (Waldron 1995, Gilbert 2010). If these critics are right, then they put in jeopardy the foundational claims that my suggested modifications of the original position rest upon. Consequently, Option 1 can only be used by a federal con-tractualist if they are willing to embrace controversial views about personhood.

Let us now turn to Option 2. According to this view, federal principles of jus-tice are those that would be rationally accepted by parties representing free and equal peoples, situated in a properly adjusted original position. A key feature of this approach is that the parties in the original position are representatives of ‘peoples’ or ‘nations’, but they do not know which ‘people’ or ‘nation’ they rep-resent (Norman 1994). The possibility of conceiving of the contracting parties in this way was suggested by some fleeting remarks made by Rawls in The Law of Peoples. Here, he wrote that:

“it makes sense to think of liberal and decent peoples together in an orig-inal position when joining together into regional associations or federa-tions of some kind, such as the European Community, or the common-wealth of the republics in the former Soviet Union” (Rawls 1999: 70).8

From the context in which this passage appears, it seems clear that what Rawls en-visages for entities such as the European Union is something akin to the two-stage bargaining process that he favours in the case of international society. Thus, after each federal subunit has come together to settle on principles for themselves, they should send representatives to negotiate on their behalf in a second original po-sition, where principles for the regulation of the federation will be agreed upon.9

8 The passage continues “It is natural to envisage future world society as in good part composed of such federations together with certain institutions, such as the United Nations, capable of speaking for all the societies of the world”.

9 The extent to which one can infer Rawls’s own position here is unclear. It is worth noting is that the examples he gives of ‘regional associations or federations’ are not orthodox federal states and his list does not include, for example, Canada, Belgium or the United States. Indeed, in 1998 he expressed scepticism about a ‘far-reaching’ federation in Europe and suggested that “much would be lost if the European union became a federal union like the United States” (2003). Reading these two passages together gives rise to the implication that Rawls perhaps intended the ‘two-stage’ bargain to apply only to ‘loose’ federations, such as what he preferred for the EU, and not to ‘far-reaching’ ones, such as the US, who might be better suited to the one-stage bargain he describes in Theory.

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Elsewhere in The Law of Peoples Rawls suggests that original positions should be tailored according to the ‘level’ at which they apply and he argues that a ‘sec-ond-stage’ original position should obscure different information than a ‘first-stage’ original position. For example, when he considers the principles to regulate international society, Rawls argues that the representatives of peoples’ should be unaware of “the size of the[ir] territory, or the[ir] population (…) the relative strength of the people whose fundamental interests they represent (…) the extent of their natural resources, [and] the level of their economic development” (Rawls 1999: 32-33). Unfortunately, Rawls does not specify what information parties in a ‘federal’ original position should be shielded from.10 At the very least, though, if the principles are satisfy the requirements of impartiality, we can assume that the representatives of the various subunits should be unaware of whether they are rich or poor, whether they are majorities or minorities, whether they are in-dustrialised or have an agricultural economy, and whether they have a surplus of natural resources.

There are two problems with Option 2.11 First, as Føllesdal suggests, such ‘ap-proaches can easily be suspected of reifying social groups and being committed to normative communitarianism’ (2001: 245). This is because Option 2 treats ‘peoples’ or ‘nations’, and not free and equal persons, as the subjects of (hypothet-ical) moral justification. Second, and relatedly, a contract of peoples will obscure morally relevant phenomena that should be visible to a federal contractualist theory. This second objection can be illustrated by considering potential federal principles that might be rationally acceptable from the perspective of a represen-tative of a ‘people’ but not from the perspective of a representative of an individ-ual person. For instance, suppose that the parties in a federal original position are considering whether to adopt a policy that grants each subunit a wide sphere of discretion about the allocation of healthcare budgets, so that – for instance –

10 Rawls did not think that a ‘federal contract’ should be identical to the contract he describes in The Law of Peoples, and he explicitly notes that the domestic, the federal and the international are three different levels (Rawls 1999: 70). However, his description of federations as peoples joining together suggests that his federal original position would share more in common with the international than the domestic version.

11 An additional objection to Option 2 might be that it is less likely to deliver federation-wide egalitarian principles of justice. However, not only would this beg the question, but it is also most probably false. For instance, in a speculative footnote in The Law of Peoples (Rawls 1999: 43, fn 53), Rawls uses something like Option 2 to consider the case of two wealthy liberal peo-ples joining together. Here he draws the conclusion that although they would not be required to endorse a federal difference principle, it would at least be permissible for them to do so.


subunits may attach different priority weightings to disability services, emergen-cy care, end-of-life care, maternity services and so on. If the contracting parties are ‘peoples’, as in Option 2, then the important issue is whether granting subunits authority over discretionary healthcare spending promotes the fundamental in-terests they share as a people, for instance by protecting their independence and sense of collective self-respect, or by allowing them to tailor their healthcare bud-gets to meet the distinctive needs of their members. But some individuals might fare worse under a policy that permits discretionary spending. For instance, peo-ple with medical needs that are rare within their subunit but common elsewhere in the federation – such as the elderly in a comparatively ‘youthful’ subunit – could find themselves worse-off than they would be under a universal healthcare scheme. The point I am registering is not that federal contractualists should reject discretionary healthcare spending. Indeed, such a policy might be acceptable to individuals who lose out if they receive adequate compensatory benefits in the form of subunit autonomy. Rather, the objection is that potential principles of distributive justice can only be adequately evaluated if we consider their impact on individuals, and this is something that Option 2 obscures.

Let me now turn to Options 3 and 4. According to both of these options, le-gitimate principles of justice for a federation are ones that cannot be reasonably rejected by parties who are concerned to justify themselves to others. In the case of Option 3, federal principles of justice are those that individual members of a federation do not have reasonable grounds to reject, whilst for Option 4 they are those that individual subunits of a federation do not have reasonable grounds to reject. Both options have two advantages over Options 1 and 2. First, the test of ‘reasonable rejection’ can be applied straightforwardly to federal institutions that already exist. These institutions are already implicated in the distribution of goods, powers, burdens and obligations, and the ways in which they allocate these things are governed by principles. Consequently, whilst Options 1 and 2 aim to specify the principles that federal citizens or peoples would agree to un-der specified hypothetical conditions, Options 3 and 4 can ask how our existing principles can be modified to satisfy the test of reasonable rejection. Second, Op-tions 3 and 4 make fewer idealising assumptions than Options 1 and 2. This is because the parties to whom principles need to be justified are real individuals and groups, with knowledge of their own identities and interests, albeit ones who are moved by a concern to justify themselves to others.

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The test of reasonable rejection has the effect of giving the subjects of justi-fication something like ‘a veto on all proposed principles for regulating social life’ (Barry 1995: 69). In the case of Option 4, this means that we need to ask if (and how) some policy or arrangement disadvantages one or more subunits, in order to decide whether there are reasonable grounds to reject that policy or arrangement. Meanwhile, Option 3 asks whether some policy or arrangement disadvantages individuals, including individual members of subunits that them-selves are advantaged by the arrangement. As a consequence, the two approaches might yield some quite different results. One reason to reject Option 4 is that it potentially grants a ‘people’ a veto over principles that would be in the interests of individual citizens. Assuming that a just federation would not sacrifice the in-terests of an individual to those of a people, the reasons that I suggested earlier to prefer Option 1 over Option 2 can also be extended to explain why Option 3 is preferable to Option 4.

Finally, then, what about Option 3? This view says that when assessing the principles that underlie federal institutions, it is the impact they have on indi-viduals that matters. Principles will fail the test of ‘reasonable rejection’ if they demand that individuals make sacrifices which cannot be justified to them. One approach would therefore be to evaluate federal institutions according to wheth-er or not they improve or worsen the life prospects of the least advantaged indi-vidual members of the federation, by comparison with some other feasible alter-native. If the principles underlying the institutions can reasonably be rejected by the least advantaged members of the federation, such as the poorest members of the poorest subunits, and supposing that those members were concerned to justify themselves to others, then we should conclude that the principles at hand should be abandoned.

3. Federal contractualism, political autonomy and equality

Now I want to demonstrate that Option 3 supports two conclusions about fed-eral distributive justice. First, that federal contractualists should reject a theory of equal shares. Second, that federal contractualists can nevertheless endorse a background theory of egalitarian justice.


A case for the first conclusion has been suggested by Føllesdal (2001: 248-249) and can be summarised as follows:

1. Maintaining equal shares (of e.g. welfare, resources, opportunities etc.) across a federation will jeopardise the political autonomy of each sub-unit.

2. Political autonomy is more important than equal shares even for people who would have more (e.g. welfare, resources, opportunities etc.) under a unitary political order.

3. Therefore, contractualists have reasonable grounds to reject an equal shares principle of federal distributive justice.

The first premise can be illustrated with an ‘expensive tastes’ example.12 Suppose that the members of one subunit favour the preservation of their traditional in-dustries, whilst their federal compatriots prefer industrial reform (both for them-selves and for other subunits). Føllesdal suggests that if industrial policy has been delegated to the subunit level, and if preserving traditional industries is a costly economic choice, then it cannot be fair to require the comparatively wealthy sub-units to subsidize the expensive tastes of their federal compatriots, since they had no say over what policy was adopted. If, on the other hand, we decide to maintain equal shares (of e.g. welfare, resources, opportunities, etc.) across the federation, then the larger polity should have the power to overrule a local consensus if ‘local costly choices can trigger redistributive obligations from the surrounding politi-cal order’ (Føllesdal 2001: 249).

Meanwhile, Føllesdal (2001: 248-250) supplies three reasons in support of his second premise.13 First, political autonomy reduces the risk of domination. Specifically, dividing political agendas reduces the vulnerability of minorities to majority domination, whether caused by ill will, incompetence or indifference. Second, political autonomy increases the responsiveness of institutions to local concerns and interests, because it increases the relative voting power of subunit members. Third, political autonomy reduces the democratic burden of learning

12 As Boucher and Maclure demonstrate in Section 4 of their contribution to this volume, critics of federal redistribution have sometimes been guilty of applying the ‘expensive tastes’ objection inappropriately. Their (convincing) empirical claim has no bearing on the theoretical point developed here.

13 Some additional reasons that support the same conclusion are given by Van Parijs in his contri-bution to this volume.

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about (and deliberating responsibly about) issues that only affect other subunits. Consequently, Føllesdal concludes that provided an adequate threshold is met, even the poorest members of poorest subunits would be better off opting for po-litical autonomy rather than a strict egalitarian principle of equal shares.14

The conclusion of Føllesdal’s argument is that federal contractualists should reject a principle of equal shares. However, it would be mistaken to infer from this that federal contractualists must reject egalitarian distributive justice tout court. Indeed, a rival cluster of egalitarian theories that have become prominent in recent work on global distributive justice seem to escape Føllesdal’s expensive tastes objection. These are sometimes referred to as ‘background justice’ theories (Armstrong 2010: 321) or as ‘institutional’ approaches (Pogge 2002: 169-177), and they identify the ‘site’ that principles of justice apply as the background insti-tutional structure.15 Because background justice theories do not require that any particular subunit has a duty to maximise its wealth, the adoption of ‘expensive tastes’ (such as maintaining traditional industries) will be permissible provided that doing so does not involve a subunit using more than its fair share.16

What principles should a federal theory of background justice contain? At the least, a satisfactory theory must account for what each citizen and each federal partner is legitimately entitled to, and what individuals and subunits are permit-ted to do in pursuit of their own ends. If the theory is an egalitarian one, then it should have the following two features. First, because the terms on which sub-units interact with one another are a matter of distributive justice, an egalitarian theory of federal justice must be able to evaluate the rules governing subunit co-operation and competition. In practice, this is likely to mean that federal contrac-tualists should favour institutions that are able to block exploitative exchanges amongst partners, as well as federation-wide taxation schemes that ensure the

14 The threshold he sets includes – for example – ensuring that each subunit has sufficient re-sources to ‘implement acceptable educational [and] health care arrangements’ (2001: 249).

15 Thus: “the issue of distributive justice is not how to distribute a given pool of resources or how to improve upon a given distribution but, rather, how to choose or design the economic ground rules that regulate property, cooperation, and exchange and thereby condition production and distribution” (Pogge 2002: 176, Tan 2004: 62-82).

16 ‘Considerations of [background] justice aim to secure equal opportunity and fair background conditions for persons and societies in pursuit of their ends, but it does not necessarily require that everyone and every society take full advantage of the opportunities presented to them, nor does it compensate those who fail to make successful use of the opportunities available to them’ (Tan 2004: 71).


fruits of federal cooperation are shared fairly.17 Second, an egalitarian theory of federal background justice must also contain principles to distinguish justified and unjustified inequalities. As noted earlier, according to the kind of theory I am sketching, inequality amongst subunits will be justified if they are the product of choices and not circumstances. But many federal inequalities have less to do with the decisions of subunits themselves (for instance, to preserve traditional industries) and more to do with a combination of unchosen circumstances and the choices of others. In this respect, federal contractualists should be particularly concerned to ensure that the poorest members of the poorest subunits are not unfairly disadvantaged by those aspects of the federal basic structure for which they are not responsible.

An implication of the position I have been describing is that just federations may need to institute, on an ongoing basis, internal transfer mechanisms for the purposes of compensating the members of subunits who are disadvantaged as the result of otherwise justifiable practices, rules or policies. Compensation on such grounds might be required because, for example, a federation-wide immigration ‘quota’ policy leaves some subunits unable to attract sufficient workers with par-ticular skills (such as healthcare professionals), or because the speakers of a less widely used language encounter higher than average costs when trading their goods on the federal market. In both of these cases, the rationale for compen-sation is to correct an unfair distribution of the benefits and burdens of federal cooperation. On similar grounds, egalitarian compensation may also be required when subunits are disadvantaged as a result of their geographical, economic or political circumstances, such when a subunit faces greater than average costs to develop its industries because economies of scale make it more expensive to de-velop the necessary technological or educational infrastructure.

Settling on appropriate principles of federal compensation may be especially difficult in two kinds of cases. First are ‘coming together’ federations in which the subunits have historically operated under very different regulatory frameworks. For example, suppose that strict food regulations within the EU worsen the situ-ation of those member states that would otherwise be able to export a larger share of their domestic produce. Since these regulations apply to all member states, it

17 One such taxation scheme might resemble Boucher and Maclure’s ‘egalitarian conception of fiscal federalism’, described in their contribution to this volume. Theirs is not a strict theory of ‘equal shares’ in the sense described above, since what they favour equalising is the ‘fiscal capac-ity’ of each province, and this is defined in terms of a subunit being able to fund ‘comparable’ services at average or lower than average tax rates.

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would not be reasonable to object to them on the grounds that they remove the opportunity to benefit from the strict regulations applied elsewhere in the feder-ation. However, if the regulations have the effect of worsening the position of a member state by comparison with the status quo, and if that member state already fares worse than others or is dependent on food exports, then there might be egalitarian grounds for compensation on a transitional basis.

The second kind of difficult case arises when the situation of a subunit is wors-ened as a result of the practices, rules and/or policies adopted in another subunit. For example, if a subunit reduces its corporation tax this might encourage firms based elsewhere to relocate, or if a subunit enters into a trade-agreement with a foreign state then this could disadvantage competitors in other subunits, or if two (or more) subunits decide to co-operate in some mutually advantageous scheme then this may worsen the situation of the excluded subunits. On the one hand, some of these examples might pass the test of reasonable rejection, provided they are not exploitative and if there are efficiency grounds to promote competition amongst subunits. On the other hand, if the subunits that benefit in these exam-ples do so at least partially as a result of wider patterns of federal cooperation, then there may be grounds to redistribute a corresponding portion of those ben-efits to their federal partners.

4. Federalism, stability and equality

So far, I have suggested that although a principle of equal shares fails the test of rea-sonable rejection, federal contractualists can nevertheless endorse a background theory of egalitarian justice. Furthermore, I have given some indication of the kinds of principles that such a theory might contain, including ones concerning how the benefits and burdens of federation-wide policies and practices should be distributed, how cooperation and competition amongst federal partners should be regulated, and how undeserved disadvantages should be compensated. I want to conclude by describing a supplementary argument that bolsters the general case in favour of federal egalitarianism. Here I argue that federal contractualists should reject inequality of condition when it threatens fraternity, because frater-nity is necessary for political stability. Since this argument follows from what I call the federal contractualist theory of stability, before developing the argument, I need to set out the broad contours of the theory.


The federal contractualist theory of stability addresses the problem of recon-ciling pluralism and political order. Like political liberalism, it treats pluralism as a permanent, inevitable and welcome feature of a democratic society (Rawls 1996: 36) and rejects a modus vivendi approach to political stability (Rawls 1996: 147).18 However, unlike political liberalism, it is concerned with national (or cul-tural) pluralism rather than moral (or value) pluralism.19 The case against a modus vivendi, in which different partners agree to compromise with one another for reasons of mutual advantage, is that although it successfully explains why a group might opt to join a federation, it cannot explain remaining within the federation when doing so becomes costly. Consequently, modus vivendi federations may be-come dangerously unstable and prone to threats of secession.

The implication of this is that stable federations will need citizens who share a moral commitment to the federation, and who prefer it to either secession or a unitary state.20 To date, federal contractualists have made only limited headway explaining how this might be achieved. A key move is to adopt what might be called a ‘separation strategy’, which is analogous to Rawls’s turn to a political con-ception of justice in his Political Liberalism.21 Rawls favours a political conception because it might be able to solicit an overlapping consensus without jeopardising the various comprehensive moral doctrines endorsed by citizens. This is made possible by distinguishing political values (about which consensus is necessary) from non-political values (where pluralism is inevitable and desirable). Respect

18 According to Norman, for example, the basis for a stable federal union is “some form of over-lapping consensus that demands more of federal partners and their citizens than a modus viven-di, but less than a comprehensive, monolithic conception of shared identity and citizenship” (Norman 1994: 88).

19 Norman characterises pluralism in terms of “divergent conceptions of citizenship and cultural membership based, for example, on national, linguistic, ethnic, or regional identities, affilia-tions or concerns” (Norman 1994: 87).

20 Fraternity is almost certainly not the most important ingredient for the stability of actual fed-eral institutions. For example, empirical work on multinational federations has suggested that they are more likely to break down as a result of centralization projects or broken promises re-garding political autonomy (see, e.g., McGarry & O’Leary 2009: 11). However, stability here is used in a narrow and moralised sense, in which it applies to the principles of federation. In this sense, federal principles can be described as stable if the institutions that realise them are able to attract the reasoned and informed allegiance of citizens from different parts of a federation over time.

21 Different versions of this argument are developed by Norman (1994), Lehning (2001) and De Schutter (2011).

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for pluralism means leaving those non-political values intact, within limits. Thus, the success of political liberalism depends on us being able to think of citizens as simultaneously endorsing rival comprehensive moral doctrines and a shared po-litical conception of justice. Meanwhile, the success of federal contractualism will depend on citizens being able to simultaneously bear rival national identities and a shared commitment to the federation. Similar to political liberalism, the prin-ciples around which an overlapping consensus is formed must be framed in such a way as to avoid compromising national or cultural pluralism. Again, as with political liberalism, this will require distinguishing between the domain in which consensus is necessary and the domain where pluralism is to be accommodated.22

Supposing that the ‘separation strategy’ succeeds, citizens who share a moral commitment to federation as a first best alternative must be willing to further the common good ahead of both their own private ends and those of their sub-units. Thus, they must exhibit a distinctively federal version of the civic virtue of fraternity, which is a form of connectedness or partnership, experienced as a sense of sharing in one another’s fate.23 Fraternity is an essential ingredient for federal stability, and it is the absence of fraternity that marks out an association as a ‘mere’ modus vivendi. Unless citizens feel a sense of partnership such that they are willing to accept the costs as well as the benefits of federal association, then a

22 Often, the underlying challenge here is framed in terms of whether federations are capable of cultivating a shared political identity that would be sufficiently ‘strong’ to motivate members to accept the strains of federal co-operation, without at the same time imposing a unitary ‘federal’ political identity that would threaten local, subunit identities. Both critics and proponents of federalism have expressed scepticism about the whether this is possible. For example, in their contribution to this volume, Boucher and Maclure suggest that the political identities of fed-eral citizens are often shaped by ‘competing processes of nation-building’ [emphasis added]. If the different political identities within a federation are in competition with one another, in the sense that gains for one are losses for the other, then the ‘separation strategy’ is unlikely to succeed. Similarly, if feelings of political membership are an ‘all or nothing’ thing, which tend to overwhelm either subunit or federal loyalties, then it seems unlikely that a common sentiment of membership could be cultivated that would steer a path between a unitary state and secession. For some different attempts to solve this problem, which are broadly consistent with the ‘separation strategy’, see the discussions in Norman (1994), Kymlicka (2001) and De Schutter (2011).

23 For treatments of fraternity that support this interpretation, see Rawls (1971: 105), Miller (1999: chap.11), Munoz-Dardé (1999) and Cohen (2009: 53-79).


federal contract will only be a second-best and unstable compromise.24 However, federal fraternity is also an extremely demanding virtue, because federal citizens must be willing to both make sacrifices for people with different national identi-ties and to put the good of the federation ahead of their own interests and those of their subunit. Moreover, as well as being demanding, fraternity in a federation is also a particularly fragile virtue, as it cannot be nourished by the same motiva-tional well-springs as it might be in a unitary state, such as a common nationality or shared language. This is because the identity of a federation must necessarily be a thin one, as a consequence of the ‘separation strategy’.

The fragility of the essential and demanding virtue of fraternity supplies a good reason for federal contractualists to reject principles of federal distributive jus-tice that permit too much inequality, since inequality might undermine the sense that members share in one another’s fate, thereby compromising federal stability. Indeed, because the connections that underlie fraternity in a federation may be less able to bear the strains of economic inequality than the connections which underlie national fraternity, then this particular concern with inequality applies distinctively to federations. Thus, federal contractualists have reasons to reject unequal political arrangements when inequality threatens fraternity, because fra-ternity is necessary for federal stability.

A difficult issue raised by this line of argument is to identify how much in-equality amongst subunits a federation can bear before fraternity is compro-mised. One context in which this issue has been discussed is healthcare services. Here, federal fraternity might be undermined by a sense of resentment if citizens in one subunit have access to services not provided elsewhere (McEwen 2006: 253) and if citizens in one subunit perceive themselves to be subsidising the ex-

24 A general claim I am assuming here is that justice and democracy, in both federations and uni-tary states, depend upon citizens exhibiting particular character traits or civic virtues. This view has been defended by, amongst others, Macedo (1990), Galston (1991), Callan (1997) and Dagger (1997). For example, in a liberal democracy, unless citizens internalise and exhibit vir-tues such as civility, tolerance and mutual respect, it may be impossible to ensure that religious or racial minorities are not subjected to unfair forms of discrimination during routine and ev-eryday transactions. The case in favour of promoting civic virtues, for instance in the school system, need not invoke the spectres of partialism or perfectionism, and can be compatible with respect for pluralism, if the virtues themselves can be shown to be necessary for the stable operation of a neutrally justified political conception of justice (Macedo 1995). Elsewhere I have suggested that federations have some distinctive reasons to cultivate civic virtues, since they might play an important role in discouraging subunits from exploiting or dominating one another, for instance by using the threat of exit to obtain unfair advantages in political bargain-ing (Shorten 2014).

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pensive medical preferences of others (Van Parijs 2004: 164).25 One solution that addresses both of these grievances combines moderate political autonomy (allowing subunits to determine how their healthcare budgets are spent) with a centralised and egalitarian funding system, in which subunits are allocated re-sources on a per capita basis (Van Parijs 2004). Such a scheme would allow each subunit to tailor healthcare provision to the distinctive medical needs and habits of their members, but on an equal footing with one another. However, even this policy might undermine fraternity if some subunits were healthier or wealthier than others, since they would have ‘an interest in slashing the federal healthcare budget’ (Segall 2007: 267). Consequently, preserving fraternity would require not only an ‘equal shares’ distribution of healthcare resources, but also broadly egalitarian background conditions, so that each subunit is equally vulnerable to reductions in the federal healthcare budget.

What considerations such as these point us towards, I think, is that if federal fraternity is necessary for federal stability, and if federal fraternity depends upon substantial equality of condition, then considerations of stability might be more demanding, from an egalitarian point of view, than reasons of justice. This con-clusion should not be troubling, provided that stability does not require any-thing that justice forbids. At least within the context of the considerations raised in this chapter, this problem does not arise, since the justice objection to equal shares applied only to subsidising expensive tastes. For this issue at least, stability and justice point in the same direction.

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Federalism, Contractualism and Equality

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