Imagine you were responsible for setting the transportation rules for an urban area. Part of your responsibility is to set the rules for commercial transport, including taxis. How would you go about it? You might begin with some sort of statistical survey, collecting data on consumer preferences, rush hour congestion, what times the most cabs were needed, what pricing is required to assure a sufficient number of cabbies, and so on. This data would allow you to set rules; it might be your most precious resource because without it, it would be impossible to determine what the rules should be, no matter how precise the political guidance you were given (to lower carbon emissions, to support public transport, etc.). Once the rules are set, you face the daunting problem that whatever the result of your operations, the context would change: Population flows would alter the basis for the data you collected, indeed your own rules would inevitably change the reality you were regulating, and at some point new data would have to be collected and new rules promulgated which would face, equally inevitably, the entrenched interests that had based their operations on the old rules.
Enter Uber, a market-based commercial transport system that relies on continually refreshed data and a decentralized network of operators. This innovation greatly expands the opportunities for drivers and consumers in a way the old survey-and-regulate model cannot. It is an example of the change we are undergoing as we shift from industrial nation-states to informational market states, that is, from a constitutional order that sought to achieve its political goals by regulating and overriding the market to an order that attempts to use the market to achieve its goals. One cause of this change is the loss of the monopoly on the collection of some kinds of mass information that governments used to possess.
Replacing Outdated Structures
There are countless other examples of this looming development: the shift from state-owned enterprises to sovereign wealth funds; the deregulation not only of industrial practices but also, more crucially, of human reproduction; the use of private contractors to conduct government operations; the U.S. adoption of Obamacare in preference to a nationalized health service; the legalization of gay marriage; the movement from conscription to all-volunteer armed forces; and so on. This does not mean the State is withering away — far from it — but rather that its basis for legitimacy is changing. For a brilliant analysis of this development, see Australian analyst Paul Monk's essay, "The Rise of the Market State."
Partly this has been driven by the calcification of the regulatory structure of the State so well-documented by Philip Howard in The Rule of Nobody. Even as early as 1975, Grant Gilmore in his celebrated Storrs Lectures suggested that it would become necessary for courts to revert to their common law function in revising the applications of statutes that had become antiquated and no longer rationally served their intended purposes. His proposal was fully and thoroughly (and imaginatively) developed in Judge Guido Calabresi's book, A Common Law for the Age of Statutes.
But for the most part, these constitutional innovations were confined to the legislative and executive branches of government. Within the past decade, the number of contractors has overtaken the number of civil servants. The budgets of some executive departments and agencies — the Department of Energy and NASA, to name a few — are almost entirely devoted to outsourcing to the private sector. For an insightful analysis of the implications of the rise of the market state for intelligence operations, see National Intelligence Council Chairman Gregory Treverton's essay, "Intelligence and the Market State."
Not all of these innovations, at least in my judgment, are especially positive. With respect to the legislative branch, the increasing reliance on voter initiatives, referenda, recall votes and the like are attempts to use the market to replace the law-oriented processes of parliamentarianism. Advocates of direct democracy may take heart from these developments; they seem to have convinced themselves that such end runs around representative government return power to the people. In fact, they tend to move authority to those whose can best manipulate the media — which usually means the best-financed special interests.
Expediency vs. Due Process
What we have not seen much of are examples of the market state in the functions of the judiciary. But the most recent U.S. Supreme Court term may provide some interesting cases in this regard.
Zubik v. Burwell involved a challenge to the Affordable Care Act on the basis that it required nonprofit hospitals, schools and charities to participate in providing access (through medical insurance) to birth control methods and devices to which they objected on religious grounds. Instead of deciding the case in favor of either party, the Supreme Court invited the two sides to find ways to see that insurance coverage was guaranteed to employees without any particular notice to the insurance companies by employers or any participation by them. Thus the Supreme Court is in the unusual posture of attempting to carry out the intentions of Congress not by enforcing the text of a statute per se but by urging the parties to come up with a solution that avoids constitutional problems with the statute. One might say that the high court is acting as trial courts often act in conflicts between two private parties in urging a voluntary settlement rather than enforcing a legal rule. See veteran Supreme Court journalist Lyle Denniston on this point here.
In Wittman v. Personhuballah, the Supreme Court reviewed the actions of a three-judge federal court that had overturned a Virginia redistricting plan on the grounds that it relied too heavily on racial factors in concentrating African American voters in one particular constituency, District 3. Two congressmen, from Districts 1 and 7, objected to the plan adopted by the district court. But the Supreme Court held that they were unable to show any particular harm that would result to them from the use of the district court plan; they lacked, in legal terms, standing to seek relief from a federal court. (Article III of the Constitution limits federal jurisdiction to genuine "cases or controversies" in which the party invoking the court's jurisdiction actually has something to gain or lose by a court's resolution of the issues presented in the case.) This is not a new doctrine. What is novel is the court's use of this doctrine to uphold a federal court's decision rather than to avoid making such a decision in the first place. And this, too, is an example of the movement, however slight, of the resolution of conflicts typically treated by judicial means into the hands of nonjudicial parties. Here, the federal district court only ruled because the state legislature was unable to devise its own plan following the initial court challenge. Thus the legislature itself is being invited to resolve the problems posed by its unconstitutional redistricting proposals.
Betterman v. Montana raised an interesting question: Does the Sixth Amendment's speedy trial clause also guarantee expeditious sentencing when a trial has been bypassed through a plea agreement? Betterman was the defendant in a domestic violence case; after having been arraigned and charged, he failed to appear in court and was arrested. He pled guilty to jumping bail and was detained in a county jail, awaiting sentencing. After nine months, he asked that a sentence be handed down so that he might serve his time in a state prison; after 14 months, he was finally sentenced. Relying on the conventional doctrinal, textual and historical forms of argument (in this case, "precedent aligns with text and history," Justice Ruth Bader Ginsburg wrote), the court held that the Sixth Amendment did not apply to "speedy sentencing." Like Wittman v. Personhuballah, this ruling could be taken to be a typical prudentialist holding that protects the functioning of the judicial branch. We might see, however, that it is more than that when we realize it is not so much the trial process at stake here — the presumption of innocence that underlies the speedy trial guarantee and the Sixth Amendment generally — as the continued vitality of the plea bargaining process. This is a negotiation between prosecutors and defendants that short-circuits, for efficiency reasons, a full trial. Like other operations in the market, the two parties attempt to arrive at a mutually acceptable outcome through bargaining. Over the past few decades, there has been a dramatic increase in the number of federal cases resolved through plea bargaining. Since 1977, the ratio of federal criminal defendants who insisted on a jury trial has decreased from 25 percent to about 3 percent, that is, from 1 in 4 cases to 1 in 32.
It is worth noting that market states are remarkably indifferent to the norms of justice. Outrageous examples of mandatory minimum terms operating in tandem with the plea-bargaining process indicate just how far we have strayed from the due process ideals of the industrial nation-state.