In this unique and provocative contribution to the literatures of political science and social policy, ten leading experts question prevailing views that federalism always inhibits the growth of social solidarity. Their comparative study of the evolution of political institutions and welfare states in the six oldest federal states - Australia, Austria, Canada, Germany, Switzerland, the US - reveals that federalism can facilitate and impede social policy development. Development is contingent on several time-dependent factors, including degree of democratization, type of federalism, and the stage of welfare state development and early distribution of social policy responsibility. The reciprocal nature of the federalism-social policy relationship also becomes apparent: the authors identify a set of important bypass structures within federal systems that have resulted from welfare state growth. In an era of retrenchment and unravelling unitary states, this study suggests that federalism may actually protect the welfare state, and welfare states may enhance national integration.