Checks and balances should be a fairly familiar concept to Americans. The standard definition of checks and balances is that the state must be broken up into multiple segments that function as checks against each other's power and perform different functions, while these segments still remain within one central institution. Traditionally, the idea is that there must be three separate branches (executive, legislative and judicial) within one central government in order to prevent the accumulation of power into one group. At least superficially, this view slightly recognises the principle of decentralisation. Another somewhat more powerful conception of checks and balances is the idea that there must be multiple and separate levels of government, each with their own branches and jurisdictions, and that in order to combat the accumulation of power, individual states or parishes and cities should remain "independent" from the central state.
This is the doctrine of internal checks and balances. Both separation between branches and levels of government are internal theories of checks and balances. But how well do these theories stand up in the face of logic and empirical evidence? Not very well. The fundamental flaw in the idea that separation between branches within one institution will stop power from being concentrated should be fairly obvious: it is still within one institution. There is theoretically no "third party" outside of that institution functioning on a check on it, which is to say that the overall institution is a judge in its own case. The supreme court is still part of the federal government. All historical evidence shows a great deal of collusion between branches, and when there is collusion between branches, there is centralisation of powers into one expanding group. Clearly, merely having three branches under one institution will not stop power from accumulating in that institution. Much heftier criterion must be met.
While the doctrine of state's rights is a step up from this, since it maintains at a minimum that there should be a multitude of jurisdictions within the overall territory bestowed to the central government, it nonetheless contains a similar flaw. The states are still ultimately subject to the territorial dominion of the federal government and there is once again collusion between the levels of government. If a central government still exists, it doesn't matter how many territorial jurisdictions that one tries to split the central state's control into, political power is still concentrated at a central point. Surely expanding the amount of people in the government or the number of sub-governments within a government's territorial monopoly is not necessarily a way to restrict political power. In order to at least be a "pure" advocate of "state's rights", one must support a more radical approach, with no federal government.
Once one has made it to this point, the same problem keeps repeating itself at each level of government. The states in themselves would now be the central governments, only over smaller territories. The size of the dominion of power may have been reduced, but the essential feature of territorial monopoly is still maintained. Counties, parishes and cities would synergise with and the states. If the states were gotten rid of, the counties would be the territorial monopolies and the cities and towns would synergise with them. And even down to the city-state level, the problem of territorial monopoly would persist. The advantages of so-called "state's rights" or "city's rights" mostly only have to do with the size of the territorial monopoly, but they do almost nothing to address the problem of territorial monopoly itself. All such mechanisms are ultimately within the structure of the institution of the state itself. A monopoly cannot be broken up without competition from other institutions external to it.
This is why external checks and balances are much stronger and more meaningful than internal ones. Checks and balances in which governmental institutions are held in check by non-governmental ones, which requires a separation between business and state, constitutes an example of external checks and balances. An honest private institution that opens up a business in competition with the state in a particular area, which inherently requires that the given business not engage in any kind of patronage and protectionism with the state, is functioning as a check on state power by providing an alternative option for people and lowering dependance on the state. The improvement of technology and the availability of private alternatives to the state in a given field, and the long-term decrease in prices it often leads to, can function as an external "check and balance" on the state much better than any internal "check and balance" ever can.
On the other hand, a private institution that colludes with the state is participating in the centralisation and expansion of power. Indeed, the leaders of such institutions become part of the ruling class. When such synergy between industry and government takes place, various businesses start to become more centralised, modelled more similarly to the structure of the state than would otherwise have been possible. When business starts to merge at the hip with the state, this presents an opportunity to obtain and expand political power for both select private interests and members of the government itself. The union of church and state is a perfect historical example of territorial monopolies further centralising and expanding as a consequence of collusion between the state and external organisations. The ultimate end of such collusion is the merging of a more multi-centred order into one large central organisation.
In a sense, everyone who is outside of the ruling class of a given society is a potential check on political power, by the mere virtue of not being within or in control of it. There are many external methods of checking and resisting political power, which includes various types of civil disobedience and economic decisions. From the perspective of an individual as a consumer, withdrawing consumption from the state's "services" and merely patronising a private alternative at a lower price and participating in peaceful black markets is an important haven from state power. On the other hand, actively and enthusiastically participating in the state's "services" transforms one into either a state of dependance on the state, or worse, part of the ruling class. Here too, collusion has a negative effect because it is internal to the institution. It's working within the system, which is precisely why it does not work.
Economic incentives are a very important check and balance on state power. A defining feature of the state as an organisation is that it is an externaliser of costs, which is to say that those who hold the political power in a society do not actually bear the costs of the laws and policies that they work with. Therefore, mechanisms that internalise costs provide a disincentive towards political power. Political power cannot be obtained or maintained without externalising costs through mechanisms such as taxation and eminent domain. If the state is denied access to external resources then it will eventually crumble, as the state as an organisation depends entirely on the production of those who are not in it. If it is either cut off from receiving that production then political power obviously cannot be maintained for very long.
The ultimate check on political power is philosophy. In short, it is impossible to maintain or expand political power without the propagation of ideological ideas in favour of political power or encouraging resignation to it. What ideas people adhere to ultimately effects the course of history. All that is required to combat political power is the action of withdrawal of support to the best that one can manage. And in order for this to be done, it must be philosophically accepted that the only possible checks against the state that can possibly exist are external to the institution because the institution of the state is a compulsory territorial monopoly regardless of what one tries to do with it internally. It is logically inconsistent to maintain that one can reduce, restrict or abolish political power by using political power, and it is nonsensical to claim that one can provide checks and balances on an institution through mechanisms that are entirely within the framework of that very institution and when that institution has a territorial monopoly.
What about so-called "competition" between nation-states? If there can be said to be anything resembling checks and balances between governments, it would be the total lack of both collusion and offensive intervention between governments. When states engage in economic hegemony with each other they begin a gradual trend towards international or global government, taking the centralisation process to the extreme of there being virtually no territory immune from being within the jurisdiction of the government monopoly. International government possesses all of the problems previously mentioned about federal and state government. It just conglomerates power even more than nation-states and has a larger monopolistic jurisdiction.
Modern state warfare essentially cannot be done without collusion and contracting with particular banking and business interests. War is the most costly endeavour a government can possibly engage in and it can only be waged by externalising the costs, particularly through the mechanism of monetary inflation and borrowing from foreign governments and banking interests. War has historically been a means of maintaining and expanding political power. As such, it would be disingenuous to use it as an example of free competition. It is, by definition, a flexing of state power, of monopoly. Even if a state is overthrown by another, the victor state usually has increased power when the smoke clears. War has been the main mechanism of expanding state power throughout history.
In conclusion, it should be clear that true checks and balances lies within the domain of private and decentralised mechanisms that are external to and not in any kind of collusion with any political power. That is, market competition is true checks and balances, while the state can only attempt to simulate competition in vein. The more standard concept of checks and balances, while a well intended attempt to form a structural means for restricting political power, is incredibly mistaken in its premises as to how the state functions as an institution. It is rather naive about the nature of political power. In order to truly have checks and balances, the state as an organisation must be questioned altogether and participation in the activities of and consumption of the loot of such an organisation must begin to be abandoned in favour of a multitude of alternatives.