In many of his writings, Alexander Hamilton was trying to solve a problem that would have felt familiar to any observer of today’s European Union: how do you hold together a collection of sovereign states with divergent interests, competing economies, and shared but fragile security arrangements? Some tasks, he insisted, required centralization — and it was above all questions of commerce and collective security that occupied him. More than two centuries later, Europe has built half of Hamilton’s vision with remarkable success — market integration — while leaving the other half, defense, conspicuously and dangerously unfinished. Today, the external pressure that might finally force Europe to complete that vision is arriving not gradually but all at once.
Hamilton’s argument for centralization across the Federalist Papers rests on two interlocking pillars. The first is commercial: a fragmented union of competing states would descend into economic rivalry, trade disputes, and beggar-thy-neighbor policies that would impoverish all parties and breed resentment. Federalist No. 11 makes the case brilliantly — only a unified commercial front could give America the leverage to negotiate with European powers on equal terms, build a common maritime capacity, and generate the economies of scale that prosperity requires; only through union, Hamilton wrote, could America become “one great American system, superior to the control of all trans-Atlantic force or influence.” (p. 52) But a customs union without political union, Hamilton understood, would have been inherently unstable. Commercial integration creates winners and losers; without a central authority to redistribute, regulate, and adjudicate, those imbalances fester into conflict. The second pillar is security. Federalist No. 6 catalogues, through the history of ancient and early modern Europe, how disunited states drift into rivalry and war even when material interests would counsel peace. No. 7 turns to the specific flashpoints — territory, commerce, public debt — that could set the American states against one another. And No. 8, most sobering of all, warns of what disunion does internally: standing armies emerge, garrisons multiply, and civil liberties erode under the discipline of permanent military readiness. Smaller states become clients or victims of larger ones. The very act of partial union, Hamilton argues, may be worse than either full union or no union at all, because it creates the illusion of shared fate without the institutions to back it up.
What makes these arguments especially pointed, however, is that Hamilton was writing against an existing institutional failure: the Articles of Confederation. Under the Articles, the thirteen states had created precisely the kind of half-union that Hamilton warned against — a league of sovereign states with a common framework but no effective central authority. Congress could pass resolutions but could not enforce them. It could requisition funds from the states but had no independent power of taxation. It could negotiate treaties but had no means of compelling compliance. It could not regulate interstate commerce, meaning that states erected tariff barriers against one another and pursued commercial policies that benefited themselves at their neighbors’ expense. The result was chronic dysfunction, mutual suspicion, and the very economic fragmentation that union was supposed to prevent. Shays’ Rebellion in 1786 — a debtor uprising in Massachusetts that the confederal government was powerless to address — seemed to confirm Hamilton’s darkest fears about what confederal weakness looked like in practice.
The Articles of Confederation, in Hamilton’s view, represented a fundamental category error: the attempt to combine the form of union with the substance of sovereignty, to enjoy the benefits of collective action without surrendering the autonomy that makes collective action impossible. Federalist No. 15 is his most devastating indictment: a government that operates only on states, rather than directly on individuals, is — in Hamilton’s own words — scarcely a government at all, “a mere treaty, dependent on the good faith of the parties.” (p. 151) When its demands become inconvenient, member states simply ignore them, and there is no legitimate mechanism of enforcement short of force exercised against a state’s collective body — which is to say, war between members. The confederal model, Hamilton concluded, was not simply inefficient — it was structurally destined to break down into either paralysis or civil war, with no stable middle ground.
The European Union, viewed through this Hamiltonian lens, presents a striking and uncomfortable parallel. On the commercial dimension, Europe has achieved something Hamilton could only have dreamed of for the early American republic. The single market, the customs union, the euro — these represent extraordinary feats of institutional construction, binding together twenty-seven economies in a web of regulatory harmonization and legal obligation that has no real precedent in history. As Daniel Kelemen and Kathleen R. McNamara (2022) argue, the EU has undergone substantial state-building through the incremental, legal construction of market authority — a quiet revolution of regulatory capacity carried out largely through courts, agencies, and directives rather than through dramatic moments of constitutional founding. On this dimension, Europe moved decisively beyond the confederal trap that paralyzed the early American republic. But on the security and fiscal dimensions, Europe remains stubbornly, almost willfully, incomplete. There is no European army and there is no European treasury with meaningful independent taxing and spending capacity. The European Central Bank was forced into its outsized role during the Eurozone crisis by default — because member states refused to build the fiscal institutions that would have made such improvisation unnecessary. Rather than a statement of institutional strength, Mario Draghi’s “whatever it takes” was a confession of institutional absence. The ECB did what it had to do precisely because nothing else existed to do it.
The deep insight of Hamilton’s argument — and its most unsettling implication for Europe — is that the two pillars of commercial and security union are not independent of one another. Commercial integration without fiscal and security union actively generates new vulnerabilities. Integrated markets amplify asymmetric shocks. A financial crisis in one member state becomes a crisis for all, yet without a common treasury or lender of last resort, the response is improvised, slow, and politically corrosive. Hamilton knew this instinctively. His hope was that shared liability creates shared identity, and that, in turn, shared identity makes political union durable — a bet that eventually paid off in the American context, but only after profound trauma. Without the cement of common fiscal obligation, the single market risks becoming what the Articles of Confederation made of interstate commerce: a framework that promises integration while the underlying political architecture remains fragmented and rivalrous. The problem is that the United States had the Atlantic to shield it from the most overwhelming external pressures, and this bought time to develop a common identity gradually — through geopolitical threats that were serious but rarely existential, and an internal threat it ultimately overcame, but only at the cost of civil war. The European Union has no such shield today, and it does not have the luxury of resolving its own unfinished union through internal conflict — it will have to find another way to the same destination.
The external environment that long allowed Europe to defer this reckoning has collapsed with startling speed. For decades, the security deficit at the heart of European integration was masked by American willingness to provide a collective defense umbrella through NATO, allowing European states to free-ride on US military capacity while investing in welfare states and market integration. That arrangement has now visibly unraveled. Russia’s full-scale invasion of Ukraine in 2022 demonstrated that war on European soil was a present reality. Europe’s response, as Philipp Genschel and colleagues (2023) document, was revealing: existing EU funds were hastily repurposed for weapons deliveries and energy independence, but when the Commission suggested genuinely new collective resources, member states refused. The main burden of resource mobilization fell back on national governments, exactly as Hamilton would have predicted of a confederal system under pressure.
Since the start of Donald Trump’s second administration, the assumption that American security guarantees could be taken for granted has been difficult to sustain. J.D. Vance’s address at the 2025 Munich Security Conference — devoting his remarks to European free speech and internal politics rather than to Russian aggression, and warning the EU against regulating American technology firms — was widely read in European capitals as a signal that Washington’s commitment to the continent’s defense could no longer be assumed. Whatever the long-term trajectory of transatlantic relations proves to be, European security planners have had to reckon, for the first time in the alliance’s history, with the possibility that the United States may not reliably show up. Europe now shares the Eurasian landmass with its geopolitical rivals, without the oceanic buffer that granted the United States its long strategic luxury. The imperative to build genuine collective defense capacity has become an immediate necessity. And yet precisely at this moment of maximum external pressure, Europe faces a double challenge, because the geopolitical emergency arrives simultaneously with a profound internal crisis of democratic legitimacy. The same anxieties, economic dislocations, and cultural resentments that delivered Trump his second term are reshaping European politics from within. Populist and nationalist movements are gaining ground across the Union, from France to Italy, feeding on a widespread sense that European integration is something done to ordinary people by distant elites rather than something built with and for them. This reflects a genuine and durable tension at the heart of the European project — one that the Antifederalists in Hamilton’s own time identified with uncomfortable prescience.
The Antifederalist critique of the 1787 Constitution was a democratically serious argument about the conditions under which legitimate political authority is possible at all. Figures like Brutus and the Federal Farmer warned that republican self-government requires a demos — a people with sufficient shared identity, common experience, and mutual trust to accept being governed together, to lose political battles gracefully, and to pay taxes that benefit strangers in distant places. They feared that a continental republic was simply too large and too remote from ordinary citizens to sustain genuine accountability. Representatives would be too few and too distant. The powerful would capture federal institutions. Local self-government — the genuine school of democratic citizenship — would wither under the shadow of a consolidated government in a faraway capital.
A union that deepens its fiscal and security capacity without simultaneously deepening its democratic foundations risks accelerating precisely the internal fragmentation it is trying to overcome. Each step toward deeper integration taken over the heads of European publics — the euro, banking union, emergency debt instruments — has generated a backlash that makes every subsequent step politically harder, and unresolved legitimacy questions of this kind rarely stay dormant. The Antifederalists lost their argument in 1787, but history gave them a partial revenge: the union they warned against required a civil war to survive, a New Deal to acquire real fiscal capacity, and a civil rights movement to extend its founding promises to those it had excluded — three very different reckonings, but each a sign that “a more perfect union” was never self-executing. Europe should take that warning seriously before assuming that institutional deepening automatically produces democratic legitimacy rather than consuming it.
What, then, does Hamilton actually teach Europe in the present? His most important lesson is not simply that more integration is needed. It is that the specific combination of commercial depth without fiscal and security capacity is structurally unsustainable, and that the window for managing the transition on favorable terms is closing. The geopolitical case for deeper union has never been stronger or more urgent. Europe today faces two continental-scale competitors simultaneously: a China whose state-directed industrial policy is reshaping global technology and manufacturing supply chains, and a United States that under its current administration has abandoned the pretense of treating Europe as a partner rather than a target. Europe’s fragmented capital markets, its inability to scale technology firms across national borders, its patchwork of industrial policies that subsidize nationally rather than collectively, and its chronic underinvestment in defense and research leave it exposed on every front at once. Hamilton’s insight about commercial leverage applies here with full force: twenty-seven member states negotiating separately with Beijing or Washington have a fraction of the leverage that a unified European industrial and technology policy would command. The single market created the platform; only genuine fiscal union — with the capacity to issue common debt, fund collective investment in strategic industries, and redirect resources across borders — can build the superstructure that competitive survival in the twenty-first century requires.
And yet, centralization always harbors the risk of an unchecked concentration of power. This is Hamilton’s aporia, transposed onto Europe: the same fiscal and security capacity that a fragmented, exposed union urgently needs is also the capacity that, absent a clearer definition of who the demos is, who belongs, and how that demos can elect and check those who govern it, will deepen the crisis of legitimacy that has beset the European Union from its inception. Europe cannot long afford to remain half-built. But Europe can also not build further without an answer to the question of who is doing the building.
