This is a map of the 48 contiguous United States of America, in a situation in which each state has just begun to expand its market reach into territories which will have formerly been exclusively governed by their neighboring states.
During this transition, where there are now interstate borders, there would be territories in which individuals or communities would be free to choose whether to submit the disputes which arise amongst them to be arbitrated by the judicial system of to two or more states; essentially, to choose their government.
The next stage of transition into panarchy would involve the continued expansion of the states' market reaches - in proportion with each state's fiscal and infrastructural ability to gradually expand their market reach into new areas - to include the entire areas which comprise the states which are their neighbors.
Areas in which multiple arbitrators or governments are available to consumers of justice are said to lie within overlapping jurisdictions. This phrase relates to the name of a formulation of panarchy called Functional, Overlapping, and Competing Jurisdictions, which was proposed by Austrian political scientist and social democrat Bruno Frey and Reiner Eichenberger.
Panarchy is diametrically opposed to - and the antithesis of - statism (at least as it is defined by Max Weber in his essay Politics as a Vocation). The goal of panarchy is to provide for the abolition of statism; that is, the abolition of local (or territorial) monopoly on legitimate violence.
This requires that within every area, there be at least two governments (or arbitrators) competing to provide a better quality of justice to citizens (the consumers of justice), so that no agency providing justice may require people to always submit their disputes to it, and so that no such agency may prohibit others from going into competition with it.
As long as we classify provision of justice, security, and other government services as commercial business activity, then we should construe the Interstate Commerce Clause to apply to such activity, so that the Sherman Antitrust Act obligates the federal government to intervene (constitutionally) in interstate commerce in order to abolish the states' local monopolies on the sale of justice, security, and other goods and services, and to abolish their local monopsonies on the purchase of certain goods and services on the behalf of citizens, the single-payer (i.e., monopsonistic) health insurance system as an example.
All this begs three questions about the relationship between the federal government and the states:
1) Federal and local government wield some influence within the states. How is that monopoly? Don't the states compete with the federal government to make good policy?
Since the establishment of the states (earlier, colonies) began, states were organized as wielding local monopolies over second-level administrative jurisdiction (states are considered to be second-level administrative divisions, while nations and federal governments are first-level administrative divisions), within the local monopolies over first-level administrative jurisdiction, which was wielded first by the United Kingdom and then by the United States.
Also, county and local governments wield local monopolies over their respective levels of administrative jurisdiction. This means that states are not sovereign (independent), but suzerain; that is, submissive to the federal government. This is to say that the states' monopolies are dependent on - and framed and bounded by the extent of - the national monopoly.
This is not a state of perfect competition, imperfect competition, or even oligopoly, but a system of local territorial monopolies which are subsidiaries of the larger territorial monopolies which bound, condition, and constrain them. A system of subsidiary monopolies is nothing more than a monopoly with a hierarchy.
Under dual federalism, the states and the federal government are regarded as co-equal sovereigns (supreme within in their respective, constitutionally-delineated spheres of policy influence) and the states and federal government make policies separately but more or less equally.
Dual federalism favors a situation in which states compete with the federal government to make good policy more than cooperative federalism does. But dual federalism does not support state sovereignty; only the right of the states to nullify federal laws which unconstitutionally transfer the authority of the states to the federal government (often through executive orders and executive branch expansions).
Confederationism supports state sovereignty; dual federalism instead supports well-delineated boundaries between federal and state policy territory (or political territory, or functional jurisdiction). The states cannot be said to truly compete with the federal government to make good policy. There are many government programs which are jointly run and funded by governmental agencies operating at more than one administrative jurisdictional level; this is not competition but coordination and cooperation.
Also, under cooperative federalism (the federal system which we have apparently decided is better than dual federalism), multiple levels of government cooperate to solve common policy problems collectively. These days, under cooperative federalism, the Tenth Amendment (the nullification or states' rights amendment) is largely ignored (at least by the administration which currently controls the executive branch and the Senate), and its supporters vilified and ridiculed.
While cooperative federalism can promote coordination between different levels of government, it is not very useful in promoting political competition, except in that it allows voices from multiple levels of administrative jurisdiction to be heard. We might be inclined to liken this arrangement to competition across levels, but it is competition only in theory and ideology, and not in practice, because this cooperation is directed at implementing a single universal policy rather than simultaneous experiments in policy conducted in different territories.
Additionally, cooperative federalism has for the most part been subsumed and replaced by idea that the federal government is supposed to direct and order the states and their subsidiaries (directed and ordered by the states) to act in accordance with whatever set of policies have been deemed by the executive branch of the federal government to be in the interest of the general (read as "vague", not "universal") welfare of the nation at large. Essentially, that the Tenth Amendment is no longer in effect, and that.the federal government has the right to force a state to violate the Constitution that balances state and federal power and keeps the nation's governmental structure together.
We may see the federal government backing off of the states on the issues of legalizing the medicinal and recreational uses of cannabis, and gay marriage, and it is true that in the Obamacare decision we saw the Supreme Court enjoin the federal government from withdrawing Medicare subsidies from states which do not increase medical welfare for the poor.
This may suggest that dual federalism is still considered legitimate to some degree in modern constitutional law, but this small degree of dual federalism does not remotely approach a situation of full competition in government. Also, these popular policy issues distract from more fundamental questions pertaining to competition and government structure, such as "Whom shall arbitrate disputes?" and "How may dispute resolution be conducted voluntarily?"
2) What is the proper relationship between the federal government and the states under panarchy?
The only federal arrangements which would allow for real competition (i.e., competition in practice, not just in theory and speech and potential) would be the dual federalist, triple federalist, or other multiple-federalist systems, and even then, individuals would choose independently which level of government have jurisdiction over them and arbitrate their disputes.
In such an arrangement (a transitional state between dual federalism and panarchy), individuals would choose independently whether this or that level of government governs them for some case or for some period of time. For example, a person could subscribe to only the local or county government; to only the state or federal government; to two or three thereof; to all four, or to none thereof
However, individuals are not free to choose independently which level(s) of government apply to them. Section I of Amendment XIV to the U.S. Constitution reads, “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.”
Many libertarian, originalist, and textualist scholars of constitutional law are apt to criticize Section I of the 14th Amendment because it causes citizens of the states to additionally become citizens of the federal government, and because the law and the manner in which it became the law are constitutionally and procedurally questionable.
The main problem of this is that support of the 14th Amendment typically comes with a defense of the idea that the amendment somehow subverts the states to the federal government; that it sets up a power structure wherein the citizen is subjugated to the states, which in turn are subjugated to the federal government.
If in a system of voluntary accession to government(s) on an individual basis, a person chose to become subject to both the state and federal government – or any group of governments from among the various levels of administrative division – such agencies' authority could only reasonably apply to the same person if there were no conflict of interest between them.
The dispute between the states and the federal government regarding the 10th Amendment is precisely the conflict of interest which is threatened by a federal government which neglects the need for a clear constitutional delineation between what is the functional jurisdiction of the state government and what is the political territory of the federal government.
This is especially problematic because – being that the purposes of the 14th Amendment include to authorize the federal government to prevent the states from making or enforcing laws which abridge the privileges or immunities associated with federal citizenship – the 14th Amendment is intended to empower to the federal government to address inequalities in legal protections (un-“equal protection of the laws” which arise across states, and there are many ways to show that the federal government has invoked the 14th Amendment and the Commerce Clause in order to justify undue obstructive intervention in interstate commerce rather than to keep interstate commerce regular, i.e., free from inhibitions and interruptions.
All of this presents a problem to constitutional scholars, because the federal government is only supposed to wield exclusive jurisdiction within the District of Columbia and the overseas territories; however, it has come to wield something resembling exclusive jurisdiction over the states through its administration of vast swaths of state lands (around 90% of the land area of some western states are administered by the federal government) for natural resource protection purposes, through its neglect of the 10th Amendment, and through the 17th Amendment which shifted the responsibility to elect U.S. Senators from the state houses to the people.
However, Section I of the 14th Amendment does not, in fact, subvert the states and the people thereof to the federal government; rather, it provides that citizens of states only become “subject to the jurisdiction” of the federal government if individuals willingly subject themselves to the federal government.
Although the following fact is not well publicized and considered dangerous and discussion of it treasonous, individuals may constitutionally renounce their federal citizenship and become citizens only of the states in which they reside. However, today the federal government maintains that a person may only renounce his U.S. citizenship (without committing treason) if he is at a U.S. embassy in a foreign country in which he intends to become a citizen.
But there are constitutional scholars who would point to the fact that in 2009 the federal government confirmed that Article I of the 1783 Treaty of Paris – in which the American colonists and the British acknowledged the right of the states to be “free, independent, and sovereign” - was the only article of the treaty which was still in affect; these scholars would argue that the states and the federal government are to be construed as nations which are foreign to one another, which would suggest that a U.S. citizen may renounce his federal citizenship and retain his state citizenship as long as he were to do so at a federal office established as a federal diplomatic office in a state.
To answer the original question, the proper relationship between the federal government and the states is for neither to exist as a geographic entity which wields exclusive jurisdiction. The proper relationship between governmental agencies at the various levels of administrative divisions, however, is to perfectly align themselves with some of the other levels of government, and to permit other levels of government to be different from them.
But to focus on this is to ignore the need to ask why various levels of administrative divisions would be necessary in the first place, when utilizing the various other types and modes of social organizations to deliver goods and services currently provided inefficiently by government remains an option (this will be discussed).
This would provide for individual freedom to choose to have one's disputes resolved by zero, one, or multiple governments, multiple governments being possible because governments which perfectly align and jointly govern citizens would have had their conflicts of interest resolved.
Additionally – insofar as we are promoting the need for various levels of administrative division, and speaking within the context of currently existing federalism as it develops into panarchy – the most important role the federal government should play is to provide a solution in areas in the states which most severely lack competition (i.e., choice from among several available alternative governments which would actually govern individuals in practice, rather than solely existing in potential as a minority vote within a majoritarian system) in interstate provision of governmental goods and services (as commercial business activity).
To be explicit and to use a concrete example: suppose that you lived in the center of the state of Wyoming, and the nationwide transition to panarchy had just recently begun. In such a situation, the state governments of Montana, South Dakota, Nebraska, Colorado, Utah, and Idaho would only just recently have begun to offer dispute resolution and other government services to persons living and traveling in Wyoming, so you could not reasonably expect the government service providers in those states to be immediately available in your remote location in Wyoming.
Only with efficient utilization of and improvements to governmental commercial infrastructure can such expansions in market reach become possible. But the federal government – which has long had offices in and relations with Wyoming – is already established there, so its services should substitute as the single alternative to the Wyoming state government until such time as local and interstate alternatives become available.
This state of affairs would ensure that more than one alternative is available, and this will promote competition as long as neither federal nor state government prohibit such alternatives from competing, and as long as federal and state government do not collude to keep such competitors out of the government marketplace. Basically, the federal government should come in to offer alternatives, not orders and mandates.
3) This proposal invites the federal government to intervene in the states' affairs, and invites the federal and local governments to compete with the states within the territories over which the states are supposed to wield exclusive jurisdiction. How can you defend this as a constitutional proposal when it undermines state sovereignty?
This proposal does not authorize the federal government to intervene in the states' affairs; only to obligate the federal government to assume the authority contained in the Interstate Commerce Clause of the Constitution, i.e., to regulate interstate commerce (insofar as provision of goods and services by government is commercial activity.
That is, the federal government has the authority to keep governmental commerce between the states regular, meaning free from inhibitions and interruptions. I argue that exclusive territorial jurisdiction of any kind constitutes an inhibition and interruption of interstate governmental commerce which can only be constitutionally resolved by the federal government, acting on the authority given to it by the Sherman Antitrust Act.
However, the federal government has not yet contended with the idea that government services should be considered commercial business activity, and it is for this reason that the existence and actions of the federal government have served only to entrench the hierarchical system of monopolies which are subjugated to one another, rather than to promote a competitive market in governance.
This proposal may invite the federal government into the states' affairs, but such invitation can be done without violating 1) the libertarian, originalist, and textualist views of the Interstate Commerce Clause of – and the 10th Amendment to - the Constitution, and the Sherman Antitrust Act; 2) the conditions required for a perfect and complete system of markets; and 3) the conditions necessary for a system of justice (namely, that no arbitrator of disputes be permitted to require others to always come to it in order to resolve their disputes, because that arbitrator – which could simultaneously be judge and defendant – could not be trusted to rule against itself when it is in the wrong).
While the United States of America may have begun as a confederation, since 1787 there has been a federal government which has constitutional powers. This is not to say that states' rights to nullify federal law do not exist; they exist, however the states are not sovereign. On the contrary, the federal government and the state governments are “co-equally sovereign” in their respective, constitutionally-delineated spheres of political influence on the various activities and industries.
Furthermore, the idea of sovereignty (alternatively: statism, local monopoly on legitimate violence, exclusive dominion) – in addition to the related ideas of suzerainty and co-equal sovereignty - stands in direct opposition to the notion of a free and competitive market to provide good governance to individuals and communities who have the freedom to choose which agency or agencies resolve their disputes and provide them with justice, security, and other goods and services customarily provided by government.
Also, sovereignty and its variants are monopolistic, oligopolistic, monopsonistic, and oligopsonistic; they favor situations in which single and few buyers and sellers exist, which distorts the calculation of prices such that price, cost, supply, and demand can be easily manipulated by those who wield the ability to influence market prices, due to their purchasing power and their willingness to use coercion to affect the market.
Sovereignty is literally the right of governments to threaten individuals, enterprises, and other organizations to purchase or sell goods and services at some price determined unilaterally by the sovereign. State sovereignty, the federal-over-state structure, and all other forms and variations of sovereignty are exclusive dominion over people, businesses, and resources.
It is ownership of people and things; human ownership, chattel and political and debt slavery, involuntary servitude, choiceless accession – subjugation – to political contractual “agreement”/ It is a system that can trap a man in a prison of a land – and deprive him of his natural freedom of travel - for committing a victimless crime.
It is a system in which a man can be condemned to death within an appeals process system that ends. The system of checks and balances of the current federal system stands in direct contrast to a private system of courts in which there would be a potentially infinite series of appeals, because in such a system the parties to disputes would submit their dispute to be resolved by some mutually chosen arbitrator which is neutral and has no vested interest in the outcome of the resolution of the dispute.
A ban on monopolies – sovereign entities (that is, governments) included – as monopolization is a fundamental transgression of the rules of a perfectly and completely competitive system of markets would provide that no state could exist which could compel parties to disputes to come to it for resolution, nor to prohibit parties to disputes from choosing to have their disputes resolved by some entity other than the local sovereign.
At this point, it should be clear that the proper way to constitutionally provide for a free-market solution to the problem of statism (local monopoly on violence, and on dispute resolution) in the United States – at least insofar as we are talking about the structure of the government – is to enable the various levels of administrative divisions of government to compete against one another to sell their goods and services to individual consumers (and to voluntary communities and voluntary collectives) without regard to their location, so that citizens may have political choice which can be actualized in terms of materially affecting how they are governed, rather than political choice which exists only in potential as a minority within a majoritarian decision-making system.
Additionally, this solution involves explicitly authorizing the federal government to regulate interstate governmental commerce; to keep it regular and free from inhibitions and interruptions by providing that potential competitors are not prohibited from going into competition with one, several, or all of the local sovereign governments and the agencies thereof.
However, there is one last issue which remains to be addressed. Let us suppose that two neighbors live near what is now the border between Wyoming and Montana, but which in a transition to panarchy would be a territory in which the state governments of Wyoming and Montana – in addition to the federal government, and the municipal and county governments within those states - municipal, county, and federal governments – would offer dispute resolution services.
If the neighbors got into a dispute, and one would choose to have his disputes resolved by the government of the state of Wyoming, and the other by Montana, then wouldn't those states have to submit their dispute to the federal government? Wouldn't that result in a huge number of cases which would normally be resolved by a single state to be submitted to be resolved by the federal government?
In the current federal system, yes, a dispute arising between the states of Wyoming and Montana would have to be resolved by the federal government. But under panarchy, a dispute between those states would be resolved by whichever neutral, independent third-party arbiter they choose.
Of course, any municipal, county, or federal government which could be chosen to resolve a dispute could be easily argued to have vested interest in the outcome of the dispute resolution. This is to say that any government which is now practicing statism and / or its variants would be prohibited from providing government services, because their presence makes competition impossible in practice, and for all of the reasons discussed above.
But going back to the premise of how a dispute between two states would play out during a transition to panarchy: yes, many cases which would normally be resolved by a single state would clog the federal court system. However, this presents us with an opportunity to ensure that equal protection of the law is provided, and that the interests of governments at various levels may be aligned if such governments and their subscribers so choose.
In fact, not only would this alignment of interests achieve one of the goals of the 14th Amendment (and of cooperative federalism), it would serve to fulfill (at least as far as the market for government is concerned) one of the conditions for a perfectly and completely competitive system of markets, which is homogenous products; that the qualities and characteristics of a market good or service do not vary between different suppliers.
Simply put, increasing citizen choice in the market for good government would increase the rate at which the federal government resolves disputes between the states - and addresses inequalities in legal protection which arise between the states - thus increasing the homogeneity of justice provision. Problems arising from an excessive amount of homogeneity of justice and other government goods and services (problems such as mediocre standards of justice and rationing of justice services) might be ameliorated in three ways.
1) By placing strict conditions for – or outright bans on – market participation by governments having contributed to hierarchical and oligopolistic conditions in the market for government
2) By exploiting what appears to be a loophole in the requirement that a good or service be homogenous; that is, by allowing various sets of government services to be “bundled” together (as in the “bundle” of property rights), and allowing there to arise arrays of rights, liberties, privileges, immunities, and responsibilities – in addition to sets of functional (political) jurisdiction across administrative divisions (or voluntary community or collective territories) - which are offered as packages.
The sets which the markets prefer would become common, and - eventually - standard and homogenous. But of course, imperfect homogeneity would exist during the transition. Significant amounts of research, development, and public information might mitigate this problem.
3) Permitting any and all manners of social organizations and societal institutions – be they individuals, enterprises, business alliances, trade associations and organizations, consumers' groups, social enterprise agencies, charity organizations, non-profit and non-for-profit organizations, interest groups, unions, syndicates, communities, cooperatives, cooperative corporations, guilds, mutuals, or private communities – to come to offer to consumers the goods and services which are now provided by states, in order to provide alternatives to consumers where existing sovereign governments (which are transgressors against the conditions for a free market and competition in government, and which therefore ought to be disqualified from selling something they cannot be rightfully be trusted to call real justice) do not yet offer services.
“...it is in the consumer's best interest that labor and trade remain free, because the freedom of labor and of trade have as their necessary and permanent result the maximum reduction of price... the interests of the consumer of any commodity whatsoever should always prevail over the interests of the producer... the production of security should, in the interests of the consumers of this intangible commodity, remain subject to the law of free competition... no government should have the right to prevent another government from going into competition with it, or to require consumers of security to come exclusively to it for this commodity.” - Gustave de Molinari, 1849
“Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.” - Sherman Antitrust Act, 1890