Subsidiarity

The principle of subsidiarity has earned a solid position in European intellec­tual history. Since, as a result of its incorporation into the Maastricht Treaty,¹ it has become international law, it is worth briefly retracing its intellectual history.

Historical context and theory

This short subsection tries to clarify the meaning of the principle of subsidiarity - which is far from unambiguous - and to explain some of its implications in the context of European unification and the accompanying legal discourse. Perhaps one of the earliest formulations of the principle of subsidiarity, which is at the same time one of the first formulations of a full-scale state welfare programme, can be found in Christian Wolff’s Principles of Natural Law, published in 1754. There, in section 1022, he states the following:

In order to lead one’s life with decency, it is necessary that the destitutes and the beggars be provided with what they basically need, and that therefore the subjects will not be burdened with too much charitable giving. It has to be carefully determined what the natural law prescribes for charity. Houses of order are to be established where those can work who, although they are able to work would rather prefer to keep begging. Similarly, houses for the destitute need to be established, where those will be fed who cannot work for their own livelihood, and who have no relatives or friends who could take care of their needs: also hospitals, where the destitute will be fed and sometimes cured. Likewise orphan­ages, where poor orphans will be educated: and finally schools for the destitute, where the children of poor parents will be taught free in matters that are necessary and useful to them.²

Several elements of this exposition are particularly noteworthy. First is the scope of the programme of the welfare state, including measures to alleviate the consequences of sickness, unemployment, poor health, orphanhood and, more generally, poverty, in which case access to public schools is guaranteed.

It can be readily seen that single houses cannot sufficiently provide themselves with what gives satisfaction of needs, comfort, and pleasure, in fact even what is needed for their welfare, nor can they safely profit from their rights and from what they can rightfully expect from others, nor can they be sure to protect themselves against the violence of others. It is therefore necessary, to provide through com­mon forces what single houses cannot get by themselves. For this purpose societies have to be formed. (Section 836)³

We realize, then, that in Wolff’s conception the principle supporting the unit of the welfare state was the house, the classical household or micro economy; only if it failed did a larger politico-economic unit have to inter­vene. The interesting question is what form this intervention was supposed to take. The answer is already implicit in Wolff, but a more explicit statement can be found in the writings of another authority on political thought in continental Europe, Robert von Mohl, writing about a hundred years after Wolff:

Of course, from the need to have anyone provided with basic necessities, it by no means follows that it is the state that has to do the providing.

In brief, Mohl (1844) suggests that the mere existence of needs of its citizens is an insufficient reason for the state to directly satisfy those needs. In general, the state, rather than satisfying the needs of its citizens directly, has the task of creating the conditions under which the citizens can accumu­late sufficient wealth to satisfy their needs themselves. Note that this application of the principle is twofold, and twice correct. On the one hand, Mohl cor­rectly identifies the state as the better provider of the (mostly legal) infrastructure which allows its citizens to prosper and accumulate wealth in order to satisfy the needs of themselves and their dependants. He correctly assumes that the provision by the state will detract from this objective, since the provision by the individual households will be more cost-effective than the provision by the state which would, by necessity, have to be financed through taxes to be borne by the tax-paying households. Consequently, the state is responsible for providing the infrastructure in which the individual households can prosper. Since, on the other hand, provision of welfare ser­vices and the satisfaction of needs can be better directed and more effectively rendered by the (larger) households, it is to them that the task also falls, relieving them of the otherwise necessary tax burden. In applying the prin­ciple of subsidiarity, it is of pivotal importance continuously to consider both sides of the coin, expenditure and revenue. The determination of the primary and the subsidiary service entity can only be accomplished if both expendi­ture and revenue factors have been properly and completely taken into account.

A more recent (and perhaps the most widely read) formulation of the principle of subsidiarity is contained in a papal encyclical named after the first two Latin words, Quadrogesimo anno, in section 79 of the 1931 encyc­lical. The text reads:

And since what an individual can accomplish through his own initiative must not be taken away from him and accorded as a collective task to the state, so similarly it violates the principle of justice that the bigger and higher authority claim a task that smaller communities can accomplish well. This would be extremely disad­vantageous and confusing for the entire social order. Every social activity, to be sure, is subsidiary by its own nature and on its own terms. It is supposed to support the different organs of the bigger social body, which however may not absorb or destroy the smaller entities.⁵

In this formulation, the subsidiarity principle appears rather matter-of- factly as a restatement of an old principle in political theory and also church doctrine. Second, it receives an organic twist which blurs its sound economic interpretation. If a community can reasonably discharge its duties, a larger community (of which it is conceivably a part) should not take over these duties as a matter of (ethical) principle. In this formulation, no mention is made of the costs and benefits to the larger and the smaller community, respectively, or to the costs and benefits facing other smaller communities being part of the larger whole. It is not surprising that the formulation from the encyclical, rather than the traditional formulation, has given rise to much controversy and to contradictory applications.

Yet the economic core of the principle is readily crystallized. In order to optimize the performance of the larger political entity, primary liability for the solution of problems lies with the smallest functional unit. This need not be the lowest functional unit in a hierarchical sense. This smallest functional unit can be a single unit or a group of such units; as shown in the quotation from Wolff (Section 972) these units can be linked by friendship, neighbour­hood, a common religion, history or some other such link.

In the clear case of insufficiency of a particular level, the nearest functional one needs to be found. The search can go either up or down, depending on where one starts. If a particular province, for example, cannot adequately solve, for instance, an environmental problem, it might consider cooperating with (i) another province (lateral subsidiarity), (ii) the nation-state or the European Community (upwards subsidiarity), or (iii) the local communities inside the province, where the problem is most urgent (downwards). The situation might arise where the provincial government takes care of the environmental problem for the smaller communities, whereas the larger com­munities or those where the environmental problem is most urgent take the matter into their own hands.

It should be emphasized that this principle provides a pattern of thought in order to delineate public responsibilities. The historical survey shows the principle of subsidiarity to be a long-standing constitutional principle which actually dates back to the very beginnings of constitution writing based on natural law systems. The natural law source also makes the principle an integral part of church teachings. In its original formulation, the principle of subsidiarity is a constitutional principle determining the definition and de­lineation of rights and responsibilities of private bodies, on the one hand, and public bodies, on the other. For example, this is still the case with the role of the principle in the German Basic Law (article two). In the Maastricht Treaty, the principle is used primarily (but not exclusively) to define the relative responsibilities of the European communities, on the one hand, and member states or parts of member states (in the German and Belgian case, federal states or ‘gewesten’) on the other. In the tug-of-war between the community and the member states, where the community tries to expand its programmes while these attempts are sometimes met with resistance on the part of at least some of the member states or parts thereof, the principle has assumed a substantial importance.

In brief, we can interpret the principle of subsidiarity as an economic principle of functional organization. First, the function needs to be clearly defined; second, the organizational unit needs to be defined in terms of a constitutional economic analysis determining which unit can best fulfil this function. A third step will necessarily consist in finding a legal counterpart to the organizational unit defined in this way.

Lateral subsidiarity

Perhaps the most difficult concept in this context is the notion of lateral subsidiarity. All minds are trained to think in terms of analogies and parallels, and it is difficult to conceive of putting bodies of different legal and political status together into one common cooperation. Yet, in the environmental con­text where historical and political developments transcend geographical and ecological reasons, such cooperations with a binding legal form are perfectly normal. By way of example, the Lake of Constance is a condominium of one republic (Austrian), two federal German states (Bavaria and Baden- Wurttemberg) and the Swiss canton of Thurgau. In cooperations between highly centralized countries such as France or the Netherlands and highly decentralized countries such as Belgium and Germany, many lateral forms of subsidiarity can develop.