Federation is the principle of connecting smaller, partially self-governing units through a central unit that manages shared resources among them and powers over them. It generally seeks to create a multi-layer architecture in which authority lies at the most appropriate level.

Federalism is generally associated with calls for a stronger central authority.

Federation and confederation are sometimes distinguished, wherein federation is a system where sovereignty lies chiefly in the central unit (such as the US federal government), while in a confederation sovereignty is understood to lie with the constiuent units (such as the European Union).

Input: constituent units, central unit, contracts among them

Output: cohesion, multi-layered authority structure


Federated structures have been widespread in various forms of government, as well as in private enterprise. Early examples include the pre-Columbian Haudenosaunee Confederation (or Iroquois Confederacy), followed by post-colonial formations in the Americas such as the United States, Mexico, and Brazil.

In the private sector, cooperative businesses frequently form federations, which are typically second-order co-ops (or nonprofit associations) whose constiuent members are smaller cooperatives or non-cooperative businesses.

Federation may be considered an implementation of the philosophical concept of subsidarity, which holds that power should reside as locally as possible to the relevant context.

Feedback loops


  • Balance between local governance and economies of scale


  • Can exact high costs of governance among autonomous constituent units



  • Cooperative federations, such as Confcooperative in Italy and US “generation and transmission” electric cooperatives
  • Governments in many countries

In fiction:


  • Fediverse, a set of interoperable federated social networks using software such as Mastodon, GNU Social, and Pleroma
  • Lightning Network, a scalability solution for blockchain systems that dynamically delegates authority to clusters of trusting nodes

Further resources