Collective Action Federalism: A General Theory of Article I, Section 8

Robert Cooter & Neil Siegel

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The Framers of the United States Constitution wrote Article I, Section 8 in order to address some daunting collective action problems facing the young nation. They especially wanted to protect the states from military warfare by foreigners and from commercial warfare against one another. The states acted individually when they needed to act collectively, and Congress lacked power under the Articles of Confederation to address these problems. The Framers did not have the tools and language of modern social science, but they knew a collective action problem when they saw it. When activities spilled over from one state to another, the Framers recognized that the actions of individually rational states produced irrational results for the nation as a whole—the definition of a collective action problem.

The solution lay with the establishment of a more comprehensive unit of government with the authority to tax, raise and support a military, regulate interstate and international commerce, and act directly on individuals. The federal government is the smallest unit that internalizes these spillovers. By internalizing the effects, the federal government is more likely than the states to solve the problem of interstate spillovers. Section 8 thus authorized Congress to promote the “general Welfare” of the United States by tackling many collective action problems that the states could not solve on their own.

Interpretations of Section 8, both outside and inside the courts, often have focused on the presence or absence of collective action problems involving multiple states—but not always. Regardless of collective action problems, many presidents and members of Congress throughout the nineteenth century doubted the constitutionality of internal improvements and disaster relief by the federal government. Moreover, the Supreme Court of the United States, in trying to distinguish the “truly national” from the “truly local” in the context of the Commerce Clause, historically has gone back and forth between imposing essentially no limits on the scope of the commerce power and imposing a series of dubious formal distinctions. The crisis of the Great Depression ultimately exploded the Lochner Court’s categorical differentiations between “manufacturing” and “commerce,” “direct” and “indirect” effects on commerce, goods in the “flow” of commerce and goods not in the flow, and “harmful” and “harmless” goods in commerce. More recently, United States v. Morrison differentiated “economic” activity, which Congress may regulate, from “noneconomic” activity, which Congress may not regulate.

The distinction between economic and noneconomic activity seems mostly irrelevant to the problems of federalism. A federal constitution ideally gives the central and state governments the power to do what each does best. Economic activity, however, does not generally cause collective action problems among the states, and noneconomic activity is not generally free from collective action problems. Consequently, Congress is not generally better at regulating economic activity, and the states are not generally better at regulating noneconomic activity.

We propose a more promising foundation for American federalism in Article I, Section 8. The eighteen clauses of Section 8 mostly concern collective action problems created by two kinds of spillovers: interstate externalities and national markets. The eighteen clauses form a coherent set, not a heterogeneous aggregation of unrelated powers. Coherence comes from connecting the specific powers to collective action problems affecting the general welfare. The enumeration of the specific powers in the Constitution imbues the inherently vague phrase “general Welfare” in Clause 1 with definite meaning. Welfare is “general” when the federal government can obtain it and the states cannot. The states cannot reliably achieve an end when doing so requires many (or even as few as two) states to cooperate. According to the theory of collective action federalism, Article I, Section 8 empowers Congress to solve collective action problems that predictably frustrate the states. In the language of Clause 3, interstate public goods, externalities, and markets are “among the several States.” In the language of Clause 1, they are “general.”

The theory of collective action federalism interprets Section 8 as authorizing Congress to tax, spend, and regulate when two or more states face collective action problems. Conversely, governmental activities that do not pose collective action problems for the states are “internal” to a state or “local.” Thus the foundation of federalism in Section 8 flows directly from the relative advantages of the federal government and the states.

The distinction between activities that pose collective action problems and those that do not best explains why Congress may not ordinarily use its commerce power to regulate such crimes as assault or gun possession in schools. The distinction between individual action and collective action should replace the Court’s distinction between economic and noneconomic activity. Collective action federalism also identifies a constitutional “hook” for Congress to regulate multi-state problems of collective action that may not involve commerce: Clause 1 authorizes some forms of regulation of noneconomic harms that spill over state boundaries, such as contagious diseases and certain kinds of environmental pollution. It is time to revisit the Court’s decision in United States v. Butler that Clause 1 confers no regulatory authority.

The theory of collective action federalism addresses the constitutional meaning of Section 8. The “general Welfare,” interpreted as part of the enumerated powers, is a substantive conception of interstate effects that centers on collective action problems. Members of Congress and the President should use this framework to understand and debate the constitutional scope of Congress’s power to tax, spend, and regulate. Courts also should use the theory to the extent that they engage in judicial review of federalism questions.

Acknowledgments:

Copyright © 2011 Stanford Law Review.

Robert D. Cooter is the Herman Selvin Professor of Law at the University of California at Berkeley. Neil S. Siegel is a Professor of Law and Political Science at Duke University.

This Legal Workshop Editorial is based on the following Law Review Article: Robert D. Cooter & Neil S. Siegel, Collective Action Federalism: A General Theory of Article I, Section 8, 63 STAN. L. REV. 115 (2010).


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