The Federal and Fiscal Structures of Western Democracies as Models for a Federal Union in Former Communist Countries?

Abstract

We are currently observing the transformation of most of the former communist countries in Eastern Europe into market economies with western type democracies. Quite often, these countries face (amongst many others) the problem of how to organize the fiscal and federal structures, especially when, in these former federal states, provinces or member states demand either complete or almost complete economic and/or political independence. Currently such a process takes place, for example, in the former Soviet Union and in the CSFR. However, these newly formed states (e.g. in the Federal Republic of Russia) realize that they need some (minimal) federal state for national defence, foreign policy, etc. The problem arises as to how to organize this federal state and whether certain elements of western federal states can be “copied” for such a purpose. As Western Europe is composed of representative democracies, and includes only one direct democracy (Switzerland), this paper examines whether one could adopt some major elements of a federal system of either a representative democracy (like Belgium, Austria or Germany), or of a direct democracy (like Switzerland). As it is quite unlikely that a model of a very centralized system will be used for a Federal Union in former communist countries, the author decided to choose Germany as a model of a representative system since it has quite a decentralized federal structure and, of course, only Switzerland can be taken as a model for the direct democratic system.1 KeywordsPublic ChoiceMedian VoterDirect DemocracyFederal SystemRepresentative DemocracyThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.