The basic difference is that confederalism is a system where the central government is always quite weak whereas in federalism the central government can be quite a bit stronger.
In a confederal system, the "lower" levels of government (states, for example) have all the power. They give whatever power they like to the national government. A modern example is the UN where the UN only has what powers the member countries give it.
In federalism, there is a founding document (like the US Constitution) that spells out what powers are given to the central government and what powers are kept by the states. The state governments do not determine what powers the national government has. Instead, the constitution determines this.
Federalism is a concept applicable to a county or a nation, while confederalism refers to the practice of cooperation and collaboration between countries.
Federal system refers to a system of government in a country in which the power of government are divided between a central government and several regional government. The United States of America, and India, for example, are countries run by federal system of government.
The opposite of federal system may be called a unitary system of government in which all power is vested in a central government. Regional government machinery derives all its powers by delegation from the central government.
In a true federal system powers in some matters are reserved for the regional or state governments, while power in other matters the central government has power over the people of all the country. The respective powers of the state and the central governments are decided by the constitution of the country, and neither the central nor state governments have the authority to unilaterally change such division of powers.
As opposed to this feature of federalism, a confederation can only act through its individual member states. The confederation has no authority to directly control of action of people in different member countries. It can do so only through government of individual member states or countries.
Wikipedia defines CONFEDERATION as,
A confederation is an association of sovereign member states, that by treaty have delegated certain of their competences to common institutions, in order to coordinate their policies in a number of areas, without constituting a new state on top of the member states. Under international law a confederation respects the sovereignty of its members and its constituting treaty can only be changed by unanimous agreement.
Wikipedia emphasizes three important differences between a confederation and a federation:
By definition the difference between a confederation and a federation is that the membership of the member states in a confederation is voluntary, while the membership in a federation is not. A confederation is most likely to feature these differences over a federation:
- (1) No real direct powers: many confederal decisions are externalised by member-state legislation.
- (2) Decisions on day-to-day-matters are not taken by simple majority but by special majorities or even by consensus or unanimity (veto for every member).
- (3) Changes of the constitution, usually a treaty, require unanimity.