While teaching my Federalism seminar recently, I made an analogy to Star Trek's United Federation of Planets. That got me thinking about the role of federalism in Star Trek. How much power does the Federation's central government have, and how much is left to the individual planets? Does the central government's Star Fleet have a monopoly of military force, or do Vulcan and other planets have their own local forces? Does the Federation subsidize planetary governments heavily, or are there hard budget constraints? Despite five Star Trek TV series and numerous movies, these questions haven't really been answered. Unfortunately, the academic literature on Federation law isn't much help either (see also this supposedly comprehensive volume on Star Trek and the law, which almost completely ignores federalism issues).
The evidence in the TV series' on these points is contradictory. On the one hand, the Federation seems to have a socialistic economy with a massive welfare state and no currency, which would require a high degree of centralization and planning incompatible with meaningful federalism. In the absence of a currency and price system, central planning seems to be the only way to coordinate a complex economy to even a limited degree. On the other, member planets apparently have considerable autonomy. For example, Vulcan seems to have very different laws from Earth. And Vulcan's economy seems to have a large market sector dominated by family-owned enterprises. In Deep Space Nine, the planet of Bajor applies for Federation membership. Although Bajor is at least a partial theocracy with a government heavily influenced by religious leaders, anti-Federation Bajorans never argue that Federation membership would lead to the end of Bajor's quasi-theocratic political system (as it surely would if the highly secular Federation denied political autonomy to member planets).
How to reconcile the evidence? I would suggest that it is only Earth that is socialistic, while the other member worlds have free market systems or mixed economies. The human-dominated Star Fleet military is the only Federation military force, and is tasked with collecting tribute from the nonhuman planets for redistribution to Earth. But as long as they pay their taxes, which subsidize Earth's welfare state and Star Fleet itself, they are largely left alone to govern their domestic affairs as they see fit. The Federation is essentially a big protection racket (in both senses of the word: providing external security, and also "protection" against its own depradations). There is even a good historical precedent. The 5th century BC Athenian-dominated Delian League also collected tribute from the other member states (which had no independent militaries) and used it to finance government spending on welfare benefits and the Athenian Navy, an analogue to Star Fleet. As long as the allies paid their tribute, Athens mostly left them alone and did not try to influence their domestic policies.
This theory explains a lot. For example, it is now clear why Star Fleet is so completely dominated by humans. I don't think we have ever seen a nonhuman Star Fleet admiral, and there are very few nonhumans serving even as lower-ranking officers. Except for a few collaborators like Mr. Spock (who is criticized by his fellow Vulcans for accepting too many "illogical" human ways), the nonhumans can't be trusted to force their own people to pay tribute. It also explains why the human-dominated Star Fleet military force seems to have near-total control over Federation foreign policy (e.g. - Star Fleet officers such as Capt. Picard make major policy decisions without any significant civilian oversight).
Furthermore, in one of Star Trek movies, a Klingon spokesman denounces the Federation as a "homo sapiens-only club." Taken literally, this is too obviously false to be effective propaganda; the Federation surely does have nonhuman members. But this propaganda line makes sense if it actually refers to the fact that Federation and Star Fleet are tools for expropriating wealth from nonhuman planets and transferring it to Earth.
Why don't we ever see Captain Kirk or Capt. Picard on tribute collection runs? Because the Enterprise is one of Star Fleet's most advanced warships, and is therefore reserved for more difficult missions, such as going "where no man has gone before" in search of new wealthy star systems to occupy and tax. Note the term "no man," which further underscores human control of Star Fleet.
How does the Prime Directive fit into this? On the surface, it seems incompatible with an imperialistic Federation. But remember that the Prime Directive only applies to planets which are at a much lower level of technological development than the Federation itself. That is, only to planets that are not wealthy enough to be worth the cost of occupying and taxing. Star Fleet Command wants to prevent glory-seeking captains like Kirk from taking over underdeveloped worlds that are likely to drain more revenue than they bring in. The Prime Directive serves this goal, while also cloaking Federation imperialism in a veneer of righteousness that has been all too successful in fooling generations of TV viewers.
I highly doubt that this is the interpretation of Star Trek that Gene Roddenberry intended. However, it does account for the available evidence, doesn't it?
UPDATE: Commenters note that there actually has been one (though only one) nonhuman Star Fleet Admiral. I stand corrected. But most likely she's just a token exception that proves the rule. Moreover, all she does is preside over the trial of one of the few other nonhuman officers in Star Fleet (Worf). They wouldn't trust her to preside over the trial of a human!
UPDATE #2: Some commenters claim that scarcity (and thus economics) is irrelevant in the Star Trek universe because they can manufacture anything they want instantly using replicators. Not entirely true. Some crucial raw materials, such as the dilithium crystals that power their starships clearly can't be replicated. Same with the replicators themselves (you never see them try to replicate a replicator). Ditto for the Latinum that the Ferengi use as currency; if the Ferengi could replicate latinum at will, the currency would rapidly collapse due to hyperinflation caused by constant replication. Thus, there is scarcity in the Star Trek universe, even if many goods that are scarce today are much easier to produce for them.