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Opening the Third Century of American Federalism:
Issues and Prospects

Daniel J. Elazar

Ambiguous But Promising

At the beginning of its third century, the condition of American federalism is best characterized as ambiguous but promising. This, in itself, represents a great advance for noncentralized government over the situation which had prevailed between 1965 and 1980, during which the trend was rather unambiguously centralizing.

In an earlier Annals article, this writer set out the shifting patterns of American intergovernmental relations in the twentieth century.1 In the intervening twenty-five years, federal intervention in state and local affairs reached its apogee and then began to collapse of its own weight, assisted by the electoral triumph of Ronald Reagan in this dual federalist, states rights ideology.

The various "New Federalisms" that preceded the Reagan administration at most sought to replace noncentralization, that is to say, the constitutional diffusion of power among federal and state, or federal, state, and local centers in such a way that the relationships among them are those of true partnership, with decentralization, that is to say, a federal center deciding what the states and localities should or should not be doing, even as it relied upon the latter to carry out most federal programs.2 The most striking aspect of American federalism in the 1980's is the existence of very strong contradictory trends within the federal system. On one hand, in the Garcia and South Carolina decisions, the United States Supreme Court has compounded all its previous errors with regard to the proper consitutional relationship between the federal government and the states.3 The court has stood the constitution on its head to give the Congress of the United States the last word in determining the federal-state relationship in matters deemed to be within the preview of the federal government under the Commerce Clause of the federal constitution. In doing so, it threw over 200 years of constitutional understanding and nearly that many years of precedent. The Court has done exactly what the Constitution pledged not to do, that is to say, make one of the parties to any intergovernmental controversies the arbiter of the results.

If the states and localities, through their political influence in Congress, have been able to hold the line on a number of the issues directly confronted in the U.S. Supreme Court decisions, they have lost the battle with regard to Congressional mandates, whereby the Congress, in court-justified actions, orders the states to do this and that without any pretense of winning them over through federal aid or making those orders contingent upon accepting federal grants.4 This is "prefectorial federalism". A decade ago, prefectorial federalism seemed to be emanating from the executive branch of the federal government. In the intervening years, the executive branch headed by President Reagan, has turned out to be generally a friend of federalism while Congress, increasingly detached as it is from state and local ties, has turned out to be a danger , seemed only to the U.S. Supreme Court.

The transformation of American politics from a state and local party-based system to a free-for-all among individuals supported by various national economic, cultural, social, and political interests through political action committees (PACS) has meant that fewer members of Congress have had experience in state and local government. Increasingly candidates for Congress are new to the political arena, and depend on projecting their personalities to raise enough funds from PACS and individuals to cover today's outrageous campaign cost. Hence they come to Washington without state and local political roots. They settle their families within the Beltway year round, and, while they continue to work their districts, they do so as visitors more than as residents. Thus they have no strong personal commitments to state and local interests, much less to the constitutional rights of the states.5

The States Reassert Themselves as Polities

Nevertheless, within this deteriorating constitutional and political framework the states have become stronger and more vigorous than ever, have reasserted themselves as polities, and have become the principal source of governmental innovation in the United States as well as the principal custodians of most domestic programs. In this extraordinary turnaround they have been helped by the catastrophes that have befallen previous presidents and the positive efforts of the Reagan Administration to have the federal government turn over certain functions to the states, free certain revenue sources to accompany them, and reduce federal regulatory interventions into state affairs and the processes of state governance.6

Fifteen years ago, the crisis of the Nixon Administration -- Watergate, the Arab oil embargo, the national truckers strike and the collapse of South Vietnam -- paralyzed the federal government. The states, particularly the governors, acted to fill the vacuum in the true spirit of federalism and in a manner that should have demonstrated once and for all the virtues of federalism as providing useful redundancy and fail-safe mechanisms, so that when one part of the political system can not function, other parts can take over. The states organized the distribution of limited oil and gas resources, governors settled the truckers strike, and state agencies came to the fore in the settlement of southeast Asian refugees. State officials discovered that they had powers of their own derived from the very existence of their states as states and did not need to wait for federal initiatives or permission, that the states were indeed polities. Moreover, they enjoyed exercising those powers and did so well.

By 1975, as the United States was about to enter a new political generation, the second of the post-modern epoch, the states were off and running. The states' innovative role continued to expand through the late 1970s, in part because of the relative paralysis of the Carter Administration (which was sympathetic to fostering a greater state role in the federal system and whose relations with the states were generally good and constructive).

At the same time, in the years following the Warren Court, the formerly unambiguously activist U.S. Supreme Court entered into a period of rather diffuse retrenchment. Many state supreme courts began to pick up the slack through the development of a new, vibrant state constitutional law, building state constitutional foundations for public policy in everything from individual rights to relations between religion, state and society, to the fair distribution of public services. The constitutional legitimacy of these grounds was increasingly recognized by liberals and conservatives alike on the U.S. Supreme Court, each for their own reasons. State constitutional law became a field of academic and legal interest beyond the courts, a sure sign of its new importance.7

In the mid-1970's the federal high court began to look more favorably upon state actions in a number of fields previously subjected to preemptive decisions by their predecessors. For a while until Garcia, it even seemed as if the 10th Amendment would be reinvigorated through decisions such as Usery. Even today the Court's decisions on federalism are distinctly mixed, with state prerogatives being preserved at least half of the time.

The Reagan Balance Sheet

President Reagan, from the very first moment of his election, began to reshape American attitudes toward the federal government and the states in particular. The President annunciated a very traditional dual federalist view of the American system, but by annunciating it forcefully, he forced even committed centralists to respond in federalist terms and to justify their extraordinary reliance on federal intervention in those terms. With his flare for communication, President Reagan brought federalism into the headlines in a way excelled by any president in this century.

By its decisive actions in so many fields, the Reagan Administration demonstrated that it was still possible to take hold of the reins of government and begin to reverse seemingly irreversible trends -- including the at least seventy year-long thrust toward greater government permeation of society. Yet fulfillment of Presidents Reagan's promise to strengthen the states within that system and thereby strengthen the system as a whole has not been an easy task. There are several reasons why this is so:

1. Even when there was general agreement in principle, there was great disagreement around the country and even in the Administration as to what should be turned over to the states. The Reagan administration was no more immune to this problem than any other. Indeed, its people suggested new federal interventions almost frequently as they suggested federal withdrawls. 2. The states were not necessarily willing to accept added responsibilities as solely theirs, if the costs -- fiscal or political -- were high. 3. There was a tendency in the administration to rely on simple notions of striving to separate federal and state functions as a basis for making policy rather than gaining an understanding of the possibilities of strengthening the states by restoring classic patterns of intergovernmental cooperation. Much of the problem relates to a misunderstanding of the principles of federalism and how they informed the American political system in better days.

While the Reagan Administration failed to secure the adoption of the most visible portions of its New Federalism program, by shifting federal government priorities, reorganizing existing grant programs, and reducing federal domestic expenditures as a proportion of the total federal budget, it did succeed in introducing new attitudes among state and local officials and their constituents. The latter learned that it was no longer possible to turn to Washington for solutions to most of their problems and therefore it was necessary to rely upon their own efforts. All this was accompanied by a shift in the orientation of the federal departments and regulatory agencies in favor of loosening or reducing federal regulation of state and local activities and oversight of intergovernmental programs.8

On the other hand, the Reagan Administration did not succeed in restoring anything approximating dual federalism, even in the limited areas in which it made proposals. Quite to the contrary, the general sense that cooperative federalism was the only kind of federalism possible was much strengthened from both directions -- that is to say, among those who would have hoped for more federal activity and those who hoped for less.

Moreover, whenever an issue came forward in which an increased federal role was perceived by the Administration to be beneficial to its interests, it acted in what has by now become the usual way of opting for the expansion of federal powers. Three examples of this will suffice: the federal act allowing double bottom trucks on most federally-aided highways thereby preempting and superceding state standards; the enactment of a requirement that states raise the minimum drinking age to twenty-one or lose a percentage of their federal highway funds, and federal preemption of state laws prohibiting multi-state banks, thereby initiating a process of nationalization of the banking system. Still, all told, the Reagan Administration pointed the United States in a new direction. In doing so, it galvanized and focused the shift that began to be evident even earlier.

A New Direction

The twentieth century was a time in which objective conditions fostered centralization. Whether the states and localities acted responsibly or not in meeting the century's challenges, they found the federal government stepping in. Especially during the first post-war generation there was an environmental basis for the centralization that occurred. The nation's economic system became increasingly centralized as locally owned firms were purchased by national (and multi-national) corporations. The civil rights revolution led to substantial federal intervention in the legal and educational systems. Even organized religion underwent centralization as the various denominations developed strong "national offices" with extensive bureaucracies. The country's communications system, which so influences the public, led the pack toward an almost exclusive focus on Washington as the single center of political power.9

There are many signs that objective conditions in the twenty-first century will require different responses. Conditions of size and scale will reduce the utility of the federal government as a problem solver and increase that of the states. The idea that new models of intergovernmental, interorganizational, and public/private activity are needed has attracted increasing attention across the entire political spectrum, from Robert Reich's America's Next Frontier to John Naisbit's Megatrends, from conservative advocates of old-fashioned states rights to environmentalists interested in the greening of America.10 Even ten years earlier, similar ideas, whatever their intellectual value, ran against the realities of American civil society.

By the late 1980's, concrete changes in the thrust toward centralization were evident. While the trend towards further integration of the national economy has not abated--witness the movement to nationwide interstate banking--America's new economic concerns focus on industrial redevelopment and improving foreign markets. Both are spheres in which the states have played and are likely to continue to play a prominent role overlapping into international relations, consitutionally a federal preserve.11

The federal role in the educational system in everything but civil rights matters began to decline in the mid-1970's. During the Reagan Administration, federal intervention in civil rights matters also diminished, first in the actions of the executive branch and most recently in Supreme Court decisions. Moreover, recent criticism of the results of the American educational system has led to greater state involvement in funding and setting minimum educational requirements and achievement standards. What seems to be emerging is a combination of an increased variety of educational options locally, both public and private, often on a non-territorial basis: coupled with state standard setting to establish certain basic requirements for all who pass through the schools.12

Noncentralization has come back even more strongly to the religious sphere. The transfer of power to the national offices of the mainstream denominations stopped by the early 1970's as church members voted with their feet against the policies of those bodies. Since then, the national offices have retreated and the great national seminaries had lost much of their influence.13 The revival of fundamentalism, which tends to be highly localistic or, failing that, based upon individual evangelists with their own regional or national followings, has increased noncentralization in the religious sphere. As fundamentalists became involved in politics, they brought some of that noncentralization with them. Even when they seek national solutions, by and large their national political activity has been devoted to repealing federal policies which interfered with what earlier had been considered issues in the domain of the states such as abortion and school prayer.

Communications is the sphere in which there has been the least amount of change. Political news, especially in the electronic media, still seems to be heavily national in orientation, flowing from Washington and concentration on the White House. In this respect, the media, following the line of least resistance, have lagged behind the overall trends in American society. In doing so, they have lost the confidence of the American people.14 Cable television offers the promise of more public affairs programs that do not originate in Washington or New York even if as yet that promise has not been fulfilled.

What is characteristic of this new noncentralization is that it does not represent a retreat from nationalization to an older style territorial democracy but a movement to a new stage which combines territorially based and non-territorially based actors in a multi-dimensional matrix. Technological change has made much of the old centralization obsolete or is rapidly doing so but the new technology is certainly not restoring the simpler territorial democracy of a more rural age. American civil society is becoming more multi-dimensional than ever before, having to accommodate people who have embraced different lifestyles rubbing shoulders with one another in an urbanized environment as well as different stages of economic growth, educational aspiration, religious commitment, and social group expression.15

If the system has become too complex to simply turn things back to the states, it has also become too complex to simply rely upon the federal government. There are too many forces in a country of over 240 million people spread over three and a half million square miles. States, localities, and sections offer points of identification and expression which have a real vitality in their own right and offered real opportunities to deal with a multi-dimensional society.16

Changes in the patterns of urban settlement will continue to reinforce that trend. At the beginning of the century, urbanization had encouraged centralization; at mid-century, metropolitization helped shift government in the direction of decentralization. Now the spread of low density urban settlement in the countryside is restoring the impulse for non-centralization.17 Finally, the closer intergration of an international community whose members increasingly will rely on federal principles in their own organization, will increase the international role of the states, including a closer relationship with their counterparts in other federal systems. Today over 70 percent of the world's population lives under federal arrangements of one kind or another, from the United States of America to the European Community. The 160 plus politically sovereign states are interacting with the 300 plus federal states in ways that are diminishing the differences between them.18

New Dimensions and First Principles

In order to cope with these new dimensions, it is necessary to go back to first principles -- not for formulas but to reexamine them and to discover how they can help us deal with the new environment which the American federal system must serve.

First and foremost, we must recall that the nation and each of the fifty states is a polity in its own right, in the fullest sense. While the federal and state governments may serve the others in some administrative capacity by mutual agreement, neither is designed to be the administrative arm of the others per se.19 Together they form a governmental matrix established by the American people, not a power pyramid with the federal government on top, the states in the middle, local governments on the bottom and -- by implication -- the pyramid as a whole resting on the backs of the people. The general government (that nineteenth-century term has great merit for its precision and the clarity it brings to the subject) sets the framework for the matrix as a whole by defining and delineating the largest arena. The states, whose boundaries are constitutionally fixed, provide the basic decision-making arenas within the matrix.20 Both together provide the constitutional basis for the diffusion of powers necessary to prevent hierarchical domination, given the human penchant for hierarchies.21

Since the beginning of the Republic, the elements in the matrix have worked together to develop common policies and programs, with most important actors involved in most important details of most steps in problem definition, planning, programming, budgeting, implementation, and evaluation of most policies of mutual interest to them through the political process.22Empirically, students of federalism pointed this out two decades ago and more, through detailed case studies of federalism, the party political process, and the role of Congress, particularly in the quadrangle linking states (and/or local) administrators, their federal counterparts, their congressional representatives, and their common professional associations or interest groups. Congressional-administrative pre-clearance of proposed legislation and administrative regulations is a regular feature of American government and has been since 1790. Plans for programs are developed, more often than not, in consultation with spokesmen for the interested parties.23 Unfortunately, the inroads of the new hierarchies into the manner in which all this is done has put the traditional system in jeopardy.24

The problem for federalism, then, is not that the federal and state governments must cooperate in the governance of the country, but that, in the 1960's, the federal government, under the guise of "cooperative federalism" changed its role from being supportive--from playing a "backstopping" role -- to being coercive and even preemptive basis.

Recognizing the interlocking character of the federal system, a proper theory of federalism suggests that the federal government should only deal with: (1) The application of the framing principles of the United States Constitution; (2) extraterritorial issues (e.g. foreign affairs, defense); (3) boundary questions between the constituent entities of the federal system; (4) backstopping the states and their localities in matter of national concern. It need not, indeed should not, deal with any of these on an exclusive or preemptive basis. It is clear that this coercive federalism has failed. Coercion of the states and localities not only leads to a strong negative reaction on the part of the principals involved and the public in general, but it is tied closely with the failure of managerialism -- the ideology of those who sought to replace traditional federalism with a power pyramid approach.

Refocusing on the States

There was a time when the American public -- reformers and conservatives, interested parties of all kinds -- looked to their states as the arenas in which to fight great battles and do great things. Indeed, that was the case even though American society was in many respects a national society from the first and certainly became more intertwined nationwide in the wake of the Industrial Revolution. Now that is happening again. The New Deal quite properly represented a recognition that the states could not "go it alone," at least not after the U.S. Supreme Court had so limited their powers that reform was stymied unless Congress acted. But to carry the principles of the New Deal to absurd extremes, to assume that because the states can go it alone in some things, they cannot go it alone in any, or that they cannot lead in those things that are done cooperatively, is simply to misread American reality and American aspirations.

On the other hand, because powers really are diffused -- usually in a rather untidy way throughout the matrix, it is very difficult to decide to transfer power from Washington. Other presidents discovered that in order to decentralize, they must first centralize.25 Today, in an age of hierarchy-assumers, a president can be a successful centralizer to a great degree but there is no guarantee that an administration strong enough to overcome the non-centralization inherent in the system will so willingly part with hard-won powers. For those who believe in the utility and virtues of federalism, the substitution of decentralization for non-centralization is not an advance. The Reagan Administration grasped the idea apparently lost in the previous generation that while, under normal circumstances the elements in the matrix do work together to develop common policies and programs, the secret of a successful federal system lies precisely in the right of the elements not to act under certain conditions.

Federalism and The Curses of Bigness

Through bitter experience, it has been discovered that, in very large bureaucracies, coordination is well-nigh impossible "at the top" since the people on the top can barely control and are frequently at the mercy of their own organizations. Moreover, in a system of interlocking arenas (which is what exists in the United States despite all the talk about "levels"), there is no real "top" to do the coordinating. Similarly, students of public administration have begun to note the failure of managerial techniques widely touted as means to come to grips with contemporary governmental problems. Certainly, the idea that they would automatically result in efficiency and economy has long since gone by the boards. We now know how bureaucracies create their own inefficiencies and diseconomies. Beyond that, there has been a discovery that the new management techniques (PPBS and zero-based budgeting are prime examples) often are inappropriate to the political arena with its lack of precise, agreed-upon goals and its basic purposes of conciliating the irreconcilable and managing conflict.

On a different but closely related plane, Americans are beginning to sense the failure of consumerism - the redefinition of people primarily as consumers and their institutions primarily as vehicles for the satisfaction of consumer wants. At the very least, the redefinition of government as a service delivery mechanism and citizens as consumers leads to an unmanageable acceleration of public demands.26 It also leads to the evaluation of all institutions by a set of standards that, being human institutions, they are bound to fail. Not the least of its problems is the abandonment of the principle that people have responsibilities as well as rights, obligations to each other if not to the polity in the abstract, which, when neglected, imperil democracy by undermining its very foundations.

Simultaneously, the actions of the U.S. Supreme Court and, to some extent, the Congress offer vigorous testimony to the dangers which the states and the federal system face, demonstrating once again the need for strong constitutional protections for federalism even where there is the best will in the world on the part of those actively engaged in the political arena to be good federalists. The founding fathers understood this need, which is why they wrote such protections into the Constitution.

The possibilities of an increased role for the states are better for yet another reason. Until the mid-1970's, states rights were inevitably associated with arguments on behalf of slavery or racial segregation and discrimination against non-whites. However erroneous such arguments my have been in principle, in practice states's rights were used effectively as a shield for slavery and discrimination. That problem has been overcome as a constitutional issue. It is clear to one and all that the federal constitution and for that matter the vast majority of state constitutions are color-blind. This is the constitutionally correct position in a civil society dedicated to the proposition that "all men are created equal and endowed by their Creator with certain inalienable rights." For the first time in American history, believers in federalism can argue that protecting the rights of the states is important for the sake of liberty and is not entangled with slavery and discrimination. Hence, as the United States moves into the third century of American federalism, within the limits of a reality that will never conform as closely to our models as we would like and which might not pass certain aesthetic tests, there is a serious opportunity to strengthen the basic noncentralization of the American system in new ways.


1. Daniel J. Elazar, "The Shaping of Intergovernmental Relations in the Twentieth Century" The Annals, Vol. 359 (May 1965), pp.10-22.

2. Cf. Jeffrey L. Mayer, ed., Dialogues on Decentralization, a special issue of Publius, Vol.6, No.4 (1976) and Robert D. Hawkins, ed., Federalism and Government Reorganization, a special issue of Publius, Vol. 8, No.2

3. Garcia v. San Antonio Metropolitan Transit Authority
_____ U.S. _____ (1985) and Baker v. South Carolina
_____ U.S. (1988 ).

See, the ACIR Reports on Garcia: Reflections on Garcia and its Implications for Federalism (February 1986); Federalism and the Constituton: A Symposium on Garcia (July 1987).

4. See, ACIR on Congressional Mandates:
U.S. ACIR, The Constitutional Integrity of the Federal System: Questions of Balance (1988).
_____, State Regulation of Banks in an Era of Deregulation (September 1988).
On mandating, itself, see:
Catherine Lovell, "Mandating: Operationalizing Domination" in Publius , Vol. 11 , No.2 (Spring 1981) pp.59-78.

5. For a popular description of how this works, see Hedrich Smith, The Power Game (New York: Random House , 1988).

6. Robert B. Hawkins, ed., American Federalism: A New Partnership for the Republic (San Francisco: Institute for Contemporary Studies, 1982).

7. John Kincaid, ed., "State Constitutions in the Federal System,: in The Annals (March 1988) pp. 12-22.

G. Alan Tarr, "Religion Under State Conditions," in The Annals (March 1988) pp. 65-75.

Robert Williams, "Involving State Legislative and Executive Power in the Founding Decade," in The Annals (March 1988) pp. 43-53.

8. For assessments of Reagan's new Federalism, see Richard Nathan and Fred C. Doolittle, Reagan and the States (New Jersey: Princeton U. Press,1987). Reviewed by Daniel J. Elazar in Political Science Quarterly, Vol.104 , No.1 (Spring 1989).

Stephen L. Schechter, ed., The State of American Federalism 1980, a special issue of Publius, Vol. 11, Nos. 3-4 (1981); 1981, Vol. 12, No.3 (1982); 1982 Vol.13, No. 3 (1983); and 1983 Vol. 14, No. 3 (1984); 1986 Vol. 17 No. 3 (1987); 1987 Vol. 18, No. 3 (1988).
_____,Assessing the new Federalism, a special issue of Publius Vol.16, No.1 (Winter1986).
Richard Williamson, Federalism: Reagan's Efforts to Decentralize Government (Lanham, Md., University Press of America and Center for the Study of Federalism, forthcoming).

9. I develop this argument in Daniel J. Elazar "Cursed by Bigness: Toward a Post -Technocratic Federalism" in The Federal Polity, Publius, Vol. 3, o.2 NO.2 (1973) rePubliushed by Transaction Books as Daniel J. Elazar, ed., The Federal Polity. (special issue of Publius in book form,1973)

10. Robert Reich, The Next American Frontier (New York: Penguin Books, 1983) and John Naisbitt, Megatrends: Ten New Directions Transforming Our Lives, 6th ed. (New York: Warner Books, 1983).

11. Cf. John Kincaid, Political Culture, Public Policy and the American States (Philadelphia: ISHI, 1982).
_____, "The American Governors in International Affairs " in Publius Vol.5, No.3 (Summer 1975).

12. On federalism and education, see:
Susan H. Fuhrman," Education Policy: A New Context for Governance " in Publius, Vol.17, No.3 (Summer 1987).

13. Peter Takayama, "Administrative Structures and Political Processes in Protestant Denominations" in Publius, Vol.4, No.2 (Spring 1974).

14. From Public Opinion, see:
John Immerwahr and John Doble, " Public Attitudes toward Freedom of the Press " in Public Opinion Quarterly, Vol.46, 1982, pp.177-194.

15. On culture,see:

Aaron Wildavsky ,ed., American Federalism in Perspective (Boston; Little, Brown, 1967).
_____, American Governmental Institutions; A Reader in the Political Process (Chicago: Rand McNally,1968).
_____, Leadership in a Small Town (Totowa, N.J.: Bedminister Press,1964).
Terry Clark and Joseph Ben David, eds.,Culture and its Creators: Essays in Honor of Edward Shils (Chicago: University of Chicago Press,1977).
Terry Clark, Comparitive Community Politics (New York: J. Wiley, 1974).

16. Cf. Neal Peirce's series on the United States in our time (New York: W.W. Norton and Company Inc., 1976).

17. Cf. John Herbers, The New American Heartland (New York: Times Books, 1986).

18. See Daniel J. Elazar, Exploring Federalism (University Alabama: University of Alabama Press, 1986).

19. See Daniel J. Elazar, "The Rebirth of Federalism: The Future Role of the States as Polities in the Federal System," Commonsense, Vol. 4, No.1 (1981)

20. See Daniel J. Elazar, American Federalism: A View from the States, 3rd edition (New York: Harper and Row, 1984), Chapter 1.

21. See Martin Diamond, "On the Relationship of Federalism and Decentralization," in Cooperation and Conflict: Readings in American Federalism, Daniel J. Elazar, et. al., eds. (Itasca, IL.: F.E. Peacock Publiushers, 1969).

22. Daniel J. Elazar, The American Partnership (Chicago: Rand-McNally, 1966, reprinted by Transaction Books, 1984).

23. Publius, the Journal of Federalism, has documented examples of virtually every aspect of these phenomenon.

24. See Daniel J. Elazar, ed., Federalism and Prefectoral Administration, Publius, Vol. 11, No. 2 (1981).

25. Cf. Mortin Gordzins, The American System (Chicago: Rand McNally, 1966) Chapter 12.

26. See, for example, Norton E. Long, "The Three Citizenships" in Serving the Public in a Metropolitan Society, a special issue of Publius Vol.6, No. 2 (1972), pp. 13-32.

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