Cornell Law Review Volume 101 Article 2 Issue 6 September 2016 The Puzzling Absence of Economic Power in Constitutional Theory Ganesh Sitaraman Follow this and additional works at: http://scholarship.law.cornell.edu/clr Part of the Law Commons Recommended Citation Ganesh Sitaraman, The Puzzling Absence of Economic Power in Constitutional Theory, 101 Cornell L. Rev. 1445 (2016) Available at: http://scholarship.law.cornell.edu/clr/vol101/iss6/2 This Article is brought to you for free and open access by the Journals at Scholarship@Cornell Law: A Digital Repository. It has been accepted for inclusion in Cornell Law Review by an authorized editor of Scholarship@Cornell Law: A Digital Repository. For more information, please contact [email protected]. \\jciprod01\productn\C\CRN\101-6\CRN602.txt unknown Seq: 1 19-SEP-16 16:09 THE PUZZLING ABSENCE OF ECONOMIC POWER IN CONSTITUTIONAL THEORY Ganesh Sitaraman† Six years after the financial crash, disparities in economic power are at the forefront of popular debate. Political leaders increasingly express a growing popular sentiment that “the system is rigged” to work for wealthy and corporate interests who have the means to buy influence through campaign fund- ing and then sustain their influence with “armies of lobbyists” in Washington. In a battery of studies over the last decade, political scientists have confirmed populist suspicions and demonstrated that economic elites dominate the American po- litical system. Their findings operate across all areas of pol- icy, and they provide systematic empirical evidence that political influence is tilted in favor of the wealthiest members of American society. With rare exception, however, the power of economic elites—and the empirical evidence for this power—has been largely invisible from macro-level contemporary debates in constitutional theory. Most of the time, constitutional theorists have in mind a more optimistic view of American politics that both undergirds and serves as an aspiration for their ap- proach to constitutional theory and design. Republicans focus on deliberation toward the public good. Pluralists celebrate (or fear) group participation. Some worry about protecting minor- ity rights from majoritarianism; others criticize the undemo- cratic structures within the constitutional system. And recently, there have been efforts to bring greater political real- ism to constitutional theory, particularly by focusing on the intersection of partisan affiliation and constitutional structure. What is puzzling, however, is that none of these approaches engage directly or systematically with the power of economic elites in American politics. And yet, none of these approaches † Assistant Professor of Law, Vanderbilt Law School. Thanks to Ed Cheng, Einer Elhauge, Dan Epps, Barry Friedman, Willy Forbath, Brandon Garrett, Heather Gerken, Jeremy Kessler, Daryl Levinson, Bill Marshall, Jon Michaels, Martha Minow, Doug NeJaime, Dave Pozen, Richard Primus, Richard Re, Morgan Ricks, Shalev Roisman, Elizabeth Sepper, Chris Serkin, Dan Sharfstein, Suzanna Sherry, Reva Siegel, Kevin Stack, Nick Stephanopolous, and participants in the Harvard Public Law Workshop and the UCLA Faculty Works in Progress Collo- quium. Special thanks to Macy Cullison, Mary Fleming, Sean Hastings, Laura McKenzie, and Eric Mills for excellent research assistance. 1445 \\jciprod01\productn\C\CRN\101-6\CRN602.txt unknown Seq: 2 19-SEP-16 16:09 1446 CORNELL LAW REVIEW [Vol. 101:1445 can be truly successful—even on their own terms—without grappling with the realities of economic power. Contemporary constitutional theory needs to be rooted in a more realistic description of the American political process. This Article first argues that leading debates in constitutional theory have failed to engage with the reality of elite economic domination and that without taking into account the role eco- nomic elites play in American politics, these theories have seri- ous limitations even on their own terms. Second, it shows that any attempt to design institutions to account for the influence of economic power will face persistent, pervasive, and per- verse problems. A central task of constitutional theory going forward must be to overcome or at least mitigate these stum- bling blocks. Third, it provides a conceptual framework of possible, albeit imperfect, design options for mitigating elite economic domination. There are a variety of design strategies for grappling with economic power, which cover a wide range in both plausibility and efficacy. Given the persistent problems involved in mitigating the influence of economic power, it is not likely there will be any one single “solution.” Constitutional theory will instead need to consider a second- best approach in which multiple suboptimal strategies are adopted, in hopes that the system as a whole is relatively desirable. INTRODUCTION .......................................... 1447 R I. THE REALITY OF ELITE ECONOMIC DOMINATION ....... 1455 R A. Preferences and Participation ................ 1457 R B. “Democracy by Coincidence” ................. 1461 R C. Theories of American Politics ................ 1465 R II. THE PUZZLING ABSENCE OF ECONOMIC POWER IN CONTEMPORARY CONSTITUTIONAL THEORY ............ 1466 R A. The Relevance of Economic Power for Constitutional Theory ....................... 1467 R B. Economic Power and the Madisonian Design . 1471 R C. Contemporary Constitutional Theory ......... 1477 R 1. Interest Groups and the Countermajoritarian Difficulty ................................. 1477 R 2. The Undemocratic Constitution and Popular Constitutionalism ........................ 1482 R 3. Political Parties and Partisanship Theories ................................. 1488 R D. The Historical Origins of Economic Power’s Absence ..................................... 1491 R III. THE PERSISTENT PROBLEM OF ECONOMIC POWER IN CONSTITUTIONAL THEORY .......................... 1494 R \\jciprod01\productn\C\CRN\101-6\CRN602.txt unknown Seq: 3 19-SEP-16 16:09 2016] PUZZLING ABSENCE OF ECONOMIC POWER 1447 A. The Inside-Outside Problem ................. 1495 R B. The Hydraulic Problem ...................... 1498 R C. The Paradox of Process ...................... 1500 R D. The Aristocratic Selection Effects of Elections .................................... 1502 R E. The Hazards of Entrenching Economic Class . 1505 R IV. THE IMPERFECT POSSIBILITIES FOR INSTITUTIONAL DESIGN .......................................... 1506 R A. Countering Economic Inequality ............. 1508 R 1. Regulation, Taxation, and the Organization of the Economy .......................... 1508 R 2. The Economic Ulysses: Precommitting Against Inequality ........................ 1510 R B. Safeguarding the Political Process............ 1512 R 1. Ex Ante: Campaign Finance and Lobbying Restrictions .............................. 1512 R 2. Ex Post: Political Process Theory and Judicial Review .......................... 1514 R C. Incorporating Countervailing Powers into the Political Process ............................. 1518 R 1. The Separation of Economic Powers ....... 1519 R 2. Leveling Up Strategies .................... 1524 R D. Bypassing the Political Process .............. 1526 R 1. Political Parties........................... 1526 R 2. The Bureaucratic State ................... 1528 R CONCLUSION ........................................... 1531 R INTRODUCTION Six years after the financial crash, disparities in economic power are at the forefront of popular debate. There is wide- spread concern about rising inequality and the increasing share of wealth going to the top 1% and 0.1% of people.1 Out- rage over the policy of bailouts for Wall Street banks flows from both the Tea Party right and the Occupy Wall Street left.2 Polit- ical leaders increasingly express a growing popular sentiment that “the system is rigged” to work for wealthy and corporate interests, who have the means to buy influence through cam- 1 See generally THOMAS PIKETTY, CAPITAL IN THE TWENTY-FIRST CENTURY (2014) (noting capitalism’s tendency to generate wealth inequality and speculating that this trend will continue in the twenty-first century). 2 Conor Friedersdorf, Why the Tea Party and Occupy Wall Street Should Cooperate, THE ATLANTIC (Oct. 11, 2011), http://www.theatlantic.com/politics/ archive/2011/10/why-the-tea-party-and-occupy-wall-street-should-cooperate/ 246413/ [https://perma.cc/WX25-ZVS2]. \\jciprod01\productn\C\CRN\101-6\CRN602.txt unknown Seq: 4 19-SEP-16 16:09 1448 CORNELL LAW REVIEW [Vol. 101:1445 paign funding and then sustain their influence with “an army of lobbyists” in Washington.3 These fears are well founded. In a battery of studies over the last decade, political scientists have confirmed populist suspicions and demonstrated that economic elites dominate the American political system.4 The wealthy participate more at every stage of the political process—from meeting candi- dates, to donating, to voting.5 Elite economic interest groups (business and industry) make up the majority of interest groups and spend the most money on lobbying.6 And the wealthy’s preferences diverge significantly from the majority of Americans.7 When median-wealth Americans’ preferences do make it into law, political scientists have shown that this is almost invariably a function of “democracy by coincidence”: median-wealth preferences happen to align with those of the wealthy.8 When preferences diverge, studies show that major- ity preferences have effectively no impact on policy outcomes, while the preferences