Until the early twentieth century, the national government was not much of a presence in the lives of most Americans. State governments had predominant authority over the internal affairs of their states. They regulated businesses, schools, police forces, byways, relief for the poor, zoning, and liquor sales. With the exceptions of national government intrusion into canal and harbor construction, the running of postal services and customs houses, and occasional drafts for wars – and wars themselves, with Native Americans (i.e., Indians) and Civil War opponents – national and state law, as well as revenues collected by Washington, D.C., sharply limited the role of the national government. Above all, it was expected that government in general be limited, and even if national government intruded, state government was where public policy decisions were made that most affected peoples’ lives.

A description of this time period – until about 1930 – is revealing. First, consider the incentives of the politically ambitious. In this past era, politicians ultimately strove to be mayors, state legislators, and governors. A stint as a member of the U.S. House of Representatives was often temporary and regarded as less desirable. Ambitious politicians who wanted important jobs typically sought positions in state government, whereas joining the U.S. Congress was akin to a grand tour of Europe – an interesting sojourn and time away to gain perspective. Often, as a member of the ruling party in state government, one had to take his turn in Washington. It helped the state governments to have representation in Washington, to stay informed, and especially, to fight against national policies that could harm the state. Occasionally, a native son would ascend to a position of real power in Washington, D.C. – perhaps even president – and that could be beneficial to the people in the home state. Capturing the chairmanship of a key committee could pay dividends for a state. In sum, the purpose of being in Congress was to look toward one’s home state as the beneficiary.

By some measures the largest and oldest organization in the world, the Roman Catholic Church (the Church hereafter), is a marvel of endurance, as well as a fascinating case of institutional evolution. This chapter summarizes key moments in Church history that demonstrate the ways in which its evolution is similar to the other cases highlighted in this book. Subunit leaders have repeatedly assented to representative centralization and, sometimes with great consequence, large enough groups of them have assented to executive centralization. The leaders across multiple levels of Church governance have formed partisan groups pursuing common policies, and most importantly, separated into groupings around the goals of the top leaders. The Church ratcheted toward executive centralization (especially since the mid-nineteenth century). As a result of the executive centralization and partisanship, the Church has locked into a period of centralization with predominant authority residing in the executive above the subunits and the central representative body.

According to Roman Catholic tradition, Jesus Christ founded the Church during his life and then when the Holy Spirit was sent to the Apostles after Christ’s death, the Church began its public ministry. Bishops today are considered descendants of the Apostles. Governance in the Church has long resembled Western European monarchism from medieval and Renaissance times, including the corresponding hierarchical, vassal relationships. Bishops govern the various sees, which are local areas of responsibility (typically geographically defined), like dukes and princes, and altogether serve as the Church hierarchy. Peter the Apostle by tradition was the first pope. By the fact that he and Saint Paul were martyred and buried in Rome, the city and its Christian leaders were accorded special status. Today the Church uses the term pope to refer to the bishop of Rome who traces a direct line of succession back to Saint Peter.

The previous four chapters recounted historical episodes from some of the world’s most important federated institutions. The U.S. case is Exhibit A, a familiar example based on the overall design of its governing institutions. The well-known design features spring from the tenets of federation and separation of powers. Along with these design features is the well-established historical pattern of a strengthened presidency over time with increasing authority lodged in the executive branch. That increasing authority to the executive, combined with partisanship linked to capturing the presidency, are key to understanding how centralization to the national level and away from the subunits becomes locked-in. The subunit governments and representatives over time have had less and less say in two kinds of decisions: what policies will be decided at the national level versus the state level, and if they are decided at the national level, what those policies will be.

There are historical wrinkles having to do with subunits and their representation in the U.S. trajectory. The U.S. federation began with a Senate comprised of people appointed by state governments. Until the early twentieth century, this meant there was direct representation of state governments in one chamber in what was intended to be the most powerful branch (legislative) of that national government. This direct representation by state governments did not survive the Progressive Era. Owing largely to fatigue and exasperation at corruption in the awarding of those seats, through reform movements backed by popular demand, senators by 1917 became elected by popular vote in every state.

Among our four main cases, the European Union (EU) has the least complete history in the sense that it has not ratcheted toward intensive executive centralization. The EU has not locked-in in the same way as the other cases. The citizens of the EU member countries coexist in a complex, sprawling international union that has unmistakably trended toward representative centralization. They live in a system where uneven but enormously consequential authority is wielded by a government in Brussels that has final authority above nation-state governments on a host of important policy issues.

It is tempting for two reasons to put the focus on the inevitable, and say that the EU has “not yet ratcheted” toward executive centralization and is “not yet locked-in.” First, there were moments in the recent past when the member states in the EU appeared to be on the verge of approving changes that would lead toward substantial executive centralization, but they stepped back. Second, and related, recent circumstances will possibly lead them to take that leap. There are, as of this writing, loud calls for more centralization within the EU in response to economic crises and even stalwart opponents of a stronger EU executive among the member states – the governments of Germany and France, for instance – have shown more openness toward common economic policies decided on by an executive and backed up by rigorous enforcement. In 2013, the EU set the stage for a dramatic strengthening over the next few years of banking regulation by central administrators.

How should governing institutions be designed for large, sprawling systems, such as global companies or international organizations? How can governments and institutions facing global problems provide enough autonomy for smaller units to flourish while at the same time achieve economies of scale from coordination? Federation offers a promising, and common, answer to such questions. An allegedly successful model for governance, federation can survive in form and it can lead to productivity, profitability, safety, stability, enrichment, or whatever we want from our institutions. Federation offers the opportunity to combine diversity and unity. It is the “politically correct” form of governance. Celebrate difference, individuality, voice, but also recognize and harness unity of purpose, oneness, and overlapping interests. What is not to like in principle about the idea of federation?

The separation of power between an executive and a representative body serves as another common institutional feature among organizations and governments. Under this typical institutional form, the organization or government will have shared decision-making authority between a council, parliament, congress, or central committee made up of representatives of various subunits, and an executive whose authority is derived independently of the representative body. The representative body can include members from various constituencies, who are often grouped by geographic origin. The representative body is not solely responsible for choosing the executive, and the executive is not solely accountable to the representative body, but also to such other groups as voters, investors, or outside evaluators. Perhaps, as is the case with the U.S. government, the executive and the representative bodies check each other and typically must assent to the passage of new laws. That is, both have a veto over new policies.

For many years during the twentieth century, General Motors (GM) was the world’s largest industrial corporation by various measures, including number of employees and sales. Each year between 1933–2007, it sold more vehicles than any other manufacturer in the world. Despite its near collapse a few years ago, GM still lives on and maintains a substantial presence in the global automotive industry. In fact, by 2011, it had regained its place as the number one seller of vehicles.

The mighty GM of decades past left a distinctive imprint on the modern corporation. It offered a model of organizational structure that many other corporations followed in the middle part of the twentieth century. Organizational theorists have assiduously studied GM and its corporate leaders, and generations of business school students have analyzed GM’s early corporate structure. Like any huge organization, GM has constantly worked to balance decentralization and centralization, to craft the right model of federated governance. During its formative decades, it was led by innovators who devised and carried out reorganizations while maintaining a highly productive balance between decentralized autonomy and centralized control of strategy. As with our other cases, the balance at GM between subunit autonomy and central authority was never static, and it was not the result of broad consensus among leaders. Rather, GM’s institutional structure and the resulting settlements on authority were contested and repeatedly forged through political conflict within the leadership.