This article explores “molecular federalism”, an idea floated briefly in the author’s earlier work on private lawmaking. The many private lawmakers — ranging from familiar organizations like the American Law Institute and the New York Stock Exchange to less well known ones, like the International Chamber of Commerce and associations of banks — are here envisioned as part of a federalist scheme that operates at a “molecular” level rather than at the level of the state. Assuming that many private entities have de facto lawmaking power, as suggested in the earlier paper, their function and legitimacy, and the strengths and weaknesses of private lawmaking, are assessed under the rubric of federalism. 

The article takes up both horizontal and vertical aspects of molecular federalism, considering the possibilities of competitive private lawmaking and the potential for (and limits of) governmental control. The author accounts for the extraterritoriality of private lawmaking and considers how private legislation may escape some of the vertical checks and balances associated with state-based federalism, not only through extraterritoriality, but also through some surprising shifts in the federalist hierarchy. Also explored the question of how one legal regime can become dominant, while other contexts may suffer legal fragmentation. The paper attempts to place its analysis within the context of some prominent U.S. theorists of federalism, including Herbert Wechsler and Justice Brennan, and contemporary European theorists, such as Gunther Teubner. The conclusion is that molecular federalism, like its state-based counterpart, produces mixed results, and often in a way that accentuates both the strengths and the weaknesses of statebased federalism. Also suggested that a constitution for private lawmaking, or a similar system of meta-rules, may be necessary to allow private lawmaking to come closest to its potential.