Die wirtschaftlichen Voraussetzungen föderativer Zusammenschlüsse

This file is a single political-economic essay. Hayek asks what economic order a federation of formerly sovereign states requires. The thesis is double: federation can secure peace only as an economic union, yet that union disables much of the interventionist repertoire of the nation-state and cannot simply transfer it to a federal center. Its five sections move from peace and market unity, through the limits of protectionism and planning, to constitutional design and liberal internationalism.

Hayek begins by tying peace to economic integration. Defence and diplomacy cannot be detached from tariffs, money, finance, and trade. If member states keep economic borders, local shocks and privileges harden into territorial interests; if barriers fall, interests overlap and conflicts no longer recur between the same blocs. Economic union is therefore not a useful supplement but a condition of political durability.

Es scheint ziemlich sicher, daß eine politische Union zwischen einstmals souveränen Staaten ohne gleichzeitige Wirtschaftsunion nicht lange dauern würde.

English translation: It seems fairly certain that a political union between formerly sovereign states would not last long without a simultaneous economic union.

The second section follows the consequences of free movement. Goods, people, and capital turn the federation into one price area, so member states lose the means to protect industries through tariffs, monopolies, supply restrictions, price supports, or independent monetary action. Local regulation remains possible, but any burden imposed on local producers exposes them to competitors elsewhere in the union.

Das Bundesgebiet wird ein einziger Markt und die Preise in seinen Teilen werden nur um den Betrag der Transportkosten differieren.

English translation: The federal territory becomes a single market, and prices in its parts will differ only by the amount of transport costs.

Hayek then rejects the answer that the federal government should assume all powers denied to the states. Protectionism depends on solidarities that work inside national communities but weaken in heterogeneous unions. A tariff can be sold as aid to “our” producers; it is far harder to ask French, Swedish, British, or South African citizens to subsidize distant groups with whom they share no thick political identity.

Es ist schwer vorstellbar, wie in einem Bundesstaat eine Einigung über die Anwendung von Zöllen zum Schutze einzelner Industrien erreicht werden könnte.

English translation: It is difficult to imagine how, in a federal state, agreement could be reached on the use of tariffs for the protection of individual industries.

The same point becomes an argument against planning. Central economic direction presupposes shared ends; in a multinational federation, differences of language, living standard, tradition, and development make such agreement thin or coercive. Hayek’s conceptual move is to show that federalism does not merely move sovereignty upward: it dissolves the social preconditions of discretionary economic rule.

Jedenfalls wird die Lenkung des Wirtschaftslebens in einem Bundesstaat einen viel engeren Spielraum haben als in einem Nationalstaat.

English translation: In any case, the direction of economic life in a federal state will have a much narrower scope than in a national state.

The fourth section gives this a constitutional form. A federation must sometimes prefer no legislation to state legislation that would break the common market. Hayek uses the United States and Switzerland to show that internal protectionism can return through sanitary rules, inspections, fees, and administrative controls. The federal authority therefore needs a negative power: not to plan for the member states, but to stop them from reconstructing economic borders.

Das heißt, daß der Bund die negative Macht haben müßte, die Einzelstaaten zu verhindern, in bestimmter Weise in die Wirtschaftstätigkeit einzugreifen, während er aber selbst nicht die Macht hätte, das an ihrer Stelle zu tun.

English translation: This means that the federation would have to have the negative power to prevent the individual states from interfering with economic activity in particular ways, while it would not itself have the power to do so in their place.

This is not simple laissez-faire. Hayek allows public action where it creates a durable framework for private initiative and supplements the market in services the price system cannot provide. What he excludes is short-term management through monopolies, cartels, and bargains among organized interests. Federal economic policy must be impersonal, long-range, and rule-bound.

In the final section, Hayek casts international federation as the completion of liberalism. Nineteenth-century liberalism failed, he argues, by compromising first with nationalism and then with socialism. Against their fusion, he proposes a democratic international order limited to fields where real consent exists.

Eine Regierung nach Übereinstimmung ist nur möglich, wenn wir von der Regierung nur in jenen Gebieten Handlungen verlangen, in denen wir echtes Einverständnis erzielen können.

English translation: Government by agreement is possible only if we demand action from the government solely in those areas in which we can achieve genuine consensus.

The essay remains relevant because it treats a common market as a constitutional choice: it promises peace by preventing territorial interest blocs, but it also narrows industrial policy, monetary nationalism, and comprehensive planning. Hayek’s federation is not a larger nation-state; it is a liberal device for limiting government where agreement is thin and preserving democracy by refusing to overload it.