Subsidiarity in Practice: Which Level Should Decide?

Subsidiarity is not a rule that “local is always better”

In European law, subsidiarity has a fairly precise meaning. Article 5 of the Treaty on European Union says that, in areas that are not within the Union’s exclusive competence, the Union should act only when Member States cannot sufficiently achieve the objectives themselves and the objectives can be better achieved at Union level because of the scale or effects of the action. That legal rule governs the relationship between the EU and its Member States; THY-REALITY does not turn it into a universal law for every institution. What is useful is its structure of reasoning: test the lower level first, then justify the wider one.

The European Charter of Local Self-Government turns the same intuition toward the local level: public responsibilities should generally be exercised by authorities closest to the citizen, while moving responsibility upward should take account of the extent and nature of the task and the requirements of efficiency and economy. Slovenia’s Constitution follows a related logic in Article 140, linking local matters to whether a municipality can regulate them autonomously and whether they concern only its residents.

None of this produces one predetermined ideal community size. It produces a presumption in favour of proximity that can be overcome by concrete reasons. Subsidiarity is therefore not decentralisation at any price. It resists unnecessary centralisation while recognising that some tasks genuinely require a wider scale because of their nature.

Proximity has two important advantages. People who directly experience the consequences of a decision often possess better local knowledge; they can also more easily see who decided, whom to question and how a decision can be changed. The Council of Europe identifies precisely these democratic and practical benefits of local decision-making.

This fits the backbone of Awakening to Natural Law, where sovereignty is connected to responsibility for one’s own judgement rather than automatically surrendering judgement to an external authority. But the institutional translation cannot be “everyone decides everything alone.” We live in networks of consequences, so individual or local competence ends when the problem is no longer only individual or local.

The Green Book, in its critique of representation, also pushes political decision-making toward the basic popular unit. For this article that intuition is useful only as a reminder that the reason for distant decision-making should be visible. THY-REALITY adds the missing test: the basic level has priority only while it can perform the function and does not export its costs to others.

Test 1: how far do the consequences reach?

The first question is spatial and social: who actually carries the benefits, costs and risks? If an effect remains almost entirely within a household, building or neighbourhood, the case for wider authority is weak. If a decision changes conditions for people outside the decision-maker’s boundary, the legitimate circle of participants expands.

“Water and Sanitation: Local Source, Shared Watershed” showed this with water: a local water utility may be local, but a watershed is not. “The City as a Network of Communities: Decentralisation Without Fleeing to the Countryside” showed that daily transport crosses neighbourhood and often municipal boundaries. “Ecology Does Not Stop at Community Boundaries” added air, ecological corridors and intergenerational effects. In all of these cases the boundary of an institution is not necessarily the boundary of the problem.

Subsidiarity therefore asks not only which unit is smallest, but which unit internalises enough of the consequences that its decision does not become a free bill for outsiders. Sometimes the answer is a higher vertical level; sometimes a horizontal agreement among neighbouring communities is enough. “How Can Communities Cooperate Without a Single Center?” will examine those network forms of cooperation.

Proximity without capacity can produce only nearby powerlessness. The second question is therefore whether the lower level has the people, knowledge, data, finance, equipment and organisation needed for the function. OECD work on decentralisation specifically warns that responsibility without adequate resources creates unfunded mandates and poor service.

We should distinguish current incapacity from structural incapacity. If a community lacks expertise today but can reasonably build it or share it with others, that is not yet proof that a higher level should permanently take over. If a function requires continuous specialist capacity that every small unit would irrationally duplicate, the case for a shared level becomes stronger.

“Health Care Close to People: What Can Be Local and What Requires a Larger Scale?” already showed this in health care: some care can remain close to people, while highly specialised functions need a larger catchment. “Who Maintains Shared Infrastructure?” used the same logic for infrastructure maintenance: local inspection and routine work can coexist with wider specialist support. Subsidiarity therefore evaluates capacity by sub-function, not by sector label.

Test 3: are there real economies of scale, network effects or indivisibilities?

Some functions become cheaper, safer or possible at all only at a larger scale. A major treatment plant, laboratory, rail hub, complex hospital or transmission grid is not simply a larger version of a household task. Such systems have high fixed costs, specialist equipment, interoperability requirements or a physical network connecting many users.

OECD guidance therefore explicitly asks assignments of responsibility to consider economies of scale and scope and spillovers across jurisdictions. Yet “larger is cheaper” is still not enough. Centralisation can create a single point of failure, longer chains, less local knowledge and weaker accountability.

The correct test is comparative: what do we gain from the wider scale and what do we lose? If the only advantage is administrative convenience for the centre, the case is weak. If the wider scale removes costly duplication, connects an indivisible network or provides specialist safety, the case is much stronger. “When is larger scale genuinely necessary?” will later examine the limits of localism and economies of scale directly.

One function can live at several levels at once

The question “who decides?” is often too coarse because one public function contains several distinct tasks. OECD guidance recommends distinguishing rules, strategic planning, financing, implementation, oversight, performance measurement and complaints. These sub-functions do not all have to be placed inside the same institution.

For water, a national or wider system may set health standards, a watershed may require intermunicipal coordination, and a local operator may run the concrete system and respond to failures. For energy, grid rules are wider while generation and sharing may be local. For roads, a local team may handle routine maintenance while heavy equipment or major rehabilitation is shared at a wider scale.

This is one of the most important corrections to a simple centralisation-versus-decentralisation debate. We do not have to select one level for an entire sector. A well-designed polycentric system assigns different sub-functions to different levels and defines the boundaries of responsibility between them.

The burden of proof for moving upward

If subsidiarity is taken seriously, moving a function upward should not rest on the sentence “it will be easier this way.” The EU Protocol on subsidiarity requires reasons for higher-level action to be justified and, where possible, supported by qualitative and quantitative indicators. THY-REALITY derives a broader editorial test from that logic.

Before moving upward we should be able to answer five questions: (1) What specifically can the lower level not do? (2) What evidence shows the wider level will improve the result? (3) Is the reason spillover, specialist capacity, economies of scale, a shared standard or something else? (4) Could cooperation among lower units achieve the same objective without creating a new superior level? (5) How will we test whether the transfer actually worked?

Add proportionality: the wider level should take only as much of the function as necessary. If a shared standard solves the problem, implementation need not be centralised. If common financing enables local provision, management need not be centralised. If temporary specialist assistance closes a capacity gap, a permanent superior competence may not be needed.

A higher level does not receive a competence merely because it exists. It should receive it because it demonstrates a better and proportionate answer to a concrete problem.

The lower level must pass a power check too

Subsidiarity is not moral immunity for local power. A local majority can oppress a minority, a municipality can protect a local monopoly, a small network can become nepotistic, and a wealthy neighbourhood can block a function needed by the wider city. Proximity can improve accountability, but it can also intensify personal pressure and local capture.

The lower level therefore has to pass a rights and distribution test as well as a capacity test: does it respect basic rights, do affected people have a real voice and appeal, does it shift costs onto less influential groups, and does weak local fiscal or staffing capacity create unacceptable inequality in access to a basic function?

OECD guidance therefore combines decentralisation with adequate funding, equalisation, transparency, performance monitoring and coordination. The point is important: subsidiarity protects lower levels from unnecessary intervention; it does not protect poor local performance from scrutiny.

Seven examples from the material-resilience arc

the articles from “Food: How Much Locality Increases Resilience?” through “Ecology Does Not Stop at Community Boundaries” give us a practical matrix. With food, production, processing and stocks may be local or regional while broader trade provides another fallback route. With water, system operation may be local, safety standards wider, and watershed coordination follow the hydrological unit. With energy, rooftop generation, community generation and demand flexibility can stay close to users while grid stability and interoperability require wider coordination.

With infrastructure, asset stewardship may remain local while specialist repair or major renewal is shared. In the city, neighbourhoods can decide over nearby spaces and small improvements while main public transport and housing markets exceed their boundaries. In disasters, personal and local preparedness reduces passivity while professional response and major reserves require wider coordination. In ecology, the scale of decision should follow the scale of the consequence.

The same method therefore does not always produce the same answer. That is precisely the point. Subsidiarity is an algorithm for choosing scale, not a preselected map of authority.

The most common failures in assigning responsibility

The first failure is ambiguity: two levels are supposedly responsible, so in practice nobody is clearly accountable. The second is an unfunded mandate: the lower level receives the task but not the resources. The third is centralising everything together with the standard: a legitimate need for a common minimum becomes an excuse to take over implementation that could remain local.

The fourth is the opposite: localism without capacity, where ideological preference for small scale keeps a service at a level that cannot provide it well. The fifth is administrative boundaries replacing functional boundaries: transport, water or ecology are organised around office maps although physical systems ignore them. The sixth is temporary becoming permanent: a function moves upward during a crisis and is never reviewed again.

Every assignment of responsibility should therefore have an accountable owner, a funding source, a performance measure and a review point. A good system does not prevent every failure, but it makes it clear where failure occurred and how the function can be moved or redesigned.

A practical subsidiarity audit

For any new common function or dispute about competence, use these ten questions:

1. What is the precise objective? Not “fix transport,” but for example provide a reliable connection between three settlements. 2. Who carries the main consequences? One building, neighbourhood, municipality, several municipalities, watershed, state or wider? 3. What is the lowest level that has or can reasonably build the required capacity? 4. Which part of the function requires wider scale? Standard, financing, specialist, network, reserve, oversight or actual provision? 5. Are there demonstrable economies of scale or indivisibilities? How large, and in which sub-function? 6. Does the local decision create significant spillovers or violate a basic right of others? 7. Could horizontal cooperation among lower units solve the problem without a new superior level? 8. Who will pay, and do resources follow responsibility? 9. How will success be measured and where can people appeal? 10. When will the choice of scale be reviewed?

Answering these questions honestly turns the political argument “central or local” into something much more useful: which sub-function, at which level, for which reason, supported by what evidence?

For THY-REALITY, subsidiarity is the bridge between personal sovereignty and a network of communities. It preserves the presumption that people and smaller units do not need superior management for matters they can reasonably handle themselves. At the same time, it rejects the idea that every form of wider coordination is automatically domination.

Ostrom’s work on the commons showed that local users can successfully self-organise rules; for larger social-ecological systems, one characteristic of robust arrangements is also nested organisation across multiple levels. That closely matches the direction reached by the previous arc: local capacity below, wider networks only where the nature of the problem requires them.

The final rule of this article is therefore intentionally stricter than the slogan “decide locally”:

Decide at the lowest effective level. If a function is to move upward, show the problem, the evidence for the wider scale’s advantage, the minimum necessary intervention, a clear funding source and a way to review the decision later.

“How Can Communities Cooperate Without a Single Center?” will take the next question from here: once several self-governing communities conclude that they genuinely need a shared level, how can they cooperate without creating one central master?