In political science, a confederation is when a group of smaller political entities is loosely tied to a weaker central government. In this arrangement, the states are more powerful than the central government and do not have to answer to that central government. The smaller political units maintain their sovereignty and often times have their own economic and currency systems. Examples of confederations in American history include the government of the Articles of Confederation and the Confederate States of America. In world history, the Soviet Union operated under a confederate system.
The confederate system has the advantage of affording citizens more power and freedom as they are closer to their governments. The tyranny of a large, powerful central government is not possible. A weakness is that confederations almost always break down due to power struggles and an inability to mobilize resources for the good of the whole.