Introduction
For a nation built on the ideal of individual liberty, America has a bureaucracy problem. Perhaps no other nation has ever prided itself so much on the principle of individual liberty while also relying on a centralized Leviathan to administer its political apparatus. I don’t mean to say that it is the most bureaucratized nation (it is outdone by both France, China, and others in that regard), but the United States has a unique blind spot about the proportions of its bureaucracy, and this represents a contradiction in its public philosophy. It claims to promote individual liberty while simultaneously possessing a constitutional structure that relies on a burgeoning centralized government to administer its ever-expanding political machinery.
By contrast, Germany’s constitution is decentralized both politically and economically. Politically, the German system is a unified federal republic composed of 13 Länder (Länder are roughly equivalent to American states) that are highly self-governing. The German Basic Law (GG) asserts that the federal government is supreme, yet it confers most legislative and administrative duties to the individual Länder. Contrary to the American system where federal agencies administer federal laws, in Germany federal laws are predominantly administered by regional Länder.
Germany’s commitment to a decentralized economy means industries are largely regulated by regional chambers of commerce, industry, and crafts. These chambers are composed of private actors and are vested with public responsibilities.[1] In German legal terminology, these chambers are “public corporations,” which means they serve a public function of coordinating behavior among citizens. But they do so primarily through private law, meaning contractual commitments created by private entities themselves. This phenomenon is known as private ordering and has deep connections to the principle of subsidiarity that derives from Catholic social teaching, especially as expounded in the famous encyclical Rerum Novarum.
In this encyclical, Pope Leo XIII expounded on the natural right that men have to gather into private associations for the sake of furthering the common good. Men thus possess the right to association even before formal recognition by the state, and it is this right to bind oneself and others to certain standards of conduct through associations that connects the principle of private ordering to Catholic subsidiarity. Private ordering, as we will see below, is self-government in action, and self-government forms the backbone of subsidiarity. It recognizes that each function in society is best entrusted to the office, group, or association within that society that is most naturally equipped to handle it. Not every act of governance in a society should be imposed from the top-down by means of a centralized state. Rather, the governance of a society, in addition to the supreme coordinating role played by the sovereign at the top, should be mediated through lower levels of government and the private associations that men form to conform their conduct to the common good.
To better understand why decentralization, private ordering, and subsidiarity are the norms in Germany while being the exceptions in the United States, a deeper philosophical dive is in order. We need to further clarify what subsidiarity is and then understand its relation to sovereignty.
Part I: Sovereignty and Subsidiarity
Sovereignty is a concept that has taken on many meanings and gone through many variations throughout history. To trace the historical roots of the concept would be beyond our scope, but it is important to understand that in political modernity, say, from the Enlightenment onwards, sovereignty has come to be understood as the possession of supreme and exclusive decision-making power. Whereas in the pre-modern view sovereignty meant the highest authority in a political community subject to divine and natural law, the modern view sees sovereignty as the exclusive power to set the horizon of political and legal morality in a polity, to the exclusion of all lower bodies in the legal hierarchy.
Sovereignty has not always meant exclusivity in the sense that no one else may issue binding rules except the sovereign. For example, Jean Bodin, who many consider to be the original purveyor of modern notions of sovereignty, tends to use the term simply in reference to the highest power in a given polity who cannot be overruled, but who is nonetheless subject to natural law and the law of nations. Sovereignty in this sense does not yet mean “exclusivity,” or that governing power is to be stripped from lower authorities. It is only when Locke transplants Bodin’s idea into his political theory that the idea of sovereignty takes on notes of exclusivity. According to Locke, only the legislature chosen by the people as their political agent can make binding rules, and the people cannot take back this sovereign power once vested upon the legislature. This exclusive version of sovereignty explains why private ordering has not taken root in the United States. In the exclusive version of sovereignty, only the sovereign can make the rules.
The fruits of the German system speak for themselves: Germany has among the highest income per capita in the EU, very low-income inequality compared to other developed nations, and one of the most robust manufacturing sectors in the world.
The concept of subsidiarity is almost the exact inverse of the exclusive notion of sovereignty. Rather than concentrating all decision-making power in one legislative body, the laws and regulations governing the various sectors of society are derived “from the ground up.” This form of societal organization, which is “self-government” in the truest sense, was a historical reality long before it was distilled into a theory. In medieval Europe, cities, provinces, and townships enjoyed local government under the umbrella of larger kingdoms and empires, which were harmonized (not always peacefully) in a hierarchical legal order that derived its principles from the ius commune. This arrangement is neatly, if not completely, captured in two core theses, which are corollaries of each other: (1) No task that can be handled by a lower authority should be usurped by a higher authority; and (2) higher authorities have a duty to intervene and restore order when lower bodies have failed to carry out their responsibilities.[2]
Subsidiarity is not just confined to the political order but also applies to the economic order. It cuts through the modern public-private divide by making space for corporate bodies to participate in the regulation of society. Historically, this meant allocating the power of self-government to regional authorities, trade associations, worker’s guilds, and even universities. Corporations (a broader concept than the American business corporation) gained legal status and legal privileges that corresponded with their sphere of competence; a guild of tradesman could set standards for its own industry while an association of manufacturers could negotiate industry-wide agreements. While these “lower bodies” possessed legitimate autonomy to govern their internal affairs, they were always subject to higher powers that could step in and curb abuses or harmonize the interests of the various sectors across a political community.
To summarize, modern notions of sovereignty tend to concentrate power in one overarching body, while the specifically Catholic notion of subsidiarity tends to diffuse power throughout society by the mediation of various bodies that make up the greater state. With these definitions in place, let us now turn to our comparison of the German and American constitutions.
Part II: American Federalism and Political Subsidiarity
When the founding generation convened to promulgate the Constitution, they made certain that ratification by the individual states would not be done by state legislatures, but rather by the people of each state through state conventions. This somewhat arcane detail bears crucial importance for understanding the relationship between the state and federal governments. When the states ratified the Constitution through conventions, they created historical justification for the federal government to draw its sovereignty directly from the people and not from the states. The effect was to create a system of dual sovereignty, where both the states and the new federal government were “sovereign” within their own domains and not reducible to different levels of the same legal hierarchy.
While the text of the Constitution does not use the term “dual sovereignty” (or the word “sovereignty” at all), influential jurists from the time of the founding down have interpreted the structure of the Constitution as entailing such an arrangement. James Madison’s influential argument in Federalist 39 is the canonical treatment of dual sovereignty, which states that the federal government acts directly on individuals, not on the states, and that “[e]ach State, in ratifying the Constitution, is considered as a sovereign body, independent of all others, and only to be bound by its own voluntary act.” This line of thought, while not uniformly held by all American jurists, has found influential proponents in every generation. In recent decades the doctrine of dual sovereignty has found friends in the land’s highest Court, including Justices William Rehnquist, Sandra Day O’Connor, Antonin Scalia, and Anthony Kennedy.
In Alden v. Maine,Justice Kennedy rejected the notion that the federal government “act[s] upon and through the States.”[3] Similarly, in Printz v. United States Justice Scalia reiterated that “[t]he Federal Government may not compel the States to enact or administer a federal regulatory program.”[4] The result of this jurisprudence is a radical discontinuity between state and federal governments. Whereas in Germany the regional Länder governments are presumptively responsible for the administration of all federal legislation unless expressly stated otherwise, the dual sovereignty of the American system requires that the federal government spin up a new federal agency to implement each of its programs.[5] Since states are sovereign, the federal government cannot enlist them to administer programs that serve the national interest, and since the federal government is an exclusive sovereign in the Lockean sense, it can’t devolve its regulatory power to private rulemaking bodies. The result is a federal government that involves itself more and more in economic, environmental, health, and every other type of regulation, creating a federal bureaucracy that cannot but continue to sprawl.
Rather than a legal hierarchy that harmonizes the lower powers (states) with the highest power (the federal government), we have a society of “distributed despotism [which] often leads directly to a concentrated despotism, with the latter as a kind of desperate remedy for the former.”[6] This concentrated despotism is the federal administrative state, which while attempting to fill the gaps left by the absence of a properly hierarchical state-federal relationship, ends up governing the whole country from the center.
Part III: German Federalism and Political Subsidiarity
The German federal constitution, also known as the Grundgesetz (GG), or the Basic Law in English, was designed for a nation that was starting entirely from scratch after the destruction of the Third Reich in World War II. Promulgated in 1949, the GG made an explicit commitment to decentralized government, which it did by redrawing the geographic borders of the Länder, and subsequently conferring legal status on them as regional governments within one integrated federal system. The Länder existed in Germany prior to the to the promulgation of the GG, but they were entirely disempowered during the Third Reich. Accordingly, they were resurrected under the GG with new territorial boundaries and ample governing responsibility. The German Chancellor Konrad Adenauer was intent on creating a decentralized government to prevent the recurrence of totalitarianism and consciously sought to implement the principle of subsidiarity, which he drew from Pius XI’s 1931 encyclical, Quadragesimo Anno.[7]
Of critical importance is how the GG views the Länder governments with respect to federal government, which both derive their spheres of power from the same Basic Law. Whereas the American system is composed of dual and separate sovereigns, the German federation and its Länder are part of the same legal order that relies on subsidiarity to distribute power and authority to the most appropriate level. Whereas American federalism embodies a radical divide between the state and the federal governments, the GG is envisioned as an “ultimate final program of politics; the authority of government relies on its implementation and the realization of the concrete value order of the constitution.”[8] The federal government and the Länder governments have a close intrinsic connection that derives from the same basic law, thus casting an entirely different political vision for the German nation.
The lodestar of subsidiarity in the German political system is that all governing power resides with the Länder unless explicitly delegated to federal authority. The federal level deals with foreign affairs, defense, trade, and other areas of international concern, but the remaining powers are either exercised concurrently by the federal government and the Länder, or by the Länder exclusively. The Länder have exclusive jurisdiction over the power of the police, schools and universities, culture and the arts, and broadcasting regulations.[9] The presumption of the German system is not competition but rather coordination between federal and regional governments, which allows for a decentralized system of administration.
Part IV: NIRA, Roosevelt, and the Centralization of American Government
Throughout European legal history, there has been a rich tradition of private ordering. This system elevates the role of quasi-public bodies, that are composed of private entities, to regulate their respective sectors. These quasi-public bodies include trade associations, economic chambers, craft guilds, labor unions, and other societies of mutual support. As we briefly mentioned at the outset, this system of private ordering comports directly with the principle of subsidiarity. By allowing these lower bodies to carry out public functions (under the harmonizing and directive influence of a higher power such as the state), we see how subsidiarity works in practice. Instead of regulation originating solely “from the top,” the standards of conduct that govern the various parts of society are sourced from and mediated by each level of the legal hierarchy, including the levels associated by private associations that are aimed at procuring economic goods.
In the United States a version of private ordering was briefly embodied in the National Industrial Recovery Act (NIRA) of 1932, which President Franklin Roosevelt signed into law at the climax of his first 100 days in office.
The key idea was to get labor and industry together into trade associations that would create legal codes of self-governance. These codes would feature wage agreements, working hour limits, fair competition standards, and collective bargaining agreements. By sourcing industry regulation from the ground up, both labor and industry had a say in their own governance, making sure they could directly advocate for their own interests. To ensure the fairness and effectiveness of these codes, they were submitted to the National Recovery Administration for review, who would then promulgate and enforce them with the President’s authority. Roosevelt’s hope was that industry could be well-regulated in the interests of all stakeholders while simultaneously avoiding the bureaucratic swell that would follow if federal government took on the entire burden of drafting industry codes itself.[10] In essence, Roosevelt had in mind the principle of subsidiarity, which we know from the effusive praise he heaped on Pius XI’s encyclical Quadragesimo Anno, which in addition to Rerum Novarum is the central locus for the Church’s modern teaching on subsidiarity.[11]
This plan was dashed when it ran into the Supreme Court’s nondelegation doctrine in A.L.A. Schechter Poultry Corporation v. United States.[12] The Court held NIRA to be unconstitutional because of its broad delegation of legislative power to the President. NIRA was condemned for granting the president “unfettered” discretion and was too vague in defining a “fair” code of competition. The Court also looked disapprovingly upon the role that NIRA envisioned for private entities to engage in rulemaking.[13] The reasoning in Schechter Poultry was applied in even stricter terms less than a year later in Carter v. Carter Coal.[14] The Court emphatically stated that delegations of regulative power to private bodies was impermissible.[15] Only a duly constituted sovereign legislature could do that.
The decisions in Schechter Poultry and Carter Coal are the products of an exclusive notion of sovereignty. As we stated before, Lockean sovereignty is conferred on a legislature by the people and once conferred it cannot be taken back. In a scenario where private entities engage in legislation or rulemaking, Lockean sovereignty views this as an attempt to wrest back control from a duly constituted legislature—a violation of that legislature’s exclusive rulemaking power. In an ironic twist, Lockean sovereignty, which originates in the sovereign people, militates against the principle of self-government. The reality is that self-governance is more authentically embodied by the principle of economic subsidiarity, which allows for both public and private bodies to engage in rulemaking. This is the alternative to a system of economic regulation that is imposed from the top-down by a distant federal bureaucracy.
Part V: German Private Ordering and Economic Subsidiarity
In Germany, most of the economic regulation is handled at the regional level by Chambers of Commerce, Industry, and Crafts. By delegating economic regulation to these “lower” bodies within the state, the German constitution enables private citizens and the associations they form to truly engage in “self-government,” representing a modern form of Catholic subsidiarity in action.
There are different chambers for different industries. The task of the Chamber of Crafts is to represent the interests of the entire craft sector—through self-representation—and to regulate the sector through a negotiated legal code. The Chambers of Crafts exercise legal supervision over the guilds and craft associations in each chamber district. Similarly, in the Chambers of Industry, employees and businesses are both represented in the process of negotiating rules that will govern their sector. The burden of bureaucracy is lifted from the government when these forms of private rulemaking are allowed. As Bröhmer explains “[T]he government only has a very limited role to play in regard to employment conditions… [this] exempts a rather broad policy field from the reach of the legislator, giving almost exclusive jurisdictions to the main [private] stakeholders.”[16] Instead of imposing regulation through a government bureaucracy, the norm is negotiation amongst stakeholders in the various regulated sectors, which means that certain governmental functions in German society are entrusted to that level most able to naturally carry them out, just as the principle of subsidiarity would intend.
When Germany under the leadership of Konrad Adenauer adopted its new constitution in 1949, it did so with the Catholic principle of subsidiarity in mind. It gave life to that aspiration by adding legal provisions precisely to enable this system of private ordering. The fruits of this system speak for themselves: Germany has among the highest income per capita in the EU, very low-income inequality compared to other developed nations, and one of the most robust manufacturing sectors in the world.
Conclusion
What can we learn from the preceding analysis that we can apply to the United States? First, the animosity between state and federal governments does not have to persist. Although the dominant jurisprudence of “dual sovereignty” insists that the federal government cannot direct the states, it does not rule out voluntary collaboration between the two. As American lawmakers look out over the landscape of our bloated federal bureaucracy, they should consider how regional governments can help lighten the load of Washington’s administrative apparatus. The Catholic teaching on subsidiarity as embodied in encyclicals like Rerum Novarum and Quadragesimo Anno can serve as the philosophical blueprint for such a project.
Similarly, abandoning the exclusivity of Lockean sovereignty would enable another chance at creating a private ordering regime in the economic sphere. Since the 1930s the Supreme Court has approved delegations of power to private bodies to carry out specific tasks. This means that a fresh look at a NIRA-type program might be met with less suspicion this time around. Such a program would again endeavor to involve citizens and private associations in the task of governing the various sectors of the economy at the level that is most appropriate. Both the Church’s teaching on subsidiarity but also the concrete example of modern Germany could serve as helpful guides to designing these reforms. Despite the fate that private ordering faced in Schechter Poultry and Carter Coal, who knows, the third time might be a charm. We’ll only know if we try.
[1] See Jürgen Bröhmer, Subsidiarity and the German Constitution, in Global Perspectives on Subsidiarity, M. Evans & A. Zimmermann eds. (Spring 2014).
[2] Patrick Brennan, Subsidiarity in the Tradition of Catholic Social Doctrine, in Global Perspectives on Subsidiarity (M. Evans & A. Zimmermann eds., Springer 2014); Adrian Vermeule, Common Good Constitutionalism 154–58 (Polity Press, 2022).
[3] Alden v. Maine, 527 U.S. 706 7145 (1999).
[4] Printz v. United States, 521 U.S. 898, 933 (1997).
[5] Bröhmer, 135–36.
[6] Adrian Vermeule, “Un État despotique qui a plusieurs despotes”: A Juristic Interpretation of the Society of Tyrants, Keynote address delivered at the conference on “Bien commun et fédéralisme chez Charles de Koninck,” Laval University, October 1–3, 2025.
[7] Adenauer was the first Chancellor of West Germany and the main intellectual force behind the drafting of the German Basic Law. Adenauer also lead the Christian Democratic Union (CDU) which drew many of its political and economic principles from the tradition of Catholic social teaching. Adenauer's leading role in the CDU gave him a premier position Parliamentary Council of 1948, which had been called into existence to draft a constitution for West Germany. He was the chairman of this constitutional convention and was subsequently elected as the new Chancellor once GG had been promulgated in May 1949.
[8] Signe Rehling Larsen, Varieties of Constitutionalism in the European Union, 84.3 Mod. L. Rev. 477, 485 (2021).
[9] Bröhmer, 132–33.
[10] See Michael Lind, Land of Promise: An Economic History of the United States 269–306 (HarperCollins Publishers 2012).
[11] Franklin D. Roosevelt, Address at Naval Armory in Detroit, MI, Oct. 2, 1932 (“I am going to read you another great declaration and I wonder how many people will call it radical. It is just as radical as I am. It is a declaration from one of the greatest forces of conservatism in the world, the Catholic Church. I quote, my friends, from the scholarly encyclical issued last year by the Pope, one of the greatest documents of modern times.”).
[12] A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935).
[13] Id., 537.
[14] Carter v. Carter Coal Co., 298 U.S. 238 (1936).
[15] Id., 311.
[16] Bröhmer, 143.
