The Collective-Action Constitution: Introduction

First in a series of guest-blogging posts.

(Oxford University Press.)

The Collective-Action Constitution blends law, history, political science, and economics to offer a broad, deep theory of the U.S. Constitution's federal structure. The book argues that the Constitution's primary structural purpose, both originally and today, is to empower the federal government to solve collective-action problems for the states and to prevent the states from undermining these solutions or causing such problems. Any faithful account of what the Constitution is for and how it should be interpreted should include this main structural function.

The Constitution was established principally because of the widely recognized failures of its predecessor, the Articles of Confederation, to adequately address multistate collective-action problems. These problems included funding the national government, regulating foreign and interstate commerce, and defending the nation. Such challenges are called collective-action problems because the states needed to act collectively, not individually, to solve them, and they often struggled to do so. By empowering Congress to solve collective-action problems and by creating a national executive and judiciary to enforce federal law, the Constitution promised a substantially more effective federal government.

In a fundamental sense, the U.S. Constitution is the Collective-Action Constitution. If Americans do not recognize this truth, government cannot adequately address the sobering problems facing America today. Examples include foreign aggression, immigration, terrorism, nuclear proliferation, inadequate access to health care, climate change, pandemics, opioid addiction, gun violence, racism, other bigotry, income inequality, and political extremism.

State governments can address aspects of these problems. The states are the default regulators in the American system, and they can handle many problems entirely or partially on their own. But states acting individually cannot succeed in solving the above problems no matter how effective their governance structures or political leaders are. The problems are too large—their scope transcends state borders. To solve them, the states must act collectively, not just individually.

Some states may succeed in acting collectively to some extent by creating interstate compacts or informal agreements if they can unanimously agree. There are contemporary examples of even many states acting collectively. But it is increasingly likely that states will fail to act collectively as the number of states that must cooperate or coordinate rises, and the number of states required to act collectively increases with the scope of the problem.  According to the book's arithmetic, only around 200 interstate compacts exist today, and the median number of states per compact is 3. Moreover, even when some states do act collectively, they may harm other states or the federal  government, and they may trigger disagreements over whether they are solving or creating a collective-action problem. These concerns explain why the third clause of Article I, Section 10, presumptively prohibits interstate compacts and requires Congress to approve them.

As noted, this is not the first time that the states have needed to act collectively to overcome daunting challenges. Under the Articles of Confederation, the Confederation Congress had no dependable source of tax revenue. It also lacked the powers needed to protect the states from commercial and military warfare waged by European powers, and from commercial (and potentially military) warfare waged by one another. The states proved largely unable to solve these difficulties on their own. They mostly acted individually when then needed to act collectively, and the most influential and insightful of the Constitution's Framers—including James Madison, Alexander Hamilton, James Wilson, and George Washington—concluded from experience that the states could not reliably achieve an end when doing so required two or more of them to cooperate or coordinate.

The solution they proposed was to establish a more comprehensive unit of government—a national government with robust authority to tax, regulate interstate and foreign commerce, raise and support a military, conduct foreign relations, perform other vital functions, and act directly on individuals, not indirectly through the states. The Constitutional Convention of 1787 thus instructed its Committee of Detail, which drafted constitutional text reflecting the decisions of the Convention, that Congress would possess power "to legislate in all Cases for the general Interests of the Union, and also in those Cases to which the States are separately incompetent, or in which the Harmony of the United States may be interrupted by the Exercise of individual Legislation." Called Resolution VI, the Committee took this language and, to actualize its primary objectives in more determinate form, produced Article I, Section 8, home to most of Congress's legislative powers. The Convention adopted Section 8 without much controversy. State ratifying conventions made Section 8 and many other constitutional provisions and principles that share its purposes "the supreme Law of the Land,"  to quote Article VI.

Supporters of the Constitution did not reference the modern term "collective-action problems," but many came close, including in Resolution VI. More importantly, they knew such problems when they saw them. When certain activities spilled over from one state to another, nationalist Founders recognized that the uncooperative or uncoordinated actions of individual states produced harmful results for the nation as a whole—the definition of a collective-action problem. In the system the Constitution created, the federal government is designed to be the smallest unit of government that fully internalizes the effects of these spillovers. Because the federal government can internalize the effects, and because it operates through (super)majority rule rather than unanimity rule, it will often be structurally better situated than the states to solve collective-action problems caused by intestate spillovers.

Such collective-action problems take three forms. First, cooperation problems arise when all members of a group of states prefer that every member cooperate rather than that every member not cooperate, but some or all group members prefer to achieve their most desired outcome without in effect paying for it—they prefer not to cooperate while others do. The Prisoners' Dilemma, a famous example of this kind of collective-action problem, captures situations in which states "free ride" off the contributions of other states to collective action or "race to the bottom" because some states disadvantage themselves relative to others by regulating businesses or individuals in ways that other states do not.

Second, coordination problems arise when some or all states would need to coordinate their behavior to solve a problem but there are multiple ways of doing so and there may be disagreements about how to do so. For example, creating national networks of transportation and communication would require the states to coordinate their regulatory behavior.

These classic collective-action problems of game theory can be called "Pareto collective-action problems" because all states would be better off by their own estimations if collective action succeeded. Given the number of states and the extraordinarily demanding requirement (called Pareto optimality) that all states be better off, Congress would almost never be able to act if it were authorized to solve only Pareto collective-action problems.

By contrast, a third category of collective-action problems, which The Collective-Action Constitution calls "cost-benefit collective-action problems," refers to certain situations in which some states would regard themselves as better off if collective action succeeded but other states would deem themselves worse off. Almost all multistate collective-action problems in U.S. history are of this variety. (For example, Rhode Island boycotted the Constitutional Convention.)  When collective-action reasoning is relevant to the scope of federal power, Congress, as only governmental institution in which all states and individuals are represented, is authorized to resolve disagreements among states over whether collective action should succeed if Congress rationally determines that its intervention would help the one group of states more than it would harm the other. This requirement is called cost-benefit optimality. When the book references multistate collective-action problems, it includes both Pareto and cost-benefit collective-action problems.

Managing collective-action problems is not the Constitution's only structural function, and The Collective-Action Constitution honors the additional purposes of preserving state regulatory authority and separating and mixing federal powers to make the exercise of federal authority safe for state autonomy and individual liberty. Vindicating these purposes requires constitutional and practical limits on federal power, and the book endorses many of them. But when constitutional meaning is uncertain and there are conflicts among these purposes, the Constitution's collective-action objective should generally prevail. To a significant extent, the Constitution is the Collective-Action Constitution—both because a collective-action account possesses significant descriptive power originally and today, and because it is normatively attractive. The main goal of the Collective-Action Constitution is not to achieve economic efficiency, but to sustain political and economic union.