Collective Sanctions Daryl J. Levinson* I.

Introduction Around midnight of August 13, 1906, a group of armed men, ten or twenty, ran through the town of Brownsville, Texas, firing their weapons down the streets and into buildings.1 A police officer on horseback was shot and wounded, and a bartender was killed in the doorway of his saloon. Suspicion immediately fell upon a battalion of black soldiers that had recently been stationed at Fort Brown, on the outskirts of the city. The rioting occurred in a neighborhood adjacent to the enlisted men=s barracks; empty shells collected along the rioters= route seemed to have come from Army-issue rifles; and several Brownsville townspeople claimed to have recognized the rioters as black soldiers. As for motive, racial tension between the soldiers and townspeople had been simmering since the battalion arrived. Brownsville residents had greeted the soldiers with Jim Crow restrictions and other gestures of racial hostility. In two cases, soldiers had been physically assaulted by white civilians, purportedly in retaliation for Adisrespectful@ behavior. On the day of the shootings, a soldier was accused of attempting to rape a white woman. Based on this evidence, Army investigators were quickly convinced that the rioters were members of the black battalion.2 When the soldiers were questioned in an attempt to discover which individuals were responsible, Athe countenance of each individual being interviewed assumed a wooden, stolid look, and each man positively denied any knowledge in the affair.@3 Unable to identify the guilty soldiers, the Inspector General of the Army wrote a report to President Roosevelt recommending that every member of the battalion be discharged without honor and forever barred from reenlisting or from employment in any civil service job. The Inspector General acknowledged that many men who did not participate in the riot would suffer as a result. Nevertheless, it was his view that, as they Aappear to stand together in a determination to resist the detection of the guilty, therefore they should stand together when the penalty falls.@4 The President found the report convincing and ordered his Secretary of War, William Howard Taft, to carry out its conclusion. All of the one hundred sixty-seven black soldiers in the battalion, including six Medal

*Professor of Law, New York University School of Law. Thanks to Jennifer Arlen, Dick Craswell, Barry Cushman, Barry Friedman, Mike Klarman, David Garland, David Golove, Jack Goldsmith, Lewis Kornhauser, Liz Magill, Rick Pildes, Eric Posner, Richard Posner, Ricky Revesz, George Rutherglen, Jim Ryan, Bill Stuntz, and Adrian Vermeule, and participants in faculty workshops at N.Y.U. and Stanford for useful comments on drafts, and to Gretchen Feltes and Kristine Hutchinson for research assistance. 1The facts in this paragraph are drawn from Ann J. Lane, The Brownsville Affair 12-23 (1971). 2Some of this evidence was subject to doubt in subsequent investigations. The identity of the Brownsville shooters remains contested to this day. 3See Lane, supra note __, at 22. 4Id.

of Honor recipients, were dishonorably discharged.5 Roosevelt=s decision understandably infuriated black communities throughout the nation.6 Many modern observers will share their outrage. Even if some of the dismissed soldiers were guilty, many people will have the intuitive reaction that Apunishing the innocent@ or imposing Aguilt by association@ is deeply unjust in a case like this. Most obviously, group punishment in this context reeks of race discrimination. In his 1906 annual message, issued in the midst of the Brownsville controversy, Roosevelt explained to black Americans that they were collectively blamed by white Southerners for the behavior of black criminals (in particular, rapists) and that they should take more responsibility for bringing these criminals to justice.7 If black individuals could be lumped together as a group in the eyes of Southerners for purposes of attributing criminal responsibility and blame, then, we might suspect, so too for purposes of group punishment in the Brownsville case. Indeed, much of our legal and moral thinking about group liability and responsibility is inflected by race and ethnicity. Debates about affirmative action and reparations for slavery, for example, focus on the moral and legal obligations of wrongdoing groups to compensate victim groups, where both groups are defined by race. Thus, Awhites@ are sometimes said to owe Ablacks@ compensation for prior discrimination or slaveryCeven though many of the individual whites who will bear the costs were not themselves wrongdoers, and many of the individual blacks who will receive compensation were not themselves subject to discrimination.8 Racial identity is the supposed glue that joins wrongdoers and payers of compensation, as well as individual victims and beneficiaries, into unified groups for purposes of assessing obligations and dessert. The same is true with respect to ethnic and national identity in the context of reparations paid by the United States government to Japanese Americans interned during World War II, and by Germany to Israel for the Holocaust. Needless to say, there is deep disagreement about the moral significance of the racial, ethnic, or national bonds that arguably create group responsibility in these cases. More generally, group liability strikes many as objectionable because it seems to reflect an anti-liberal embrace of communal responsibility. Racial essentialism is, in this view, just one (especially pernicious) manifestation of the communalist failure to take individuals seriously as moral agents. Liberal conceptions of morality insist that agency and responsibility be attributed only to individuals, not groups. Group liability will strike liberals as an unfortunate atavism of preliberal or primitive societies, which, conventional wisdom holds, were fundamentally 5The Brownsville incident developed into a national political affray involving, among others, Roosevelt, Taft, Booker T. Washington, and Senator Joseph Foraker of Ohio. In addition to Lane, supra note __, see Lewis L. Gould, The Presidency of Theodore Roosevelt 236-44 (1991); Emma Lou Thornbrough, The Brownsville Episode and the Negro Vote, 44 Miss. Valley Hist. Rev. 469 (1957); James A. Tinsley, Roosevelt, Foraker, and the Brownsville Affair, 41 J. Negro Hist. 43 (1956). 6See Lane, supra note __, at 70. 7See id. at 104. 8Of course there are other justifications for affirmative action and reparations that do not depend on this kind of racial essentialism. For an illuminating discussion, see Eric A. Posner & Adrian Vermeule, Reparations for Slavery and Other Historical Injustices [unpublished draft].

communal in both their social organization and their approach to morality.9 To be sure, in cultures where clans and tribes are the relevant unit of moral agency and blame, group liability will seem natural. In modern, liberal societies, however, where relevant moral unit is the individual, punishing groups for the misdeeds of individuals will be regarded with deep skepticism. Most modern readers of Genesis will sympathize with Abraham=s case to God on behalf of the evil cities of Sodom and Gomorrah: AWill you really sweep away innocent and wicked together? Suppose there are fifty innocent in the city; will you really sweep it away ... ?@10 In taking sides with Abraham, we distinguish ourselves from the ancients.11 In light of its associations with racial essentialism and primitive communalism, it is no wonder that group punishment has a dubious reputation. Yet there is another set of reasons for punishing groups that is perfectly consistent with moral and (more generally) methodological individualism, and that should carry no connotations of essentialism or communalism. Group members might be punished not because they are deemed collectively responsible for wrongdoing but simply because they are in an advantageous position to identify, monitor, and control responsible individuals, and can be motivated by the threat of sanctions to do so. In Brownsville, after all, the stated goal of group punishment was not to exact retribution from all of the dismissed soldiers, conceived as an undifferentiated collective entity, but rather to motivate them to identify the guilty individuals in their midst. On this understanding, the imposition of collective sanctions might be justified as an indirect way of controlling individual wrongdoers. 12 The basic strategy is to aim sanctions not at the individual wrongdoer, but at some target group that is well-positioned to monitor and control him. We might say that the sanctioner effectively delegates the deterrence function to this group. Conceived in this way, collective sanctions should seem at least somewhat familiar: vicarious liability rules in numerous areas of law are commonly understood to rely on the same functional mechanism, inasmuch as principals are sanctioned in order to motivate them to monitor and control misbehaving agents.13 Indeed, vicarious liability might be understood as a special type of 9See infra notes __ and accompanying text. The use of the term Aprimitive@ throughout the Article reflects its usage in the sources cited. The term is dated and undefined. It seems to refer to relatively small, relatively simple, pre-industrial societies. 010Genesis 18: 23-24. 11We may also distinguish ourselves from Abraham. See David Daube, Two Notes on Communal Responsibility, 36 Soc. Rev. 2, 24-25 (1944). Daube interprets the story of Sodom and Gomorrah not as a choice between group and individual responsibility, but a choice between two different conceptions of group responsibility. In place of God=s inclination to impose communal blame, Abraham advocated communal merit, or crediting all of the residents of the cities with the virtues of the righteous few. Daube explains, AProbably, communal thinking was so deep-rooted that Abraham could think in no other way; the method of judging a city as one unit so unreservedly accepted that he never questioned it as such. @ Id. at 26. 212Switching to the term Asanctions@ is meant to escape the legalistic implications of Aliability@ and
the moral baggage of Apunishment. @ The term Acollective@ is meant to avoid the sociological connotations of Agroup.@ For a more formal definition of collective sanctions, see infra notes __ and accompanying text. AWrongdoer@ is another term that may carry moral freight. For purposes of the Article, however, it is meant to refer to any individual whose behavior a sanctioner wishes to change.

313Other terms for the strategy of delegated deterrence exemplified by vicarious liability include
Acollateral, @ Athird-party,@ and Asecondary@ liability. See Reinier H. Kraakman, Gatekeepers: The Anatomy

collective sanction regime, characterized by a target group consisting of (only) two individuals bound together in a contractual relationship.14 But the regulatory strategy of delegating deterrence through collective sanctions is potentially useful, and is in fact used, in a much broader array of situations than just this. Legal systems also impose collective liability on shareholders for the torts and crimes of corporations, on co-conspirators for one another=s criminal acts, on polluters for the costs of cleaning up toxic waste. Governments impose international sanctions on the populations of other states in response to the policies of their leaders and on innocent civilians in retaliation for acts of terrorism or resistance. Voters collectively sanction politicians by voting against political parties. Just as parents sometimes punish all their children when one misbehaves, families suffer collective reputational sanctions for the failings of individual black sheep. Economic arrangements such as insurance, partnerships, and employee stock ownership plans also make use of collective sanctions. One of the purposes of this Article is to assimilate these and other institutional arrangements in law, economics, politics, and social norms under the common conceptual framework of collective sanctions. Broadening our focus from vicarious liability to the full range of collective sanctions should help us to appreciate that delegated deterrence can be more than just a second-best solution in the idiosyncratic case where direct, individual liability fails.15 Our intuitive presumption in favor of individual liability is probably too strong. Policymakers would do better to recognize that there is always a choice about where to aim sanctions and that individual wrongdoers will not always be the first-best location. To the contrary, in many situations the optimal target of sanctions will not be the individual whose behavior the sanctioner hopes ultimately to affect but rather some group to which that individual belongs. A further purpose of this Article, therefore, is to provide a model for analyzing the costs and benefits of delegated deterrence through collective sanctions in comparison to (ordinary) direct deterrence through individual sanctions. In constructing such a model, the Article adapts and expands the basic economic theory of vicarious liability to take account of the internal dynamics of collective action and group organization. Collective sanctions will effectively deter wrongdoing only to the extent that group members are in a positionCor can be motivated to put themselves in a positionCto monitor and control one another=s behavior. This requires collective action on the part of the group, which in turn requires group solidarity. Groups with established institutional mechanisms for influencing the behavior of their members will have an easier time translating group-level sanctions into individual-level controls. At the same time, by increasing the benefits of cooperation, collective sanctions may induce groups to create or bolster such institutional mechanisms, with a number of potentially counterintuitive consequences for group behavior. In short, collective sanctions not only leverage but also build group solidarity. The Article proceeds as follows. Part II revisits the standard narrative of socio-legal
of a Third-Party Enforcement Strategy, 2 J. L. Econ. & Org. 53, 53 (1986).

414See infra notes __ and accompanying text. 515Resort to vicarious liability is most commonly justified as a solution to the problem of agent insolvency.
See infra notes __ and accompanying text.

evolution from traditional, communal societies to modern, liberal ones and redescribes the use of collective sanctions in primitive societies in functional terms of delegated deterrence. Viewed functionally, premodern collective sanction regimes like blood feud and frankpledge seem continuous with similar regimes in more developed societies. Indeed, a number of central features of modern legal systemsCvicarious, joint and several, and corporate liability, as well as insuranceCmake use of the same functional mechanisms as these Aprimitive@ institutions. Part III develops an informal model of collective sanctions. The model combines the basic economic insights underlying the regulatory strategy of delegated deterrence, primitive law=s lesson that it is often groups that are best positioned to play the role of delegate, and economic and sociological theories of collective action and group organization. Part IV applies this model to a number of illustrative collective sanction regimes in law, economics, politics, and social norms, ranging from group lending by microcredit institutions in developing countries and employee profit-sharing plans to ethnic violence and the assimilation of minority groups in response to discrimination. Before beginning, it is important to acknowledge an obvious limitation on the scope of this project. Virtually all other work on the general subject of group liability has been concerned with backward-looking moral issues of responsibility and blame.16 This Article ignores these issues and instead takes a forward-looking, functional approach. Its project of understanding how collective sanctions work in instrumental terms is meant to imply nothing about the fairness, justice, or morality of punishing groups. Where moral responsibility is individuated, the intuitive unfairness of collective sanctions lies in the fact that Ainnocent@ group members may bear some of the costs. In other words, collective sanctions impose strict liability on group members who are not wrongdoers. 17 Now, in many contexts strict liability is unobjectionable because there is no moral demand that liability be matched to responsibility. This is probably true of most cases in the realms of economics and politics, and many in the realms of law and social norms. Moral objections to strict liability mainly arise in areas of criminal or quasi-criminal punishment (including cases like Brownsville). Yet even in these areas, legal analysts and moral philosophers often manage to obviate, or evade, strict liability objections to group liability. Liberal distaste for primitive communalism notwithstanding, collectivities are sometimes granted the moral status of individual agentsCas when corporations are reified as legal persons and states are conceptualized as unitary actors. Alternatively, on some moral theories individuals may be blamed for the wrongful acts of others if they voluntarily enter into certain relationships with them. Accomplice liability doctrines in criminal law and shareholder liability for corporate misconduct may be justified in this way. Nonetheless, residual demands for matching sanctions to responsibility may well create side-constraints on the efficient use of collective sanctions in some cases. This Article makes no attempt to identify such cases or to weigh instrumental against moral concerns. At best, by pointing to a plethora of existing collective sanction regimes, the Article may help to clarify where 616Leading examples include Ronald Dworkin, Law=s Empire 167-75 (1986); Christopher Kutz, Complicity (2000); Larry May, Sharing Responsibility (1992); Collective Responsibility (Larry May & Stacey Hoffman eds., 1991); Larry May, The Morality of Groups (1987); Peter A. French, Collective and Corporate Responsibility (1984); Groups and Group Rights (Christine Sistare et al. eds., 2001); Joel Feinberg, Collective Responsibility, 65 J. Phil. 674 (1968). 717See Feinberg, supra note __, at 674-77.

moral objections (and defenses) should be directed. II. Collective Sanctions, Primitive and Modern A conventional narrative of socio-legal evolution describes a transition from collective responsibility in Aprimitive@ societies to individual responsibility in Amodern@ ones. Henry Sumner Maine famously theorizes the growth of Aprogressive@ societies from the primitive stage, where the basic legal unit is the family, clan, or village, to the modern stage, where the basic legal unit is the individual.15 Maine sees collective responsibility, moral and legal, as a logical corollary of primitive law=s communalism: groups are sanctioned because it is groups that misbehave.4 If he is right, and collective sanctions are in fact tied to group-based theories of social organization, agency, and responsibility, then we should expect to see them used only in pre-liberal societies. As societies Aevolve,@ and the atomic legal unit shifts from the group to the individual, we should expect sanctions for wrongdoing to become individuated as well. A functional perspective on collective sanctions casts doubt on this prediction by questioning the significance of collective moral responsibility. Where identifying or reaching individual wrongdoers is prohibitively costly and solidary groups can be mobilized to perform these tasks more efficiently, collective sanctions may be preferable to individual ones on entirely functional grounds. These conditions were common in primitive societies that lacked welldeveloped, centralized law enforcement institutions and could rely on solidary groups organized by kinship, clan, or tribe. But they are common in modern societies as well. Collective sanctions in the form of frankpledge or blood feud may seem foreign, but a number of familiar liability regimes in modern law are justified in exactly the same functional terms. Appreciating the functional justifications for departing from direct, individual liability in both the primitive and modern contexts will lay the foundation for a more general framework of analysis for collective sanctions and a broader survey of their relevance to modern law, economics, politics, and social norms. A. Groups as Individuals versus Groups of Individuals in Primitive Law and Norms

515Henry Sumner Maine, Ancient Law 126 (1861). Maine =s account of the movement from
communalism to individualism Csummarized in his famous aphorism about the movement from Astatus A to Acontract, @ id. at 170Cresonates with much of late nineteenth century legal and social theory. See Emile Durkheim, The Division of Labour in Society (1893) (describing developmental path from mechanical to organic solidarity); Ferdinand Tonnies, Community and Society (Charles P. Loomis trans. & ed., 1963) (1887) (describing progression from traditional agrarian Gemeinschaft to modern industrialized Gesellschaft ); see also Sally F. Moore, Legal Liability and Evolutionary Interpretation, in The Allocation of Responsibility 56 (Max Gluckman ed., 1972) (tying together Maine and Durkheim with the thematic thread of Athe general movement of legalhistorical change ... from an emphasis on legal community and collectivity to an emphasis on legal individuality@).

4See Maine, supra note __, at 127. Maine writes:

The moral elevation and moral debasement of the individual appear to be confounded with, or postponed to, the merits and offences of the group to which the individual belongs. If the community sins, its guilt is much more than the sum of the offences committed by its members; the crime is a corporate act, and extends in its consequences to many more persons than have shared in its actual perpetration.

Collective responsibility for wrongdoing, and collective punishment, are widely recognized as defining features of Aprimitive@ law and norms.17 In traditional societies organized around kin groups (or clans, tribes, or villages), a person who wrongfully harms a member of another group commonly invites retaliation against, or the extraction of compensation from, not just himself but any of his kinsmen.18 John Reid describes the difficulty white fur traders and trappers had in coming to terms with this feature of the North American Indians= system of justice. When an Indian was killed by a trader, the tribe might take retribution against any trader from the same company, or even against any white man in the vicinity.19 Likewise, if a Creek killed a Cherokee, liability attached to the killer=s entire nation.20 For intra-tribal killings, collective liability might attach to the killer=s family, village, camp, or band.21 The traders purported to be outraged at the Indians= resort to collective liability, insisting that it would be Ainexpedient and unjust to hold tribes responsible for the acts of individuals@ (except on those occasions when they apparently found it expedient and just to do just that). 22 When the process of mutual retaliation by and against kinship (or other) groups continues through several rounds of approximately proportionate exchanges of violence, it attains the status of blood feud.23 Back-and-forth killings between rival groups, each collectively vulnerable as targets and collectively responsible for retaliation, might persist indefinitely, until the opposing groups are both decimated.24 Mercifully, in societies with surplus wealth, blood vengeance and feud tends to give way to a system of compensation (or blood money, wergeld, or composition) paid to the victim or his kin.25 In these societies, the principle of collective liability typically 717See, e.g., Michael Barkun, Law without Sanctions: Order in Primitive Societies and the World
Community 20 (1968) (A[Lineage] segments are supposed to act corporately, behaving as one man in their relationships with other groups. Primitive law has long been known to be weak in concepts of individual responsibility. A law-breaking individual transforms his group into a law-breaking group, for in his dealings with others he never stands alone. @); Saul Levmore, Ancient Rights and Wrongs: Rethinking Group Responsibility and Strategic Threats in Biblical Texts and Modern Law, 71 Chi.-Kent L. Rev. 85, 85 (1995) ( AConventional wisdom has it that ancient laws ... are more collective and less individualistic than modern perspectives on law and justice.@).

818See Richard A. Posner, The Economics of Justice 193-94 (1981). 919John P. Reid, Patterns of Vengeance 92-95 (1999). 020Id. at 96. 121Id. On blood vengeance among the Cherokees, see also John P. Reid, A Law of Blood chptr. 10
(1970).

22See Reid, Vengeance, supra note __, at 98, 98-100.

violence like raiding and warfare).

323See Jacob Black-Michaud, Cohesive Force 1-32 (1975) (distinguishing the feud from other forms of 424Not surprisingly, many feuding societies have developed ways of preventing feuds from escalating.

Regulated fights or duels between representatives of the wrongdoer =s and the victim =s group, for instance, may forestall further violence. See William Seagle, The Quest for Law 39 (1941).

525See A. S. Diamond, The Evolution of Law and Order (1951); Oliver Wendell Holmes, The Common
Law 6 (Mark DeWolfe Howe ed. 1963) (1881); Seagle, supra note __, at 41-42.

follows blood to money, so that the wrongdoer =s kinsmen are responsible for making payments, and vulnerable to violent retaliation in the event of default.26 These basic patterns of privately-administered collective sanctions have been documented in any number of pre-industrial societies.27 Several variations are also common. In societies with a system of public law, the sanctioner may be the state. For example, traditional Chinese law provided for official punishment of the family members of criminals. The crime of rebellion against the Empire was punished by the execution of every adult male in the family, enslavement of the rest of the family members, and confiscation of all familial property.28 Or the sanctioning agent may be supernatural. Murder among the Cheyennes, for instance, was a sin that Abloodied the Sacred Arrows@ and brought great sufferingClost wars and famineCupon the entire tribe.29 Similarly, among the Ashanti of western Africa, crimes were offensive to the tribal ancestral spirits and, if left unpunished, would invite misery for the tribe.30 Another type of supernatural collective sanctions is the ancient Greek (as well as biblical) idea of Apollution.@31 For the Greeks, a murderer who went unpunished caused the pollution of his city, as Oedipus=s murder of his father brought plague upon Thebes.32 Finally, the sanctioning agent may comprise decentralized enforcers of societal norms. In many societies, including modern ones, an individual who misbehaves tarnishes the reputation of his family, affecting his relatives= opportunities for education, employment, and marriage.33 All of these sanctioning regimes are commonly thought to reflect an organic conception of social groups in which agency and responsibility for wrongdoing are attributed to the corporate entityCfamily, clan, tribe, or villageCand not disaggregated among individual members.34 On this 626See Posner, Economics of Justice, supra note __, at 193-94. 727See, e.g., R. F. Barton, The Kalingas 218-239 (1949) (the Kalingas of the Philippines). 828See M. J. Meijer, Marriage Law and Policy in the Chinese People =s Republic (1971). 929See Karl N. Llewellyn & E. Adamson Hoebel, The Cheyenne Way 132-33 (1941). 030See E. Adamson Hoebel, The Law of Primitive Man 232 (1951). 131See Posner, Economics of Justice, supra note __, at 217-24. 232See id. Whereas Sophocles wrote of the pollution of cities, Aeschylus emphasized the pollution of the
criminal =s family, especially his descendants. Id. at 217.

33See Douglas D. Heckathorn, Collective Sanctions and the Creation of Prisoner =s Dilemma Norms, 94
Am. J. Soc. 535, 538 (1988); infra notes __ and accompanying text.

434For example, Karsden explains that among the Jibaro Indians of Ecuador, AThe members of the same
family are regarded as, so to speak, organically coherent with each other, so that one part stands for all and all for one.@ Rafael Karsden, Blood Revenge and War among the Jibaro Indians of Eastern Ecuador, in Law and Warfare: Studies in the Anthropology of Conflict 303-26, 311 (Paul Bohannan ed., 1967). In the same vein, commenting on the Hittite Laws, Neufeld says, A[C]ollective responsibility, common among the Semites and widespread all over the primitive world, was predominant among the Hittites. This form of retribution ... originates from the conception that the individual is merged in his group and consequently his fellow-members are collectively responsible for his misdeeds. @ E. Neufeld, The Hittite Laws 116-17 (1951). Gomperz agrees:

understanding, collective sanctions are a peculiar feature of pre-liberal societies in which groups, not individuals, are the atomic moral unit. Primitive law and social norms direct punishment at groups because they follow primitive morality=s conception of collective blame. Once society has progressed to the point of assigning responsibility and blame at the level of individuals, however, we should expect to see sanctions redirected toward individuals as well. But collective sanctions need not depend upon collective agency or responsibility.35 Where it would be costly or impossible for an outside sanctioner to identify or reach an individual wrongdoer, the sanctioner might instead inflict costs on the wrongdoer =s group with the expectation that these costs will be passed on to the responsible member. The threat of sanctions to the group will create an incentive for group members to monitor and control each others behavior, whether through group norms or more formal internal governance structures. Especially in societies lacking centralized investigatory and law enforcement apparatuses, collective sanctions may reduce deterrence costs by delegating the tasks of controlling wrongdoers to solidary groups.36 Moral questions of group versus individual responsibility aside, the use of collective sanctions in primitive and ancient societies may be understood, from a functional perspective, as a useful strategy for leveraging the solidarity of closely-knit kinship groups in order to deter individual wrongdoers more efficiently.37 As this functional perspective contemplates, and the moral one obscures, primitive societies that make use of collective sanctions seem to have no trouble disaggregating and individuating responsibility within groups.38 Reviewing the anthropological literature, Moore hypothesizes, AWhere every member of a corporate group has the power to [invite] collective liability, a corollary rule always exists whereby the corporation may discipline, expel or yield up to enemies members who abuse this power or whom the corporation does not choose to support ... .@39 Thus, among the Mbembe of Nigeria, while matrilineal kinship groups were collectively liable to outsiders for offenses committed by their members, wrongdoing members were then punished individually by the group, and a persistent offender might even be condemned
ASuccess and failure with primitive man, whether in chase or in war, mostly refer to the group; but even when due mainly to an individual, they are referred to the clan or to the tribe, to the city or to the nation. @ H. Gomperz, Individual, Collective, and Social Responsibility, 49 Ethics 329, 336 (1939). H. D. Lewis sums up the conventional wisdom as follows: APrimitive peoples pay little heed to the individual; the unit is for them the tribe or the family.@ H. D. Lewis, The Non-Moral Notion of Collective Responsibility, in Individual and Collective Responsibility 131 (Peter A. French ed., 1972).

toward collective sanctions. Cf. Avner Greif, Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies, 102 J. Pol. Econ. 912 (1994) (tracing the influence of collectivist cultural beliefs on the development of Maghribi social and economic organization, including the use of collective sanctions in various contexts, and comparing the influence of individualist cultural beliefs on the development of Genoese society).

535This is not to deny, of course, that cultures committed to collective responsibility will be more inclined

Not Have Needed a System of Criminal Law, 76 B.U. L. Rev. 29, 51-54 (1996).

636See Posner, Economics of Justice, supra note __, at 194-95; James Lindgren, Why the Ancients May 737See Posner, Economics of Justice, supra note __, at 194. 838See Sally F. Moore, Law as Process 111-33 (1978); Seagle, supra note __, at 45. 939Moore, supra note __, at 121.

to death.40 Likewise, while a Tallensi creditor could raid the livestock of any clansman of a defaulting debtor, that clansman could then claim restitution from the responsible debtor, who might even be forced to pawn a child or sell himself into slavery in order to settle the claim.41 The fear of supernatural sanctions or pollution can also be understood as a mechanism for inducing the group to inflict worldly punishments on individual wrongdoers. 42 A Cheyenne tribe could purify itself from the collective taint of murder by performing the sacred ritual of renewing the Medicine Arrows, but only after it had banished the individual murderer. 43 That the costs of collective sanctions would be routinely transmitted by the group to individual wrongdoers in need of deterrence may seem anomalous from the viewpoint of group moral responsibility, but it is a straightforward prediction of a functional account. William Miller=s study of the blood feud in medieval Iceland illustrates the functional advantages of collective sanctions in a context where the moral account seems clearly inapposite.44 Collective liability was a defining feature of the Icelandic feud. The object of a vengeance killing was typically a kinsman of the wrongdoer (just as the expiator was typically a kinsman of the victim). As Miller makes clear, however, these practices hardly entailed that Icelanders assessed responsibility at the level of groups rather than individuals. Formal Icelandic law governing the right to kill limited expiation to the liability-incurring wrongdoer. 45 Although the feuding parties usually ignored this limitation, it was not because they had any difficulty in parceling out individualized responsibility. Miller assures us, AAvengers were able to distinguish individuals in their opposition. They did not see the opposing group as an undifferentiated Them.@46 And not surprisingly, kinship groups were highly conscious of the individual responsibility of their members. A troublemaker who invited vengeance against his kinsmen could be suspended or expelled from the group. 47 In extreme cases, groups could grant prospective immunity from vengeance to outsiders who might be inclined to kill him off.48 None of this evidence suggests that saga-era Iceland was a communal society in the sense of paying little heed 040See id. at 120.
concludes:

141See M. Fortes, The Dynamics of Clanship among the Tallenesi 245 (1945), cited in id. at 121. Fortes
This is a good illustration ... that collective responsibility is not a principle of Tale jural relations. It is not the clan but the debtor himself who is responsible for his debt. Self-help [by the creditor, against any member of the debtor=s clan] is a technique for putting pressure on a debtor through the mechanism of clan and lineage cohesion.

Id.

242See Posner, Economics of Justice, supra note __, at 221-22. 343See Llewellyn & Hoebel, supra note __, at 133. 44See William I. Miller, Bloodtaking and Peacemaking chptr. 6 (1990). 545Id. at 197. 646Id. at 205. 747Id. at 175.

to the individual. Indeed, Miller suggests that Icelandic communalism was as much a consequence of the use of collective sanctions as a cause. People who are placed at risk of punishment for each other=s conduct will have good reason to take an active interest in each other =s affairs. Thus, in medieval Iceland, the formation and structure of kinship groups were significantly endogenous to the feud. AThe kin group ... was not a closed corporation of determinate membership; it did not constitute itself automatically.@49 To the contrary, A[t]he people with whom one claimed kinship for the purpose of invitations to feasts and weddings [might not] be the same people one counted as kin when it came time to assist in a lawsuit or help pay compensation for their wrongdoing.@50 Miller describes how kin groups were formed and reformed depending on the contingent needs of individual participants, particularly those related to waging feuds.51 In order to seek vengeance, the aggrieved individual or household had to assemble kin and other allies from among a diffuse pool of candidates through persuasion, appeals to honor and duty, and promises of reciprocity.52 At the same time, the kin group was Apassively@ constituted by outsiders who might inflict vengeance killings based on their own conceptions of who should count as closely-enough related.53 A good way of bringing family members closer together is by threatening to slaughter them when their relatives misbehave.54 Not surprisingly, mutual consultation among kin about important decisions was a strong norm in Icelandic society.55 Moving (chronologically or geographically) away from primitive societies and toward more modern ones, the functional understanding of collective sanctions comes to monopolize. In common with primitive societies, medieval England faced severe problems of social disorder with limited state resources for solving them. Violent crime was rampant: homicide rates may have been double those of contemporary America (quite a feat in the absence of firearms).56 Lacking a public police force or centralized law enforcement bureaucracy, the Crown mobilized mediating groups as instruments of social control.57 Responsibility for crime control devolved to artificially848Id. at 175-76. 949Miller, supra note __, at 155. 050Id. at 156. 151Id. 252See id. at 164-67. 353Id. at 164. 454See id. at 164, 198. 55Id. at 164-65.
and Justice: An Annual Review of Research 295, 313 (Michael Tonry & Norval Morris eds., 1981). On crime in medieval England, see generally John Bellamy, Crime and Public Order in England in the Later Middle Ages (1973).

656See Ted R. Gurr, Historical Trends in Violent Crime: A Critical Review of the Evidence, in 3 Crime

757Stephen C. Yeazell, From Medieval Group Litigation to the Modern Class Action 83 (1987). The

created groups whose members were held collectively accountable for bringing wrongdoers in their midst to justice before the county and royal courts, on pain of group fines.58 Most famously, the frankpledge system required the majority of adult men to organize themselves by tens into groups that were held collectively liable for the crimes or misdeeds of any member who escaped prosecution.59 Now, there is considerable historiographical debate about the extent to whichCor, more accurately, the respects in whichCmedieval England was a Acommunal@ society.60 But no one would think that the frankpledge system was inconsistent with individualized attribution of wrongdoing.61 The point of the system, after all, was to create incentives for groups to identify, capture, and offer up for punishment individual wrongdoers.62 Frankpledge groups (or Atithings@) seem to have had no important social role aside from their suretyship functionCand, correspondingly, no independent social identity to which wrongdoing could be ascribed.63 This is
evolution of law enforcement institutions in England, from frankpledge to public police forces, is summarized in David A. Sklansky, The Private Police, 46 U.C.L.A. L. Rev. 1165, 1195-1205 (1999).

858See 1 Pollock & Maitland, The History of English Law 558 (2d ed. reissued 1968). Liability for members of these groups was joint and several, so that a handful of relatively wealthy individuals might be charged with payment of the entire fine. Through most of the medieval period, the individuals who made payment had no legal right of contribution Cthough of course we should not be surprised to learn of informal mechanisms of reallocating the costs of sanctions among group members. In 1585, under the reign of Elizabeth, the laws were amended to provide for indemnification of any member of a hundred forced to pay compensation for crime by taxation of all the members. Id. at 617.
of their status in society, in particular those whose status or wealth provided sufficient surety to obviate the need for collective policing. See id.

959See William A. Morris, The Frankpledge System (1910). Some classes of men were exempt as a result

060See Alan Macfarlane, The Origins of English Individualism (1978); see also Yeazell, supra note __, at 26-31 (summarizing the debates). 161The same must be true of the ancient precursors to the frankpledge system found in the following
provision of Hammurabi =s Code: If a man breaks into a house, they shall kill and hang him in front of that very breach. If a man commits a robbery and is then seized, that man shall be killed. If the robber should not be seized, the man who has been robbed shall establish the extent of his lost property before the god; and the city and the governor in whose territory and district the robbery was committed shall replace his lost property to him. If a life [is lost during the robbery], the city and the governor shall weigh and deliver to his kinsmen 60 shekels of silver. Laws of Hammurabi && 21-24 [cite translation].

262Frankpledge might be redescribed as a regime of individual sanctions for group members who commit
an independent offense by failing to identify criminals, or, in a more active formulation, Aobstructing justice.@ Some such semantic conversion is possible for any collective sanction regime. For purposes of the Article, what matters is the functional mechanism of delegating law enforcement authority to a group by threatening group members with sanctions. Whether the threat of group sanctions is tied, legally or morally, solely to the conduct of the individual wrongdoer or also to the conduct (or lack of conduct) of other group members is of no consequence. (Morally, on the other hand, this may make a big difference.)

363See Yeazell, supra note __, at 120-21 (recounting the deterioration of tithing groups as their policing
function was taken over by justices of the peace and overseers of the poor).

not to say that frankpledge had no connection to social solidarity. It would be pointless to assign policing responsibility to groups whose members did not have, or potentially have, sufficient opportunities to monitor one another=s behavior.64 And, reversing causation, social solidarity was surely strengthened by a system that made each man his brother =s, or neighbor=s, keeper.65 Maitland says of medieval England, AMuch of the communal life that we see is not spontaneous. ... Men are drilled and regimented into communities.@66 Groups were important to the frankpledge system because their solidarity could be leveraged in the service of law enforcement, just as frankpledge was important for groups because it created or bolstered their solidarity. Collective sanctioning schemes in other areas of medieval English life relied on the same functional mechanisms. For example, Maitland describes the general principle of collective liability that attached to merchants of a town for each other =s debts: [I]f a merchant of X owes a trading debt to a merchant of Y, then if other merchants of X go to the town of Y ... they will likely enough be held answerable for the debt Cthey are the communares of the principal debtor, they are Ahis peers and parceners,@ they are Ain scot and lot@ with him, and they, and each of them, must answer for his trading debts ... .
67

Collective sanctions against merchants from other boroughs might have been a clever, functional adaptation to inter-borough trade without the protection of an organized system of inter-borough dispute resolution. Merchants within a borough were often highly organized through guilds and could monitor and influence each other much more effectively than merchants across boroughs.68 Collective sanctions would leverage these intra-borough and intra-guild governance structures, creating incentives for local merchants to police one another=s debts. A similar system of collective liability among merchants throughout Western Europe has been credited by economic historians for helping make possible the late medieval commercial revolution by facilitating impersonal exchange across distances.69 Absent a legal system that could enforce, say, debt contracts between borrowers and lenders from different localities, lenders= only recourse would have been refusing to deal with debtors who had defaulted in the past. On the model of an iterated prisoner=s dilemma, if the gains from future lending were high enough, the threat of boycott by lenders might make it individually rational for debtors to repay. For 464See Feinberg, supra note __, at 680. 565Id. 661 Pollock & Maitland, supra note __, at 688. 767Id. at 682.
102 J. Pol. Econ. 745 (1994); see also Yeazell, supra note __, at 86-90 (describing internal regulatory structures of guilds and boroughs, including councils, courts, and social norms).

868See Avner Greif et al., Coordination, Commitment, and Enforcement: The Case of the Merchant Guild,

969See Avner Greif, Institutions and Impersonal Exchange: From Communal to Individual Responsibility,
158 J. Inst. & Theoretical Econ. 168 (2002). The abstract discussion below summarizes that paper.

retaliatory boycotts to be an effective deterrent, however, lenders had to know the credit history of potential borrowers. When creditors and debtors were from different corners of Europe, reputational information was hard to come by. Much easier to ascertain was a merchant=s community of origin, often revealed by his surname or nickname, language, traveling companions, or contractual witnesses.70 Using this information, in the event of default by one borrower of a community, the aggrieved lender, along with other lenders in his community, could refuse to deal with any other member of the borrower =s community (and also confiscate any of their property within the lender=s jurisdiction). Communities would in turn have a strong incentive to police the actions of their borrowers. Whereas distant lenders would have a hard time identifying or reaching the assets of defaulting borrowers, these borrowers= home communities would have little trouble collecting compensation to avert the threat of collective boycotts. Even as Britain was transformed into a Aliberal social, economic, and political order, @71 collective sanctions persisted as a tool of social control. For example, the Riot Act of 1714 was modeled on frankpledge.72 In response to Amany rebellious riots and tumults ... to the disturbance of publick peace ... continued and fomented by persons disaffected to his Majesty,@ the Act, in addition to criminalizing participation in a riot, 73 imposed collective liability on the hundred (a sub-unit of counties) in which the riot occurred. Any person suffering property damage in the riot was given a cause of action against the hundred for compensation, with the funds for payment to be raised by a general tax.74 In contrast to frankpledge, hundreds were subject to sanction under the Riot Act irrespective of whether the guilty rioters were apprehended and punished. But the basic functional justification was the same: to delegate law enforcement to groups of citizens by giving them an incentive to police and prevent one another =s misconduct. As Lord Mansfield explained, the purpose of the Riot Act was Ato encourage people to resist persons thus riotously assembled.@75 070Compare Paul R. Milgrom et al., The Role of Institutions in the Revival of Trade: The Law Merchant,
Private Judges, and the Champagne Fairs, 2 Econ. & Pol. 1 (1990) (describing the role of the Fairs = court in providing the information necessary to support an informal contract enforcement regime based on the threat of multilateral retaliation against defectors).

171See Robert G. Bone, Personal and Impersonal Litigative Forms: Reconceiving the History of
Adjudicative Representation, 70 B.U. L. Rev. 213, 222 (1990).

272Riot Act, 1714, 1 Geo., ch. 5 (Eng.). 373The Act provided that twelve or more persons riotously assembled would be deemed felons. When a
disturbance arose, they would be read a proclamation ordering them to disperse within an hour (i.e., Aread the Riot Act@), and those who did not could be seized or killed.

474See Russell Glazer, The Sherman Amendment: Congressional Rejection of Communal Liability for
Civil Rights Violations, 39 U.C.L.A. L. Rev. 1371, 1385 (1992).

575Ratcliffe v. Eden, 98 Eng. Rep. 1200, 1202 (K.B. 1776).

If even relatively modern institutions like the Riot Act seem as strange as ancient blood feuds from the perspective of contemporary American legal culture, an historical postscript may help bridge the gap. Social disorder and violence in the Reconstruction South was reminiscent of medieval England. When state governments were unwilling or unable to control the Ku Klux Klan =s reign of terror against blacks and white Republicans, Congress was driven to intervene. See Eric Foner, Reconstruction: America's Unfinished Revolution, 1863-1877, at 425-44, 454-59 (1988). While the Forty-second Congress debated what would become the Ku Klux Act of 1871,

B. Functional Analogues in Modern Law If collective sanctions have instrumental utility in primitive societies quite apart from any moral conception of group responsibility, then we need not presume that modern liberalism makes them obsolete. Nonetheless, it may be tempting to think that the conditions under which collective sanctions make functional sense are also limited to primitive societies.76 The public law enforcement institutions of developed legal systems lower the costs of identifying, apprehending, and punishing individual wrongdoers.77 At the same time, the atomism and anonymity of modern urban (or suburban) life has done away with the kind of cohesive kinship and village groups that can easily observe and influence their members behavior.78 So, whereas from a moral perspective we should expect collective sanctions to disappear from modern societies because moral responsibility has become individuated, from a functional perspective perhaps we should expect them to disappear because the state has bloomed while groups have withered. This prediction takes for granted that individual sanctions are generally superior and that resort to collective sanctions is justifiable only in the kind of dire circumstances confronted by primitive societies, where identifying and reaching individual wrongdoers is virtually impossible. Yet collective sanction regimesCor at least close functional analoguesCare a central feature of modern legal systems. Vicarious or gatekeeper liability across any number of areas of substantive law are designed to improve deterrence of agents by sanctioning principals. Joint and several liability as applied to products liability in tort and the statutory Superfund scheme similarly displace liability from individual wrongdoers to some set of individuals or firms. Corporate liability, civil or criminal, works in much the same way, by forcing shareholders to bear the costs of managerial misconduct. Insurance delegates deterrence responsibilities to a risk pool, whose members exercise control over individual insureds through the governance structure of an insurance company. All of these legal regimes deploy the basic functional mechanism of collective sanctions, deterring wrongdoers indirectly by delegating enforcement authority to some thirdSenator Sherman proposed an amendment self-consciously based on the frankpledge system and, especially, the English Riot Act. See Glazer, supra note __, at 1400-06. Sherman =s amendment would have held any inhabitant of a county or city in which mob violence occurred civilly liable for any injuries, deaths, or property damage that resulted. Anticipating that damage actions would be brought against the wealthiest landowners in the communities that tolerated or encouraged Klan violence, Sherman hoped to leverage Athe influence which property always gives in any community.@ Cong. Glob, 42d Cong., 1st Sess. 761 (1871). These landowners would Aunderstand that if they will not ... take the necessary steps to put down lawless violence ... their property will be holden responsible .... @ Id. (Sherman =s amendment was ultimately enacted in a somewhat weaker form, placing liability only on persons with actual knowledge of racially-motivated mob violence and the power to help prevent it but who refuse to intervene. See id. at 819. The Ku Klux Klan Act is codified at 28 U.S.C. ' 1986.) Similarly, a number of states in the 1920s passed anti-lynching laws that imposed a fines on the county or city in which the lynching occurred. See James Harmon Chadbourn, Lynching and the Law 25-26 (1933).

676See Feinberg, supra note __, at 680 (A[S]urely there is no going back to [collective punishment]. ... On the contrary, the changes that with modern times have dictated quite inevitably that [individual punishment] replace [collective], and no >alternation = is remotely foreseeable, unless massive destruction forces the human race to start all over again in tiny isolated farming settlements. @). 77See Posner, Economics of Justice, supra note __, at 194-95, 222; id. at 680. 878See Feinberg, supra note __, at 680.

party or -parties who are well-situated to monitor and control them.79 Moreover, each of these regimes has the potential to deter wrongdoing more efficiently than any plausible substitute regime of sanctions targeted directly at individual wrongdoers. Recognizing that a number of widely-accepted features of modern legal systems are selfconsciously justified in the same functional terms as collective sanctions belies the common belief that collective sanctions are anachronistic under modern circumstances. Vicarious and corporate liability are functionally indistinguishable from blood feud and frankpledge. Furthermore, understanding how these modern regimes work and why they might be preferable to direct, individual liability will lay the foundations for a more general model of collective sanctions. The model will combine the modern economic theory of indirect deterrence by delegated enforcement with primitive law=s lesson that it is often groups that are best positioned to play the role of delegated enforcer. 1. Vicarious and Gatekeeper Liability Many legal regimes impose vicarious liability on one party for the primary liability of a second party based on the relationship between the two. The paradigmatic case involves a contractual principal-agent relationship, where the principal is held strictly liable for the illegal conduct of her agent.80 Thus, employers are routinely held liable for the torts of their employees committed within the scope of employment.81 The standard functional justification for displacing liability from the agent points to several situations in which direct, individual liability fails adequately to deter misconduct. 82 Some tort victims (for example) will have a hard time identifying the individual employees within a firm who are responsible for their harm, whether because all they know is the company name on the back of the truck, or because their injury resulted from a complicated design and manufacturing process involving multiple agents, any one of whose negligence might have caused the injury. Where the identity of individual wrongdoers is costly or impossible for plaintiffs or courts to ascertain, a 979Mattiacci and Parisi recognize that vicarious liability, gatekeeper liability, and insurance have in
common the economic attributes of delegated enforcement schemes. See Giuseppe Dari Mattiacci & Francesco Parisi, The Cost of Delegated Control: Vicarious Liability, Secondary Liability and Mandatory Insurance, George Mason School of Law, Law & Economics Working Paper Series 02-27.

080Vicarious liability originated in the form of respondeat superior, holding masters liable for the behavior
of their servants. Where the servants were slaves, this seemed as justifiable as holding masters responsible for damage caused by their farm animals, carts, or other property. The doctrine evolved to encompass contractual agents, and agents with greater discretion, but the intuitive justification remained rooted in the notion that the master was acting through the servant. See Oliver Wendell Holmes, Jr., Agency, 4 Harv. L. Rev. 345, 348-50 (1891).

181Most vicarious liability regimes make the principal and the agent jointly-and-severally liable, so that
the plaintiff can collect the judgment from either. The principal will often be the more attractive defendant, perhaps because of her deeper-pockets, and the consequence of vicarious liability will be to shift liability from the agent alone to the principal alone.

282See Steven Shavell, Economic Analysis of Accident Law 170-75 (1986); Lewis A. Kornhauser, An Economic Analysis of the Choice Between Enterprise and Personal Liability for Accidents, 70 Cal. L. Rev. 1345 (1982); Alan O. Sykes, The Economics of Vicarious Liability, 93 Yale L.J. 1231 (1984); Alan O. Sykes, Vicarious Liability, in 3 The New Palgrave Dictionary of Economics and the Law 673-77 (1998).

regime of direct liability combined with the usual requirements for proving causation will result in under-deterrence. Vicarious liability solves this problem by allowing the plaintiff to prevail against the employer just by proving that some employee was negligent. An individual liability regime will also under-deter when employees lack the personal assets (or insurance) to pay the full amount of judgments against them. If employers can externalize liability costs through insolvent employees, their level of precaution-taking will be inefficiently low and their activity level will be inefficiently high. Vicarious liability ensures that employers internalize the full costs of their business and creates corresponding incentives for them to monitor and control employees. So long as the employer has effective tools to control employee behaviorCsalary adjustments, promotions and demotions, the threat of termination, and the likeCthen shifting liability to employers will not diminish the incentives of employees to take optimal care. Whereas under direct liability employees= incentives are proximately created by an outside sanctioning agent such as a court, under vicarious liability their incentives are proximately created by employers. Employers may be in a better position to create effective incentives than courts. 83 Even where employees are fully solvent, the deterrence benefits of individual liability may be limited by their lack of knowledge about how to reduce risk or lack of access to technologies of riskreduction (such as installing safety devices, revising operating procedures, or hiring safer employees). Employers have the capacity to assess and implement optimal precautions on a firmwide basis. In addition, employers may be better than courts at inducing individual employees to take optimal care. This is obviously the case for insolvent employees, who will not respond to threats of tort damages but may well respond to threats of salary reduction or termination. But even for solvent employees, a set of low-powered, high-probability intra-firm incentives may be more effective than the low-probability, high-powered legal remedies available to courts. 84 Understood as a collective sanction regime, vicarious liability is distinctive only in that the target group consists of two parties, and the relationship between the parties is contractual and hierarchical. Not surprisingly, the functional advantages of vicarious liability match the advantages of collective sanctions displayed in primitive societies. There, collective sanctions were advantageous in circumstances where it was more costly for an outside sanctioner to identify and reach an individual wrongdoer than to mobilize members of the wrongdoer =s group to do the policing and punishing work. Vicarious liability regimes arise in just the same circumstances. Where courts cannot cost-effectively identify wrongdoing agents or directly control their behavior, they can instead sanction employers, who are in a position monitor and control employees at lower cost through contractual and intra-firm governance mechanisms. Notice that the efficacy of any type of collective sanction depends on the capacity of the target group to influence members= behavior. Predictably, then, vicarious liability tends to be
around a direct liability regime by providing for employer indemnification of employee liability. If contracting is costless (and assuming that employees are fully solvent), the choice between direct and vicarious liability will not matter. Insofar as transaction costs exist, however, efficiency gains can be realized by making vicarious liability the contractual default rule.

383Where the employer is the more efficient bearer of liability, employers and employees can contract

484See Jennifer Arlen & Reinier Kraakman, Controlling Corporate Misconduct: An Analysis of Corporate
Liability Regimes, 72 N.Y.U. L. Rev. 687, 700-05 (1997).

limited to situations where the employer has the capacity to monitor and control employees. Employers are not held liable for most torts committed by independent contractors or for employee torts committed outside of the scope of employment.85 Notice, too, though, that the group=s ability to monitor and control is to some extent endogenous to the use of collective sanctions. Just as the solidarity of medieval English villages was no doubt strengthened by the frankpledge system, the relational bonds between vicariously liable principals and their agents will be tied more tightlyCfor better or for worse. If employers are held liable for crimes or torts employees commit using company computers, we should expect employers to keep a close watch on e-mail and internet usage. Intensive monitoring will reduce both crime and privacy. The debate over vicarious liability for managed care organizations (MCOs) for the malpractice of their affiliated physicians is illustrative. Skeptics of vicarious liability in this context emphasize that, under present arrangements, MCOs exercise little influence over physicians= care decisions. If MCOs are not in a position to monitor and control the delivery of medical services, then holding them vicariously liable will do nothing to improve the incentives of physicians.86 Proponents of vicarious liability take a more dynamic view of the relationship between MCOs and physicians. If MCOs were held liable for physician malpractice, they would have an incentive to be more aggressive in screening affiliated physicians and monitoring and regulating their performance.87 One consequence might be better patient care. Another might be to threaten the professionalism of physicians by subjecting them to micromanagement by corporate overseers.88 Other legal regimes extend liability from a primary wrongdoer to some other party who is in a position to disrupt the wrongdoing by withholding her services or cooperation, or by taking some preventive measure: a Agatekeeper@ or an Aenabler.@89 Examples are legion. Liability for fraudulent securities transactions may be placed on lawyers or accountants who have provided audits or legal opinions.90 Dram shop legislation and tort law in some states places liability on bartenders and social hosts for alcohol-related damages caused by their intoxicated customers and guests.91 Therapists may be held liable for failing to warn the victims of their patients=

585See Alan O. Sykes, The Boundaries of Vicarious Liability: An Economic Analysis of the Scope of Employment Rule and Related Legal Doctrines, 101 Harv. L. Rev. 563 (1988). 686See Richard A. Epstein & Alan O. Sykes, The Assault on Managed Care: Vicarious Liability, Class
Actions, and the Patient =s Bill of Rights, 30 J. Legal Stud. 638-41 (2001).

787See Jennifer Arlen & W. Bentley MacLeod, Malpractice Liability for Physicians and Managed Care
Operations [unpublished draft]; Clark C. Havighurst, Vicarious Liability: Relocating Responsibility for the Quality of Medical Care, 26 Am. J. L. & Med. 7 (2000).

88See Havighurst, supra note __, at 20-22. 989See Kraakman, supra note __ (gatekeepers); Robert L. Rabin, Enabling Torts, 49 Depaul L. Rev. 435,
441-42 (1999) (enablers). The discussion that follows will refer to both types of regime as Agatekeeper@ liability.

090See Kraakman, supra note __, at 64-65 (citing examples). 191See Rabin, supra note __, at 441-42.

predictable acts of violence.92 Gun manufacturers have recently been held liable for the injuries of shooting victims based on the manufacturers= marketing and distribution practices.93 These cases are conceptually distinct from classic vicarious liability in two respects. First, the relationship between the gatekeeper and the primary wrongdoer need not be principal-agent or even contractual. Second, the gatekeeper=s liability is not strict but duty-based: gatekeepers are independent wrongdoers who are directly, not vicariously, liable. So, whereas employers are held vicariously liable for their employees= torts irrespective of whether they behaved negligently in any respect, proposed gatekeeper regimes that would hold employers liable for hiring illegal aliens condition liability on the employer=s knowledge of their illegal status or failure to verify documentation.94 Sexual harassment under Title VII is a mixed vicarious and gatekeeper liability regime.95 In some casesCwhere the harassment is accompanied by a Atangible employment action,@ or where an harassing supervisor is of a sufficiently high rank in the companyCthe employer is liable for the misconduct of its employees no matter what it did or did not do by way of contribution or prevention.96 In cases of harassment by co-employees, on the other hand, the employer is liable only if negligent in allowing the harassment to occur. 97 These are vicarious and gatekeeper liability rules, respectively. (Other cases fall somewhere in between. Employers are vicariously liable for hostile environment sexual harassment, but they can escape liability by establishing the affirmative defense that they exercised reasonable care to prevent and correct the offensive behavior and the plaintiff employee unreasonably failed to avail herself of available corrective procedures.98) Formal and doctrinal distinctions notwithstanding, gatekeeper liability works in much the same way as vicarious liability. Consider a regime of gatekeeper liability imposed on internet service providers (ISPs) for the copyright violations or cybercrimes of their users.99 The proximate authors of misconduct on the internetCusers of Napster who violate copyrights,100

292See Tarasoff v. Regents of the University of California, 551 P.2d 334 (Cal. 1976). 393See Rabin, supra note __, at 436-37; Timothy D. Lytton, Lawsuits Against the Gun Industry: A
Comparative Institutional Analysis, 32 Conn. L. Rev. 1247 (2000).

494See Kraakman, supra note __, at 64 n.29. 595See George Rutherglen, Employment Discrimination Law 128-35 (2001). 696See Burlington Industries v. Ellerth, 524 U.S. 742, 761, 758 (1998). 797See Faragher v. City of Boca Raton, 524 U.S. 775, 799 (1998). 898See Burlington Industries, 524 U.S. at 765. 99See Neal K. Katyal, Criminal Law in Cyberspace, 149 U. Pa. L. Rev. 1003, 1095-1101 (2001); Assaf
Hamdani, Who=s Liable for Cyberwrongs, 87 Cornell L. Rev. 901 (2002). See also Title II of the Digital Millennium Copyright Act, 17 U.S.C. ' 512 (Supp. V 1999) (creating a complex regime of vicarious and gatekeeper liability for ISPs).

0100See id. at 940-49.

sellers of illegal drugs or Nazi memorabilia on auction sites,101 posters of child pornography102Care often anonymous, and, even when they can be identified and prosecuted, judgment-proof.103 In order to gain access to the internet, however, all of these primary wrongdoers must go through an ISP, which is comparatively easy to identify and often in a better position than an outside sanctioning agent to monitor and control the activity of users and subscribers. In combating child pornography on the web, for example, it may well be more efficient for government to sanction ISPs that fail to identify and block access to illegal sites than to attempt to prosecute all of the ISP customers who have accessed these sites.104 Just as vicarious liability imposed on MCOs would likely lead to greater efforts on their part to reduce physician malpractice, gatekeeper liability might encourage ISPs to develop hardware and software technologies, such as filters, which would reduce the cost of screening out illegal users and increase efficiency gains relative to a direct liability regime. And just as MCOs might be driven by the threat of vicarious liability to micromanage health care providers, we might worry that the same incentives would push ISPs toward overzealous monitoring that threatened the privacy of subscribers or resulted in censorship of borderline content. 105 Again, collective sanctions in any form, by making group members accountable for each other=s behavior, will tend to affect their relationships in both desirable and undesirable ways. 2. Joint and Several Liability Where multiple injurers are causally responsible, or potentially responsible, for Athe same@ harm, it will often be prohibitively costly to apportion liability among the injurers based on fault or causal contribution. In such situations, legal regimes tend to move from individualized assessments of liability to joint and several liability, meaning that the plaintiff or government regulator can collect the full amount of damages from any of the injurers.106 One prominent example is the statutory Superfund scheme, under which numerous Apotentially responsible parties@Cthe current and prior owners and operators of the site, and all generators and 101See Hamdani, supra note __, at 954-56. 2102See Katyal, supra note __, at 1028-31. 3103See Hamdani, supra note __, at 910-11. 4104See Katyal, supra note __, at 1099. 5105See Hamdani, supra note __, at 916-21; id. at 1098.
(Vicarious liability might also be considered a subset, inasmuch as the principal and agent are held jointly and severally liable, but vicarious liability cases, as defined above, lack multiple personally-liable injurers.) Unlike vicarious and gatekeeper liability, which are limited to two parties in a contractual relationship, joint and several liability may be applied to any number of defendants. There is a sophisticated law & economics literature on the complicated incentive effects of joint and several liability and related regimes involving multiple injurers. See generally Lewis A. Kornhauser & Richard L. Revesz, Joint and Several Liability, in The New Palgrave Dictionary of Economics and the Law 372 (1998); William M. Landes & Richard A. Posner, Joint and Multiple Tortfeasors: An Economic Analysis, 9 J. Legal Stud. 517 (1980).

6106When joint and several liability is defined at this level of generality, gatekeeper liability is a subset.

transporters of hazardous substancesCare strictly liable for the costs of cleaning up toxic pollution around a waste site.107 Confronting enormous evidentiary challenges to apportioning clean-up costs among individual defendants, courts have held all the parties jointly and severally liable.108 Another example is modern products liability law, under which manufacturers, distributors, retailers, and suppliers of component parts may be held jointly and severally liable for injuries caused by defective products. Often it will be difficult for consumer-plaintiffs to identify where, exactly, in the chain of manufacturing and distribution, cost-effective precautionary steps might have been taken.109 Here again, where it is costly for a sanctioner to attribute responsibility to individual wrongdoers, but relatively easy to draw a circle around a group of individuals that includes all of the likely suspects, we see collective sanctions. As in other collective sanction regimes, it is then left to the group to parcel out the costs of liability among themselves. Joint and several liability regimes are commonly combined with rights of contribution among defendants. A defendant who has been forced to pay more than its rightful share can subsequently seek to reassign the costs of liability among the defendants based on fault, causal contribution, or some other pro rata division. We might understand this two-step process of joint and several liability followed by contribution, on the model of frankpledge, as harnessing the defendants= private information about each other=s behavior. Under Superfund, for example, a company that dumped very little waste at a site would have an incentive in a contribution action to reveal any information it had about the disposal practices of its highervolume competitors in order to shift liability costs onto them. (This explanation assumes that the same information would not be revealed if each defendant were held directly responsible for its fault-based or causal share in the first place. To the extent that inculpatory evidence about other firms is exculpatory for the defendant, this information will be available to the external sanctioning agent under both an individual and a joint and several liability regime.110) The possibility of insolvent defendants leads to a further advantage of joint and several liability. Under an individual liability regime, plaintiffs bear the risk of unidentifiable or judgment proof injurers. Joint and several liability shifts this risk to identifiable and solvent defendants. Either regime would seem to under-deter predictably unidentifiable or judgment-proof potential defendants, and joint and several liability would seem to have the additional disadvantage of overdeterring the remaining potential defendants by threatening them with damages in excess of their causal contribution to the social loss.111 But let us not lose sight of the capacity of collectively 7107For an overview of the Superfund scheme, see Richard L. Revesz & Richard B. Stewart, The
Superfund Debate, in Analyzing Superfund: Economics, Science, and Law 3-21 (Richard L. Revesz & Richard B. Stewart eds., 1995).

8108See id. at 7. 9109See Levmore, Ancient Rights and Wrongs, supra note __, at 89. The same informational problem
may help to justify the transition from negligence to strict liability in manufacturing defect cases. It will often be costly to determine whether a defect resulted from negligence. See Kenneth S. Abraham, The Forms and Functions of Tort Law 190-91 (1997).

0110In other words, even if Superfund courts did not rely on joint and several liability, each defendant
would still be motivated to reveal to the government anything it knew about the behavior of other firms that would reduce its own share of responsibility.

111The disadvantage of over-deterring these defendants under joint and several liability should be

liable groups to recalibrate the incentives of members who might invite liability. Returning to the Superfund context, potentially responsible parties may be in a position to reallocate expected liability costs contractually, in advance of waste dumping, transporting, or receiving activity.112 In many cases involving toxic waste sites, the parties are in a wheel-shaped market relationship around a dump site hub. In this situation, wealthy firms around the rim may have sufficient bargaining leverage to induce the owner of the dump site hub to demand a discount equal to the expected value of the excess liability of insolvent firms.113 The dump site owner would then require potentially judgment-proof firms to pay a contractual premium in that amount. In effect, potentially insolvent firms would be required to buy insurance against Superfund liability from wealthy firms, resulting in efficient incentives all around.114 This (hypothetical) result would be impossible under a direct liability regime because solvent firms would have no incentive to extend ex ante contractual control over insolvent ones. Joint liability shares with other collective sanction regimes the capacity to mobilize secondary sanctioners who are in an advantageous position to monitor and control potential wrongdoers. In this case, the sanctioner compensates for its inability to influence the behavior of some polluting firms by threatening other firms with excess liability in the hope of motivating them to create contractual controls. Notice, once again, that the relationship among the group of firms held jointly and severally liable is potentially endogenous to the application of collective sanctions. Faced with Superfund liability, firms that might otherwise have operated independently of one another now have an incentive to coordinate their behavior contractually or by other means. For instance, wealthy firms may attempt to control their potentially insolvent competitors through trade associations or consortiums. If contract or governance fails, they may even resort to buying out these firms.115 Whether these kinds of dynamic relational effects are positive or negative will, of course, depend on the circumstances. On the negative side, we might be concerned about the anticompetitive or otherwise inefficient consequences of encouraging firms in an industry to cartelize or integrate.116 On the positive side, in addition to the benefit of preventing insolvent firms from
compared to the disadvantage of undercompensating plaintiffs under an individual liability regime. Note that for the under- and over-deterrence points to hold, defendants must be classifiable ex ante, at the time they make whatever decisions determine future liability. See Landes & Posner, supra note __, at 520.

2112See David Rosenberg, Joint and Several Liability for Toxic Torts, 15 J. Hazardous Materials, 229-31
(1987).

3113See id. 4114Levmore offers a similar analysis of products liability law that explains why it might have made sense to remove the privity limitation on suits against manufacturers. He suggests that manufacturers may be in the best position to organize efficient contractual allocations of liability costs among all the firms in manufacturing and distribution chain. See Levmore, Gomorrah to Ybarra, supra note __, at 1569. 5115See id. 6116See Susan Rose-Ackerman, Market-Share Allocations in Tort Law: Strengths and Weaknesses, 19 J. Legal Stud. 739, 745 (noticing that market-share liability will make safety improvements a local public good for firms in the industry, which may lead them to attempt to cooperate through joint ventures, with potentially anticompetitive consequences); Frederick B. Sontag, Indirect Effects of Product Liability on a Corporation, in

externalizing clean-up costs, the greater coordination among firms induced by joint and several liability may solve a separate, more general under-deterrence problem. Multiple injurers who are held strictly liable for harm will be under-deterred under either an individual or joint and several liability regime.117 Intuitively, this is because each will bear the full cost of reducing liability but gain only a pro rata share of the savings in liability costs. 118 Thus, if firms act independently, they will end up over-producing waste. But if firms can cooperate in setting their levels of waste production they will agree to produce the socially optimal amount because this amount will also lead to the optimal level of liability from their (collective) perspective. Because joint and several liability creates greater incentives for cooperation than individual liability, it has the potential to ameliorate this under-deterrence problem. 3. Corporate Liability Corporate shareholders are commonly held liable (up to the amount of their equity investment) for the conduct of managers and employees that amounts to a tort, breach of contract, regulatory violation, or crime. Corporate liability is simply a special case of employeremployee vicarious liability, distinguished by the fact that the employer is a collective entity consisting of the shareholders who own the firm.119 Not surprisingly, then, the functional justifications for corporate liability parallel those of vicarious liability more generally.120 The obvious alternative to corporate liability is direct, individual liability for mangers and employees. But this is the exception rather than the rule.121 One problem with individual liability, here again, is that it runs up against insolvency: the magnitude of corporate liability is often far in excess of the assets of individual managers. Individual liability would allow corporations to externalize liability costs to a far greater extent than limited liability for shareholders. Further, diversified shareholders are better risk-bearers than undiversified agents. To avoid paying managers exorbitant risk premiums, corporations would contract around an individual liability regime by promising to indemnify them against risk. Corporate liability thus serves as an efficient
Product Liability and Innovation: Managing Risk in an Uncertain Environment 70-71 (1994) (describing inefficient corporate restructuring motivated by products liability).

7117See Shavell, supra note __, at 164-65; Kornhauser & Revesz, Palgrave, supra note __, at 372; Lewis A. Kornhauser & Richard L. Revesz, Evaluating the Effects of Alternative Superfund Liability Rules, in Analyzing Superfund: Economics, Science, and Law 120-22 (Richard L. Revesz & Richard B. Stewart eds., 1995). 8118This problem does not arise under a negligence rule because each party can avoid liability altogether by complying with the standard of care. See Kornhauser & Revesz, Palgrave, supra note __, at 372. 9119As in other vicarious liability regimes, corporations and their agents are jointly and severally liable
from wrongdoing in theory, but in practice liability almost always falls on the corporation. See Reinier H. Kraakman, Corporate Liability Strategies and the Costs of Legal Controls, 93 Yale L.J. 857, 858-59 (1984).

0120See Jennifer Arlen, Corporate Crime and its Control, in 1 The New Palgrave Dictionary of Economics and the Law 492 (1998); V. S. Khanna, Corporate Criminal Liability: What Purpose Does it Serve?, 109 Harv. L. Rev. 1477, 1494-96 (1996); id. at 858-67. 121For discussions of the circumstances under which legal regimes do or should switch to individual
liability for corporate agents, see Kraakman, supra note __, at 868-88; A. Mitchell Polinsky & Steven Shavell, Should Employees Be Subject to Fines and Imprisonment Given the Existence of Corporate Liability?, 13 Int =l Rev. L. & Econ. 239 (1993).

default rule. Imposing the costs of liability on shareholders motivates them to create incentives for managers and employees to take optimal care to avoid liability. To be sure, the diffuse and diversified shareholders of large, publicly-traded U.S. corporations have limited ability and inclination to monitor and control their agents.122 Like any other group subject to collective sanctions, they are burdened by free-rider problems. Nevertheless, shareholder monitoring and controlCwhen combined with the disciplinary effects of takeover, products, and managerial employment markets and the fact that managers usually have no personal incentive to behave in ways that invite liability for the corporationCmay be effective enough.123 Compared to individual liability for agents, collective liability for shareholders may reduce the overall social costs of corporate misconduct. In this context, as well, collective sanctions potentially outperform individual ones. 4. Insurance Insurance transforms individual liability into a type of collective sanction regime. A negligent tort defendant (for example) bears the full cost of the victim=s loss in damages, but if he has liability insurance, the cost is instead passed through to the defendant=s risk pool. As in any collective sanction regime, it will then be left to this group Cor to the insurer, acting on behalf of the risk poolCto monitor and control the potential tortfeasor. This is the standard moral hazard problem that arises any time an insured has some control over the level of the risk that is covered by the insurance.124 The most straightforward way of reducing the costs of moral hazard is for the insurer to calibrate premiums to expected risk, which will depend on the potential tortfeasor=s level of precautions. If perfect risk-rating were possible, then insurance would not blunt the potential tortfeasor =s incentives to take optimal care, but would simply shift the ex post costs of liability to ex ante premium payments. In practice, however, information and other transaction costs (including government regulation) usually prevent perfect risk-rating.125 Consequently, the efficiency of insurance is commonly assessed as a trade-off between the (inevitable) moral hazard costs of increased risk and the benefits of spreading this risk over a pool.126 At least in some contexts, however, insurance may actually reduce risk. Like other collective sanction regimes, insurance has the potential to generate more effective deterrence of individual misbehavior than would be possible through individual tort liability alone. Here again, this is because the risk pool group, acting through the governance structure provided by the insurance company, has at its disposal greater resources for monitoring and controlling its members than does the outside sanctioning agent. In tort cases, courts are usually limited to ex 2122See Henry Hansmann, The Ownership of Enterprise 57-62 (1996). 3123See Kraakman, supra note __, at 863, 866. 4124See Kenneth S. Abraham, Distributing Risk (1986). 5125See Richard A. Posner, Economic Analysis of Law 221 (5th ed. 1998). 6126See id. at 221-22; Shavell, supra note __, at 212-13. Policy exclusions and deductibles, among other
devices, are commonly used by insurers to attempt to optimize moral hazard costs and risk-reallocation benefits.

post sanctions in the form of damage awards. Potential tortfeasors will be deterred by the threat of damages only to the extent of their solvency, and they will be induced to take optimal precautions only to the extent of their capacity to understand which precautions are, in fact, optimal and how to implement them. Insurance solves the problem of insolvency by charging insureds the expected value of harms, which they can afford to pay, instead of the full value of realized harms, which they often cannot. In addition, insurers, who process a large volume of accident claims and accumulate knowledge from all of the members of their risk pools, may have greater expertise in risk reduction technologies than policyholders.127 The possibility of turning moral hazard into moral opportunity in this way offers one solution to the puzzle of why publicly held corporations buy insurance in the first place. The puzzle arises because shareholders of large corporations are in a position to diversify away risk more efficiently than any insurance pool. Insurance must provide some benefit to corporations other than risk-spreading. One possible benefit is risk-reduction.128 Insurers may have better information about optimal safety precautions than any individual corporation. 129 Here again, intragroup control mechanisms triggered by collective sanctions may deter wrongdoing more efficiently than direct imposing of individualized sanctions by an agent outside of the group. III. A Functional Analysis of Collective Sanctions Generalizing from the functional features of collective sanctions in primitive societies and in modern regimes of delegated deterrence, this Part offers a unifying, theoretical overview. When designing incentive schemes in law, economics, and politics, policymakers always have a choice about where to aim sanctions. Broadly speaking, there seems to be an intuitive presumption in favor of imposing sanctions directly on the individual whose behavior the policymaker wishes to affect. Only where individual sanctions are clearly ineffective does the possibility of displacing sanctions from the target individual to a different individual or group typically become salient. The informal model developed in this Part is designed to provide a framework for analyzing the costs and benefits of collective sanctions relative to this intuitive baseline of direct, individual sanctions. In so doing, it may suggest a more level playing-field between the two. Policymakers should recognize that the optimal location of liability is always at issue, and they should understand the conditions under which group-level sanctions may be expected to outperform individual-level ones. A. Groups and Solidarity 7127See Kenneth Abraham, Distributing Risk 19 (1986); Jon D. Hanson & Kyle D. Logue, The First-Party
Insurance Externality: An Economic Justification for Enterprise Liability, 76 Corn. L. Rev. 129, 193 n.247 (1990).

8128Other possibilities have been suggested. See Posner, Economic Analysis, supra note __ at 478; Louis
de Alessi, Why Corporations Insure, 25 Econ. Inquiry 429 (1987); George L. Priest, The Current Insurance Crisis and Modern Tort Law, 96 Yale L.J. 1521, 1560 (1987); Alan Schwartz, Products Liability, Corporate Structure, and Bankruptcy: Toxic Substances and the Remote Risk Relationship, 14 J. Legal Stud. 689 (1985).

9129See Yoram Barzel, Economic Analysis of Property Rights 60-61 (2d ed. 1997); Frank H. Easterbrook & Daniel R. Fischel, The Economic Structure of Corporate Law 52 (1991); Posner, Economic Analysis, supra note __, at 478; David Mayers & Clifford W. Smith, Jr., On the Corporate Demand for Insurance, 55 J. Bus. 281, 286 (1982).

Collective sanctions mobilize groups to monitor and control the conduct of their members. These groups may pre-exist the sanctioning regime, like kinship groups in primitive societies or the companies of Brownsville soldiers, or they may be created by it, like frankpledge groups or the otherwise unrelated producers of waste held collectively liable for clean-up costs under Superfund. For purposes of understanding collective sanctions, then, a group is broadly defined to include any collection of individuals who have some capacity to influence each other =s behavior. Solidarity refers to the to the ability of group members to make use of this capacity in order to cooperate with one another in pursuit of collective ends.130 Individuals form and maintain groups because groups provide them with jointly-produced goods that they could not obtain, or that would be more costly for them to obtain, acting individually.131 Because the goods provided by groups are often locally public, or collective, in the sense that they are produced cooperatively and shared by all members irrespective of individual contributions, groups face collective action problems.132 Rather than contribute to producing the collective good, each individual has an incentive to free-ride on the efforts of other group members. To achieve collective goods, groups must somehow attach sufficient costs to free-riding that it becomes individually rational for members to choose cooperation instead. Groups make use of at least three different mechanisms to realign members= incentives in this way. Where groups can rely on a well-functioning, state-provided legal system, one straightforward way of attaching costs to non-cooperation is by entering into legal contracts, enforced by judicial remedies for breach. Solidarity within corporations, for example, is largely constructed through a network of contracts. But there are limits to the utility of contracts. Groups that are engaged in illegal activity, like criminal gangs, obviously cannot rely on judicial enforcement, and courts are also unwilling to enforce certain kinds of intra-familial promises.133 More generally, formal contracts are often prohibitively costly to create and enforce. 134 Smaller, closely-knit groups whose members interact frequently tend to rely less on formal contracts and more on informal social norms to regulate behavior.135 Norms are enforced by nonlegal sanctions by group members, in the form of shaming, economic boycotts, or ostracism.136 0130See Eric A. Posner, The Regulation of Groups: The Influence of Legal and Nonlegal Sanctions on Collective Action, 63 U. Chi. L. Rev. 133, 135 (1996). 131See Hechter, supra note __, at 33; id. at 137. 2132See Russell Hardin, Collective Action (1982). 3133See E. Posner, supra note __, at 189, 191-93. 4134See Ellickson, supra note __, at 246-47; id. at 155-56. 5135See Robert C. Ellickson, Order without Law (1991); E. Posner, supra note __. 6136See Richard H. McAdams, The Origin, Development, and Regulation of Norms, 96 Mich. L. Rev. 338
(1997). Norms may also be Ainternalized, @ so that they are self-enforced by a sense of duty or guilt. See Robert Cooter, Do Good Laws Make Good Citizens? An Economic Analysis of Internalized Norms, 86 Va. L. Rev. 1577 (2000).

The greater the dependence of members on the group for obtaining various kinds of collective goodsCsocial, spiritual, or economicCthe more effective is the threat of exclusion from these goods as a sanction for violating a norm of cooperation.137 A number of other variables influence the efficacy of norm-based controls. For example, in order to facilitate the discovery of norms violations, and to encourage widespread sanctioning, groups must limit privacy and broadly disseminate information.138 Consensus about the substantive content of norms, and what counts as a violation, is more easily obtained in homogenous groups, such as those based on ethnicity, profession, or family.139 Sanctioning costs are reduced where group members share values and compete for esteem, and where exit is especially costly due to group-specific material or human capital investments.140 In sum, tightly-knit, homogenous, high-stakes groups can exercise strong control over their members and create high levels of solidarity by relying solely on informal, decentralized enforcement of norms.141 In larger, less tightly-knit groups, where members interact less frequently and information about their behavior is more costly to obtain and diffuse, informal social sanctions typically must be supplemented or replaced by more formal institutions of intra-group governance.142 Centralized, hierarchical governance institutions allow for division of labor and economies of scale in detecting and sanctioning violators of intra-group norms. Group governance institutions can take a variety of shapes, as some examples will illustrate. The emergence of Leviathan from the state of nature, as well as real-world governments, can be understood as institutional solutions to collective action problems among citizens.143 In the private sector, when contracting is prohibitively costly, entrepreneurs coordinate the behavior of groups of individuals engaged in complex market transactions through the hierarchical governance structure of a firm.144 Industries create elaborate private legal systems to resolve disputes among merchants.145 Users of common-

7137See Hechter, supra note __, at 45-46; E. Posner, supra note __, at 141-42. 8138See Hechter, supra note __, at 150-56. 9139See id. at 156-67. 0140See id. at 157-62. 141The relationship between judicial enforcement of member obligations and group norms is interesting
and complicated. See E. Posner, supra note __, at 155-61.

2142See Ellickson, supra note __, at 248-49; Heckman, supra note __, at 59-77.
(1989).

3143See Thomas Hobbes, Leviathan (Oakeshott ed., 1962); Dennis C. Mueller, Public Choice II at 9-15 4144See Oliver Williamson, Markets and Hierarchies (1975); Ronald H. Coase, The Nature of the Firm, 4 5145See Lisa Bernstein, Merchant Law in a Merchant Court, Rethinking the Code =s Search for Immanent

Econometrica 386 (1937).

Business Norms, 144 U. Pa. L. Rev. 1765, 1790 (1996); Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J. Legal Stud. 115 (1992); Lisa Bernstein, Private Commercial Law in the Cotton Industry: Creating Cooperation Through Rules, Norms, and Institutions, 99 Mich. L. Rev. 1724 (1999).

pool resources create more or less formal institutional arrangements to regulate their use. 146 Kinship groups, criminal gangs, and political parties likewise create hierarchical governance structures in order to monitor and control group members. Of course, recognizing that many groups achieve solidarity through internal sanctioning mechanisms just pushes the collective action problem back to the creation and maintenance of these mechanisms. If imposing non-contractual sanctions, informally or through a governance structure, is costly, then the same free-rider problems that impede cooperation in pursuit of the group=s primary ends will also impede cooperation in enforcing norms. How groups overcome this second-order collective action problem is something of a theoretical puzzleCthough a number of plausible solutions have been developed. At least some types of sanctions are probably costless for group members to impose. For example, members may be able to punish non-cooperators simply by withholding esteem.147 Or they may be able to impose sanctions at no net cost, because the costs of sanctioning are offset by rewards from other group members148 or by signaling benefits.149 Other solutions are derived from the theory of repeated games. If the interactions among group members are modeled as an N-player iterated prisoner=s dilemma, so long as members have sufficiently low discount rates and sufficiently reliable information about each other=s past behavior, cooperative behavior is a possible equilibrium.150 For present purposes, we may remain agnostic about the microfoundations of norm-based group solidarity. It is sufficient to recognize that groups often do manage to create and maintain cooperation in pursuit of collective goods, whether through contracts, decentralized norms, or governance structures. B. Collective Sanctions Collective sanctions can take the form of group punishments or rewards. (This Article focuses on sanctions as punishments rather than rewards, but the basic ideas are equally applicable to both.151) As the discussion of primitive societies emphasized, the term sanction is meant to carry none of the moral baggage of Apunishment.@ Sanctions have no necessary connection to moral guilt. Nor is the term meant to imply any relationship between the magnitude of disutility inflicted and the amount of social harm caused.152 6146See Elinor Ostrom, Governing the Commons (1990). 7147See McAdams, supra note __. 8148See James S. Coleman, Foundations of Social Theory 274-76 (1990). 9149See Eric A. Posner, Law and Social Norms (1990). 0150See id. at 15-18 (discussing the conditions under which cooperation may result from iterated
prisoner =s dilemma interactions among group members); Paul G. Mahoney & Chris W. Sanchirico, Norms, Repeated Games, and the Role of Law, U. Va. Law & Econ. Working Paper 02-03.

baseline. For example, one could say that the Brownsville soldiers were offered a reward for cooperating with the investigation, namely, keeping their jobs.

151Of course any sanction can be described in terms of punishment or reward, depending on the implicit

Sanctions are collective when they are imposed on groups of two or more individuals. AImposed@ should be understood in an ex ante sense, to take account of the fact that sanctions directed against a single group member chosen at random have the same functional consequences as sanctions inflicted pro rata on each member of the group. That is, threatening a group of ten members with a fine in the amount of $100 will have the same functional consequences whether it will be imposed by fining each of the members $10 or, instead, by choosing one member at random and fining her the full $100 (i.e., decimating the group 153). In general, so long as groups are sufficiently solidary, group incentives will be the same whether collective sanctions are lumped on one member of the group chosen at random (or by any criteria other than wrongdoing) or spread evenly among all the group members.154 Finally, as the examples throughout the Article illustrate, sanctions can be imposed by a wide variety of sanctioners, public and private, individual and collective. A central feature of the functional model of collective sanctions is that the costs of sanctions are transmitted to individual wrongdoers. As in any other sanction or taxation scheme, the impact point is not necessarily the final resting point, or incidence, of the burden. For present purposes, it is important to observe that the same is true of individual sanctions. Sanctions applied formally and initially to an individual often become collective in their incidence as the costs are spread to others. Insurance against individual liability, discussed above, is only the most obvious example. When individuals are sanctioned with monetary fines or imprisonment, their families will typically suffer along with them.155 In communities with high incarceration rates, the costs of imprisonment may spill over onto the community as a whole.156 Sellers of goods and services usually will be able to pass some of their liability costs on to consumers.157 In all of these contexts, and others, sanctions that formally target individuals will be functionally indistinguishable from (formally) collective sanctions. Whether sanctions are collective de jure or de facto, avoiding them will be a collective good for the group that is threatened.158 Absent any group solidarity, an individual group member will have little incentive to avoid sanctions because she will enjoy all the benefits of misconduct 2152In other contexts, the distinction between Asanctions@ and Aprices,@ which turns in part on the

relationship between magnitude of penalty and social harm, is a useful one. See Robert Cooter, Prices and Sanctions, 84 Colum. L. Rev. 1523 (1984).

3153Under Roman military law, commanders were empowered to collectively punish units for crimes such
as desertion or cowardice by putting to death every tenth soldiers, drawn by lots. This is the literal meaning of Adecimation. @ An obvious advantage of the practice is that nine out of every ten soldiers remained healthy and available to fight. See Clarence E. Brand, Roman Military Law [cite] (1968).

4154Cf. E. Posner, supra note __, at 147 (making the analogous point about group subsidies).
Meda Chesney-Lind eds., 2002).

5155See Donald Braman, Families and Incarceration, in Invisible Punishment 117-35 (Marc Mauer & 6156Tracey L. Meares & Dan M. Kahan, Law and (Norms of) Order in the Inner City, 32 Law & Soc. Rev.

805, 809-13 (1998); Tracey L. Meares, Social Organization and Drug Law Enforcement, 35 Am. Crim. L. Rev. 191 205-11 (1998).

7157See Richard Craswell, Passing on the Costs of Legal Rules: Efficiency and Distribution in BuyerSeller Relationships, 43 Stan. L. Rev. 361 (1991).

while expecting to pay only a fractional share of the cost of sanctions.159 The effectiveness of collective sanctions in deterring misconduct by group members will therefore depend on the solidarity of the group.160 Groups with established institutional mechanisms for controlling the behavior of their members will have an easier time translating group-level sanctions into individual-level incentives. To the extent group members are already bound together by contracts, norms, or governance structures in pursuit of other collective goods, they will be able to take advantage of the same institutional mechanisms to prevent individual wrongdoers from inviting collective sanctions. The reverse is also true. Collective sanctions not only leverage but also build group solidarity. By increasing the benefits of cooperation, collective sanctions may induce groups to create the institutional structures necessary to support cooperation or to bolster existing ones. As discussed below, once these structures are in place, the solidarity they support can be used to pursue other, unrelated collective goods.161 C. Leveraging Solidarity Groups that have achieved, or can be induced to achieve, sufficient solidarity will often be capable of controlling the behavior of individual members more efficiently than an outside sanctioning agent. Solidary groups have more information about their members behavior and can more readily identify wrongdoers. They also have at their disposal a more effective set of tools for exercising control. Collective sanctions thus have the potential to leverage group solidarity by substituting more efficient intra-group monitoring and control mechanisms for less efficient externally-imposed sanctions aimed at individual wrongdoers. 1. Identifying Wrongdoers Perhaps the most obvious reason for imposing liability on a group is that the identity of the wrongdoer cannot be cost-effectively narrowed down any further by the outside sanctioner. Collective sanctions can harness a group=s superior information to increase the probability that an individual wrongdoer will be sanctioned, whether by the group itself, or, with the group =s help, by the outside sanctioner.

8158See Heckathorn, supra note __. Heckathorn formally models the consequences of collective sanctions
as a prisoner =s dilemma game.

9159This is equally true whether collective sanctions are sprinkled over the entire group or lumped onto
one or a few group members. Imagine a scheme of collective sanctions that operates as follows: whenever an individual misbehaves, the sanctioner chooses a member of that individual =s group at random and inflicts the full sanction on her. From an ex post perspective, it is odd to describe the sanction as collective since all but one of the group members pay nothing. For purposes of thinking about deterrence, however, what matters is the expected sanction, not the one actually applied. Ex ante, it makes no difference whether the sanctioning scheme divides the disutility of the sanction pro rata among all the members or whether it chooses one at random to bear the entire burden.

0160See id. at 549. 161See infra notes __ and accompanying text.

Saul Levmore has highlighted the latter, information-forcing rationale for group liability.162 Levmore takes as his starting point the famous tort case of Ybarra v. Spangard, in which a patient was allowed to recover damages from a group of doctors and nurses who were in the operating room during his appendectomy.163 The patient awakened from anesthesia with an injury to his arm. He presented evidence that someone negligently caused the injury during the operation, but he had no way of identifying which of the doctors or nurses in the room was responsible; and they, predictably, were not talking. Rather than dismiss the claim for failing to meet the preponderance of the evidence standard for each of the individual defendants, the court decided to hold all of them collectively liable. Levmore views the court =s decision as a clever strategy for encouraging complicitly silent witnesses to reveal the actual tortfeasors.164 Generalizing from Ybarra, he suggests that group liability tends to emerge in just those situations where there is uncertainty about a wrongdoer=s identity and it is easy to identify a closely-knit target group likely to contain witnesses.165 This information-forcing feature of collective sanctions is familiar from the frankpledge system, which was designed to motivate neighbors to help enforce the law by snitching on one another.166 It was also featured in the Brownsville case, where the military resorted to collective responsibility in a last-ditch attempt to induce the battalion to offer up the guilty soldiers for punishment after the military=s own investigation had been frustrated. These kinds of regimes, which use collective sanctions to exploit the private information of groups by encouraging them to identify wrongdoers to the sanctioner, are analogous to other Awhistleblower@ strategies, such as immunity for criminal informants and liability under university honor codes for students who fail to report cheating.167 They are also analogous to Afire-alarm@ oversight strategies, as when Congress creates procedural vehicles for private groups to monitor administrative agencies and bring agency abuses to congressional attention.168 2162See Levmore, Gomorrah to Ybarra, supra note __. 3163154 P. 2d 687 (1944).
group members with super-compensatory damages if the actual wrongdoer is not discovered, a scheme that Levmore terms Aover-extraction. @ The emphasis of the over-extraction idea is not so much on encouraging silent witnesses, but on creating incentives for the wrongdoer himself to confess. In Ybarra, for example, Levmore=s ideal solution would be to induce confession by putting the actual wrongdoer to the choice of remaining unidentified and paying super-compensatory damages or turning himself in and paying merely compensatory damages. See Levmore, Gomorrah to Ybarra, supra note __, at 1563-64. Viewed in this light, Levmore =s project connects up with other schemes designed to induce self-reporting by wrongdoers. See, e.g., Louis Kaplow & Steven Shavell, Optimal Law Enforcement with Self-Reporting of Behavior, 102 J. Pol. Econ. 583 (1994) (explaining how violators can be induced to self-report by imposing a lower sanction on those who disclose their own misconduct).

4164The primary point of Levmore=s article is to improve upon this strategy by threatening each of the

5165See id. at 1570. 6166See id. at 1562. 7167Kraakman usefully distinguishes Awhistleblowing@ strategies, designed to encourage third-parties to
disclose private information about wrongdoing to enforcement authorities, from indirect liability strategies designed to encourage these third-parties to control wrongdoers themselves. Kraakman, supra note __, at 58.

8168See Mathew D. McCubbins & Thomas Schwartz, Congressional Oversight Overlooked: Police Patrols

But collective sanctions can also effectively harness group information about the identity of individual wrongdoers without the information ever being revealed to an outside sanctioner. Recall, for example, the system of communal responsibility for merchants in medieval Europe, which exploited the information of local merchants without necessitating its disclosure. Likewise, vicarious liability, products liability, and Superfund regimes have all been justified in terms of high information costs confronting plaintiffs and courts. 169 Each of these regimes takes the form of Apolice patrol@ rather than Afire alarm@ monitoring. The group is meant to use its superior information not to hand over wrongdoers to an outside sanctioner, but to take charge of controlling them itself. (In part, as discussed below, this is because informational advantages are useful not just in identifying but also in exercising ongoing control over wrongdoers. 170) Under either type of regime, closely-knit groups, whose members interact frequently, will typically have far lower monitoring costs than outsiders.171 Groups can lower these costs even further by limiting privacy, as in military barracks, and by encouraging the sharing of information through gossip, as in medieval villages.172 In regimes where the group functions not just as detective but also as prosecutor and judge, it may enjoy further cost advantages. Once a suspected wrongdoer has been identified, some kind of adjudication is usually desirable in order to ensure that the identity of the wrongdoer is correct and that her behavior did, in fact, violate the relevant standards.173 In adjudicating violations of internal group norms, groups often can rely on less formal and costly, yet more accurate, procedures for finding facts and resolving disputes than those available to outside sanctioners.174 Many industry groups, for example, have created private, internal legal systems to govern commercial transactions that are more efficient and accurate than the public legal system.175 For all these reasons, it will often be possible to deliver sanctions to an individual wrongdoer at lower cost when some or all of the responsibility is assigned, through collective sanctions, to a solidary group. 176 2. Controlling Wrongdoers
versus Fire Alarms, Am. J. Pol. Sci. 28 (1984) (contrasting police-patrol and fire-alarm oversight).

9169Levmore recognizes each of these contexts, in passing, as potential applications of the Agroup liability
as information-forcing @ idea. Levmore, Gomorrah to Ybarra, supra note __, at 1568-72.

0170See infra notes __ and accompanying text. 171See Ellickson, supra note __, at 180-81; McAdams, supra note __, at 361. 2172See Heckathorn, supra note __, at 154-56. 3173See Ostrom, supra note __, at 100-01. 4174See E. Posner, supra note __, at 156. 5175See, e.g., Bernstein, supra note __, at 1726-45. 6176In light of the fact that the optimal probability of sanctioning wrongdoers will usually be less than 100%, see Gary S. Becker, Crime and Punishment: An Economic Approach, 76 J. Pol. Econ. 169 (1968), this conclusion should be reformulated, more accurately, in terms of expected sanctions: delegating responsibility to groups will often lower the cost of maintaining a given level of expected sanctions.

Compared to external sanctioners, solidary groups often have at their disposal a more efficient set of tools for discouraging wrongdoers. For one thing, groups may be in a better position to impose ex ante regulatory regimes in situations where ex post penalties will predictably fail. For another, groups may have at their disposal more effective, or at least more cost-effective, carrots and sticks. This Section will address these two advantages in turn. In general, there are two situations where ex post liability will be ineffectual and ex ante regulation may be preferable.177 First, wrongdoers may be insolvent, and therefore fail to internalize monetary costs above the level of their ability to pay.178 Second, wrongdoers may lack the capacity to behave properly, either because they lack knowledge about what optimal behavior entails or because optimal risk-reduction strategies are structural and cannot be effected by individuals acting alone.179 In both of these situations, group-imposed regulatory regimes induced by collective sanctions may be more effective than direct individual liability regimes imposed by outsiders.180 To illustrate, recall the discussion of the vicarious liability of employers for the torts of their employees.181 Holding employees directly liable for tort damages or statutory fines will be an ineffective method of deterrence if employees are likely to be insolvent or if they lack the capacity to comply with legal standards. Motivated by vicarious liability, employers can impose ex ante forms of control that will not be undermined by limited employee solvency or capacity. Suppose that the primary problem is insolvency. Rather than charging the employee the full cost of liability when harm actually occurs, which by hypothesis she cannot afford to pay, the employer can attach sanctions to her risk-creating actions or failures to take precautions, irrespective of whether harm materializes. Assume that a physician who fails to order an inexpensive test creates a 1% risk of prescribing the wrong medication and causing $500,000 in harm to the patient.182 An MCO could create efficient incentives for its physicians by imposing a fine equal to the expected harm, or $5000, every time the test is not ordered. Now suppose that the primary problem is capacity: some physicians simply are not aware that the test should be administered. The MCO could take a variety of steps to solve this problem, ranging from hiring better-trained physicians to requiring physicians to obtain pre-clearance from a screening body before writing prescriptions. Because the MCO has more information about optimal risk-avoidance strategies and is capable of implementing structural, as opposed to individual, precautions, it will often be able to reduce risks 7177See Steven Shavell, Liability for Harm Versus Regulation of Safety, 13 J. Legal Stud. 357 (1984).
Actually there are three. Shavell points out that ex post liability will fail where wrongdoers are unlikely to be sued, particularly because they are difficult to identify. Id. at 363. This is the informational problem discussed above.

8178See id. at 360-61. 9179See id. at 359 (comparing liability to regulation based on the relative knowledge of regulators and
private actors about risky activities).

0180See Arlen & Kraakman, supra note __, at 701-04 (making a similar point as applied to firms and their
employees).

181Supra notes __ and accompanying text. 2182This example is derived from Arlen & Macleod, supra note __, at [cite].

at lower cost than physicians acting independently. Of course groups do not have a monopoly on ex ante regulatory strategies. In the vicarious liability example, a government regulatory agency could, in theory, impose any of the regulatory measures available to MCOs (for instance, mandating that physicians conduct the test and imposing a fine if they fail to do so). Or a court could enjoin individual physicians to take similar, prophylactic measures against harm as a remedy for malpractice liability. But groups will often be lower-cost regulators than outsiders like government agencies and courts. Unlike ex post liability, which only requires intervention when harm occurs, many regulatory regimes require continuous monitoring and verification of conduct. 183 As discussed above, groups whose members interact frequently will typically have far lower monitoring costs than outsiders. 184 Moreover, because many regulatory regimes impose less severe sanctions more frequently, the administrative costs of adjudicating and punishing misconduct weigh more heavily than in an ex post liability regime. Groups will typically have a cost advantage here, as well, since they can rely on less formal and more specialized fact-finding and enforcement mechanisms.185 Thus, in the vicarious liability example, an MCO will likely be able to enforce a testing requirement at much lower cost than, say, the FDA, both because it can more easily observe the behavior of physicians and because it can more cheaply adjudicate and penalize violations. Analogously, kinship groups in medieval Iceland were efficient regulators of their members= conduct because, unlike other groups or the (very weak) state, they could engage in low-cost screening of risky behavior through mandatory consultation with kinsmen and impose informal sanctions, like disesteem and social distancing, on those unwilling to follow their kinsmen=s advice.186 As this last example suggests, groups may exercise efficient control over their members not just because they have a comparative advantage with respect to ex ante regulation but also because they have access to different forms of sanctions (whether these sanctions will be attached to risky conduct ex ante or to realized harm ex post). The types of sanctions available to groups will often be more efficacious and less costly than those available to outsiders. Returning to the vicarious liability example, a court that finds a physician liable for malpractice is ordinarily limited in its choice of remedy to monetary damages, whereas a vicariously liable MCO might instead terminate her employment. The alternative sanction available to the group creates the possibility of deterring insolvent physicians.187 But insolvency is just one example of a much larger category of cases in which groups can inflict disutility on deviant members in situations where it would be more costly, if not impossible, 3183See Kaplow, supra note __, at 364. 4184See supra notes __ and accompanying text. 5185See supra notes __ and accompanying text. 6186See Miller, supra note __, at 164-65. 7187Compare the advantage of criminal law in deterring impecunious wrongdoers by threatening them
with imprisonment. See Richard A. Posner, An Economic Theory of the Criminal Law, 85 Colum. L. Rev. 1193, 1203-05 (1985). The point is that groups will often have alternative sanctions available Cand in forms that are less costly than criminal punishment.

for an outsider to do so. In closely-knit groups whose members value each other =s respect, simply withholding esteem may be a costless sanction.188 Sanctions in the currency of esteem or reputation will be highly motivating in some contexts, potentially more so even than the (costly) external threat of fines or criminal punishment. For example, Kahan cites evidence that Athe perception that one=s peers will or will not disapprove exerts a much stronger influence than does the threat of a formal sanction on whether a person decides to engage in a range of common offensesCfrom larceny, to burglary, to drug use.@189 State governments in the antebellum South failed to abolish the institution of dueling because members of the elite social classes who participated in duels valued each other=s esteem more than they feared being jailed or hanged for winning a duel, or being shot dead in the course of one. 190 Where groups have control over the granting or withholding of esteem, they may be able to control behavior at minimal cost. Competition among group members for relative esteem may in turn motivate material sanctions against norm-violators. These material sanctions, too, may come at little or no net cost to group members because the financial costs are offset by the benefits of enhanced status within the group.191 McAdams describes how whites in the Jim Crow South were motivated by their desire for status to impose economic boycotts on blacks or other whites who violated the norms of the social order. 192 Likewise, Amish groups Ashun@ rulebreakers not only by refusing to speak or take meals with the target, but also by refusing to do any kind of business with him.193 Groups may further economize on control costs by gradually escalating sanctions, imposing more costly sanctions only where less costly ones have proven ineffective.194 For 8188See McAdams, supra note __; Philip Pettit, Virtus Normativa: Rational Choice Perspectives, 100
Ethics 725 (1990).

9189See Dan M. Kahan, Social Influence, Social Meaning, and Deterrence, 83 Va. L. Rev. 349, 354 &
n.20.

0190See Warren F. Schwartz et al., The Duel: Can These Gentlemen be Acting Efficiently, 13 J. Legal
Stud. 321 (1984); see also Russell Hardin, One for All 91-100 (1995) (explaining the persistence of dueling in terms of the interests of aristocrats in maintaining status). Lessig suggests that regulators might have been more successful in prohibiting dueling if they had changed the currency of the sanction by replacing imprisonment Ca trivial threat compared to the dishonor of backing down from a duel Cwith a ban on holding public officeCa gentlemanly duty, perhaps above dueling on the ascending scale of honor. Lawrence Lessig, The Regulation of Social Meaning, 62 U. Chi. L. Rev. 943, 968-72 (1995). This is similar to Sir Francis Bacon =s proposal for dissociating the duel from honor by having the King banish duelers from his court. See Hardin, supra, at 92. More generally, legal theorists have argued that government might be able to influence behavior more effectively and at lower cost if it was more willing to apply a broader range of sanctions of the sort that groups routinely use on their members. In addition to Lessig, see Dan M. Kahan, What Do Alternative Sanctions Mean?, 63 U. Chi. L. Rev. 591 (1996).

191See McAdams, supra note __, at 373-75. 2192See Richard H. McAdams, Cooperation and Conflict: The Economics of Group Status Production and
Race Discrimination, 108 Harv. L. Rev. 1003, 1051 (1995).

3193See E. Posner, supra note __, at 182 n.144. 4194See Ellickson, supra note __, at 213-14; Ostrom, supra note __, at 97-100.

example, Ellickson describes the sequencing of remedial steps taken against Shasta County, California ranchers who allow their cattle to trespass on neighbors= property and cause harm. The victim=s first response is simply to notify the owner of the cattle, which may be sufficient to prompt a voluntary remedy. Where this fails, the trespass victim is entitled to circulate truthful negative gossip about the owner=s misconduct. Finally, if the owner is persistently deviant, the victim is permitted to destroy or seize a certain amount of the owner =s property.195 Tailoring sanctions to individual wrongdoers will typically be easier for groups than for outsiders, both because groups have a broader array of sanctions on which to draw and because the costs of monitoring the efficacy of, and recalibrating, sanctions typically will be lower.196 The ultimate sanction available to any group with control over its membership is expulsion or ostracism. Expelling deviant members may inflict tremendous disutility on the outcast while costing the group virtually nothing. In general, the severity of the expulsion sanction will depend on the value of the collective goods provided by the group relative to the value of extra-group alternatives.197 Shippers= associations and regional exchanges in the cotton industry are apparently sufficiently valuable to merchants that the threat of expulsion for nonadherence to decisions of the industry=s private legal system motivates high levels of compliance.198 Groups can increase this differential by requiring members to make sunk investments in group membership (money or human capital), cutting off ties to outsiders, or providing uniquely valuable collective goods.199 The Roma of Eastern EuropeCan insular and persecuted group with idiosyncratic cultural practicesCregard ostracism, or marime, as the virtual equivalent of a death sentence; indeed, the permanent outcast is often driven to suicide.200 All of these advantages notwithstanding, we should not lose sight of the fact that group controls have limitations of their own and will sometimes be less effective than external ones. For one thing, courts or other government entities acting as external sanctioners can threaten imprisonment, violence, or death. These are costly sanctions, but they may be unrivaled in severity by any sanction available to the relevant group, and they may be necessary where the benefits of wrongdoing are sufficiently high (or the probability of detection, even by the group, sufficiently low). For another, external sanctioners can maintain jurisdiction over wrongdoers who avoid group sanctions by exiting the group. Where the value of wrongdoing to group members is high and exit costsCincluding, significantly, the opportunity cost of the collective goods provided by the groupCare low, groups cannot deter wrongdoing effectively by threatening 5195See Ellickson, supra note __, at 214-19. 6196Nonetheless, some legal regimes do raise sanctions for repeated violations. See David A. Dana,
Rethinking the Puzzle of Escalating Penalties for Repeat Offenders, 110 Yale L.J. 733 (2001); see also infra notes __ and accompanying text (describing the use of escalating contempt sanctions in the Yonkers housing litigation).

7197See Heckathorn, supra note __, at 161; E. Posner, supra note __, at 142. 8198See Bernstein, supra note __, at 1737-38. 9199See Heckathorn, supra note __, at 161-62. 0200See Walter Otto Weyrauch & Maureen Anne Bell, Autonomous Lawmaking: The Case of the
"Gypsies," 103 Yale L.J. 323, 358-59 (1993).

even the most severe ex post sanctions.201 Groups will sometimes be able to compensate for both of these disadvantages by substituting ex ante regulatory regimes. Still, higher powered sanctions or broader jurisdiction will no doubt count in some cases as a dispositive advantage in favor of individual sanctions administered directly by the external sanctioner. D. Building Solidarity By motivating groups to create and strengthen mechanisms for cooperating, collective sanctions build group solidarity. This may have at least two kinds of unintended consequences. First, a strongly solidary group may exert control over the behavior of their members in ways, or to degrees, that will be normatively problematic from the perspective of the sanctioning agent. 202 Second, greater solidarity means that groups will have greater success in pursuing collective goods beyond just complying with the norms enforced by collective sanctions. To the extent these collective goods are consistent with the greater good of the sanctioning agent (or society more generally), enhanced solidarity will count as an additional advantage of collective sanctions. To the extent they are inconsistent, however, enhanced solidarity will be another disadvantageous side-effect of collective sanctions, and may even undermine them. 1. Excessive Control Solidary groups have the capacity to exert strong, pervasive, and efficient control over their members. From the perspective of deterrence, this is an unmitigated advantage of collective sanctions. From other normative perspectives, however, it will sometimes be problematic. Many sanctioning regimes constrain the qualitative nature or severity of sanction that can be inflicted on individual wrongdoers, as well as the extent or kinds of monitoring that can be applied. Constitutional restraints on government, for example, forbid cruel and unusual punishments and protect the privacy of citizens. Groups may not constrain themselves in these same ways, however. With respect to sanctions, as Donald Black has famously observed, many types of crime, including homicide, can be understood, along the lines of blood vengeance, as the self-help punishment of someone who has deviated from social norms.203 With respect to monitoring, groups routinely rely on techniques of limiting privacyCemploying architecture, public disclosure requirements, and informantsCthat would be considered Orwellian if imposed by a government.204 We have already seen in a number of contexts how collective sanctions can trigger excessive controls. Vicarious liability may lead MCOs to micromanage physicians, undermining their ability to make case-specific treatment decisions even in exceptional circumstances.205 1201See E. Posner, supra note __, at 157-59. 202Or from the perspective of society more generally. The analysis in this Part generally takes the
perspective of the sanctioner, but of course it is possible that sanctioners themselves will have goals that conflict with those of society more generally.

3203See Donald Black, Crime as Social Control, 48 Am. Soc. Rev. 34 (1983). 4204For an enumeration of these techniques with examples, see Heckman, supra note __, at 150-56. 5205See supra notes __ and accompanying text.

Gatekeeper liability may lead ISPs to impose stringent censorship policies.206 Superfund liability may lead wealthy firms to buy out potentially insolvent ones, with anticompetitive or otherwise inefficient consequences.207 As a further example, consider the unintended consequences of Title VII discriminatory harassment law for workplace speech. Title VII holds employers vicariously liable (or liable as gatekeepers208) for employee speech that creates a hostile environment based on race, sex or religion. Employers concerned with minimizing liability will implement prophylactic rules prohibiting all sorts of expressive activity that could contribute to the creation of a hostile environment. This might include frank discussions of affirmative action or homosexuality, or religious proselytizing. To the extent that these kinds of expression would be protected by the First Amendment, Title VII threatens to violate free speech norms by encouraging employers to censor expression that would be off-limits to direct government regulation.209 It is easy to see how similar problems of excessive control can arise in (larger) groups. Drill instructors in Marine boot camps often punish an entire platoon for the misconduct of one or a few of its members.210 When a recruit persistently invites collective sanctions, other members of the platoon may attempt to control him using physical punishments, including severe beatings, that would be off-limits to the drill instructor. 211 Drill instructor have been known to anticipate this form of control and indeed to encourage it by reminding the platoon that, while the drill instructor is not allowed to hit a recruit, he cannot prevent someone from slipping in the shower or otherwise Aaccidentally@ injuring himself.212 Similarly, in Japanese schools, teachers rely heavily on group punishments and rewards to maintain discipline among students. Left to their own devices, intensely solidary groups of students exercise rigid control over members, both by enforcing norms beyond those promoted by teachers and by amplifying sanctions to abusive levels. High levels of conformity and ijime, the Japanese term for group-on-one bullying, among Japanese youth are the predictable results.213 6206See supra notes __ and accompanying text. 7207See supra notes __ and accompanying text. 8208As noted above, sexual harassment doctrine has elements of both vicarious and gatekeeper liability.
See supra notes __ and accompanying text.

9209For discussions of the issue from various normative perspectives, see J. M. Balkin, Free Speech and
Hostile Environments, 99 Colum. L. Rev. 2295 (1999); Kingsley R. Browne, Title VII as Censorship: HostileEnvironment Harassment and the First Amendment, 52 Ohio St. L.J. 481 (1991); Cynthia L. Estlund, Freedom of Discrimination in the Workplace and the Problem of Discriminatory Harassment, 75 Tex. L. Rev. 687 (1997); Eugene Volokh, What Speech Does AHostile Work Environment @ Harassment Law Restrict?, 85 Geo. L.J. 627 (1997); Eugene Volokh, Comment, Freedom of Speech and Workplace Harassment, 39 U.C.L.A. L. Rev. 1791 (1992).

Sociological Outlook 231, 239 (Reid Luhman ed., 1982).

0210See Steven A. Gilham, The Marines Build Men: Resocialization in Recruit Training, in The 1211Id.; see also Richard Holmes, Acts of War 51 (1985) (describing the Acasual brutality@ regularly

perpetrated by recruits Ain any effort to >improve= a slovenly comrade whose behaviour or turnout has brought the group into disrepute@).

212Gilham, supra note __. 3213See Catherine C. Lewis, Educating Hearts and Minds chptrs. 4-6 (1995); Ken Schoolland, Shogun =s

2. Deviant Goals The solidarity built by collective sanctions enhances the capacity of groups to pursue whatever collective goods their members desire. Where the group =s goals are generally congruent with the sanctioner=s, this will count as a beneficial by-product of the sanctioning regime. Collective sanctions are useful to military drill instructors not just because they are an effective way of controlling the platoon but also because they contribute to molding them into a more cohesive and effective fighting unit. If what is good for the group is bad for the sanctioner, however, then collective sanctions may have the potentially perverse consequence of facilitating group wrongdoing. A medieval Icelander contemplating blood vengeance against the kinsman of a wrongdoer would be well-advised to consider the longer-term consequences of strengthening his enemy=s bonds of kinship. Likewise, collective punishment of all the members of a looselyknit terrorist organization for the bad acts of a few might actually increase the strength of the organization by making it more cohesive. Strengthening solidarity will often be a double-edged sword, as the military=s experience illustrates. Armies instill and reinforce solidarity, or unit cohesion, among soldiers because it is regarded as essential to their willingness to fight and die in combat. 214 As Richard Holmes observes, however, A[T]he creation of group spirit is no guarantee of military performance, for there is every chance that the group=s norms will conflict with the aims of the organisation of which it forms a part. @215 In particular, groups of soldiers Amay come to believe that their interests are best served by avoiding rather than seeking combat and by adopting a >live and let live= policy whenever the enemy will permit it.@216 A well-known example is the Aquiet sector@ of the Western Front during World War I, where groups of British and German soldiers
Ghost chptr. 12 (1990). Schoolland speculates that norms of conformity in Japanese society more generally may be traced back to the goningumi system of collective responsibility, implemented during the Edo period, which functioned much like frankpledge.

4214See S. L. A. Marshall, Men Against Fire: The Problem of Battle Command in Future War 42 (1947)
(AI hold it to be one of the simplest truths of war that the thing which enables an infantry soldier to keep going with his weapons is the near presence or the presumed presence of a comrade. @); Edward Shils & Morris Janowitz, Cohesion and Disintegration in the Wehrmacht in World War II, 12 Pub. Opinion Q. 280 (1948). General Schwarzkopf elaborates: What keeps soldiers in their foxholes rather than running away in the face of mass waves of attacking enemy, what keeps the marines attacking up the hill under withering machine gun fire, what keeps the pilots flying through heavy surface-to-air missile fire to deliver bombs on targets is the simple fact that they do not want to let down their buddies on the left or on the right. They do not want to betray their unit and their comrades with whom they have established a special bond through shared hardship and sacrifice not only in the war but also in the training and the preparation for the war. It is called unit cohesion, and in my 40 years of Army service in three different wars, I have become convinced that it is the single most important factor in a unit's ability to succeed on the battlefield. S. Rep. No. 112, 103d Cong., 1st Sess. 274-75 (testimony of General H. Norman Schwarzkopf, United States Army (Ret.), before the Senate Armed Services Committee, May 11, 1993).

5215Richard Holmes, Acts of War 316-17 (1985).

facing off in trenches determined that aggression was not in their interest and managed to coordinate on strategies of avoiding dangerous combat. 217 During Vietnam, in addition to a number of well-publicized incidents where platoons refused to participate in dangerous operations, it was apparently common practice for groups of soldiers to pretend to carry out patrols and ambushes while in fact doing nothing.218 (Soldiers who defied group norms of passivity were subject to excessive control in the form of assassination by Afragging.@219) One explanation of why the armies of the South unraveled in the second half of the Civil War points to the high desertion rates among homogenous and highly solidary companies of neighbors and kin who were more loyal to each other than to the Confederate cause. 220 Importantly, solidarity may also be a double-edged sword with respect to the collective good of avoiding sanctions. The most straightforward way for a group to avoid collective sanctions is for group members to comply with the norms that are backed by these sanctions. This is the response the sanctioner hopes to elicit. But there are two other ways a group might attempt to achieve the same collective good. One is for the group to conspire to hide violations from the sanctioner. Frankpledge groups, for example, may have devoted more effort to covering up the crimes of their members than investigating and reporting them to the authorities.221 This point has been emphasized in the context of corporate liability regimes.222 In deciding how much to invest in monitoring employee misconduct, firms must weigh competing considerations. On the one hand, higher levels of monitoring will deter some amount of misconduct and thereby reduce the firm=s liability. On the other hand, higher levels of monitoring will also detect and publicize some amount of misconduct that would otherwise remain invisible to the external sanctioning agent and thereby increase the firm=s liability. The general point is that avoiding collective sanctions can sometimes be better accomplished, from the group=s perspective, by hiding wrongdoing from the sanctioner rather 6216See John Keegan & Richard Holmes, Soldiers: A History of Men in Battle 53 (1985). 7217See Tony Ashworth, Trench Warfare, 1914-18: The Live and Let Live System (1980); see also Robert
Axelrod, The Evolution of Cooperation 73-87 (1984) (explaining cooperation among British and German troops on the model of an iterated prisoner =s dilemma).

8218See Holmes, supra note __, at 317-18. 9219 Id. at 329. AFragging @ refers to the practice of killing a fellow soldier, usually a commanding
officer, by rolling a fragmentation grenade into his tent at night.

0220See Peter S. Bearman, Desertion as Localism: Army Unit Solidarity and Group Norms in the U.S. Civil War, 70 Social Forces 321 (1991). Cf. James M. McPherson, For Cause & Comrades: Why Men Fought in the Civil War chptr. 6 (exploring the link between group cohesion and combat motivation). 1221The effectiveness of an analogous institution in early modern Japan, the goningumi, or five-man
group, system, was impeded by group solidarity because Avillagers were more likely to connive with one another against the government @ than to turn in a fellow villager. See Harumi Befu, Village Autonomy and Articulation with the State: The Case of Tokugawa Japan, 25 J. Asian Stud. 19, 24 (1965).

Corporate Criminal Liability, 23 J. Legal Stud. 833 (1994); C. Y. Cyrus Chu & Yingyi Qian, Vicarious Liability under a Negligence Doctrine, 15 Int'l Rev. L. & Econ. 305 (1995).

222See Arlen & Kraakman, supra note __, at 707-10; Jennifer Arlen, The Potentially Perverse Effects of

than by preventing it from occurring. Alternatively, the group might be inspired to overthrow or undermine the sanctioner in the hope of destroying his capacity to administer punishment.223 Of course individuals subject to sanctions might also benefit from disabling the sanctioner, but solidary groups are the interesting case because they might actually have the strengthCin numbers and resourcesCto succeed. Thus, the French colonial government=s use of collective sanctions in response to terrorism may have caused previously procolonial Algerians to throw in their lot with the nationalists.224 Less dramatically, one might speculate that the collective taxation of the chemical industry under Superfund increased the solidarity of firms in the industry and therefore their efficacy as a political force. To the extent the chemical lobby has been successful in reducing its financial burden under the statute, this too can be understood as a successful insurrection against the sanctioning authority.225 The bribery or intimidation of law enforcement officials by criminal organizations is yet another example.226 In general, weak agents should be wary of imposing collective sanctions on potentially powerful groups that might respond not by complying but by, in one form or another, rebelling. E. Group Composition Collective sanctions affect not only the relationships among group members but also, potentially, who those members are. If, as is often the case, individuals cannot enter or leave groups for purposes of inviting or avoiding collective sanctions, then the sanctioning regime will obviously have no effect on group composition. In those cases where group membership is to some extent voluntary, however, the composition of groups will be endogenous to the application of collective sanctions. There are two possible effects. Qualitatively, collective sanctions may encourage individuals to sort themselves into groups that are homogenous with respect to the traits or behaviors that trigger sanctions. Quantitatively, collective sanctions may encourage exit from the collective, leaving fewer group members. In collective sanction regimes, when one group member misbehaves all members share the costs of sanctions. To simplify, let us assume that group members share these costs equally. The 3223See Heckathorn, supra note __. 4224Id. at 559; Adam Shatz, The Torture of Algiers, The New York Review of Books, November 21, 2002,
53. For further discussion of collective sanctions against political resistance movements, see infra notes __ and accompanying text.

5225Cf. Maria Recio, Everybody Will Probably Pay to Clean Up Toxic Waste, Business Week, Nov. 4,
1985, at 30 (reporting that Achemical lobbyists have been fighting doggedly to avoid paying more than their current $300 million annually); Superfund: CERCLA Reform, Tax Authority Must Be Combined, CMA Tells Treasury, 27 Env't Rep. (BNA) 1850 (Jan. 3, 1997) (citing letter to the Treasury Department from the Chemical Manufacturers Association, stating that the Association is Agreatly concerned that any effort to reinstate [Superfund] taxes, other than as an integral part of a superfund reform bill, would effectively spell the end of superfund reform in the 105th Congress"), cited in Rachel M. White, Comment, Please, Sir, I Want Some More: Can EPA Continue to Feed the Superfund Orphan Share?, 9 Vill. Envtl. L.J. 73, 96 n.102 (1998). The tax provisions expired in 1995 and were not renewed.

6226See Gary Becker & George Stigler, Law Enforcement, Malfeasance and Compensation of Enforcers, 3
J. Leg. Stud. 1 (1974).

expected cost of sanctions for each group member, then, is the average of each individual member=s expected costs. Individuals will seek to join groups with the lowest possible averages, and groups will seek to lower their averages by recruiting members with low expected costs and expelling members with high expected costs. If group membership requires mutual consent Cthat is, the group can veto any member, and members are free to exit on their own initiativeCthen individuals will sort by expected sanction costs. High cost individuals will be vetoed by any group with a lower average cost, and low cost individuals will refuse to join any group with a higher average cost. In equilibrium, groups will be composed of members who are homogenous with respect to expected sanction costs. Insurance is a straightforward example of this kind of sorting. If insureds have more information about their expected costs than insurers, then at a given premium level relatively low cost insureds (whose expected costs are lower than the premium charged) will opt out of a heterogeneous risk pool and relatively high cost insureds (whose expected costs are higher) will opt in. This is the standard problem of adverse selection due to asymmetric information. As the composition of the pool becomes higher cost, insurers will recalibrate premiums to reflect their higher expected pay-outs. In response, more lower cost insureds will opt out, and more higher cost insureds will opt in. Ultimately, the risk pool will consist of only the highest cost insureds. 227 Insurers attempt to prevent risk pools from unraveling in this way by grouping together insureds who are homogenous with respect to expected costs. Other voluntary groups subject to collective sanctions will experience similar sorting pressures. Kinship groups in medieval Iceland had only limited control over their membership, but they could at least repudiate especially unruly kinsmen who subjected the group to excessive risks of reprisals.228 Products liability, which can attach to any company in the manufacturing chain, may cause suppliers of component parts with low risks of defects to refuse to deal with high risk manufacturers.229 Similarly, joint and several liability under Superfund creates incentives for generators of low risk toxic waste to refuse to dump at sites that also accept high-risk waste. In these, and other, collective sanction regimes where group membership is mutually voluntary, we should expect the composition of groups to evolve toward homogeneity with respect to whatever variables correlate with the probability and magnitude of collective sanctions. This does not necessarily mean that groups will become more homogenous in other respects, though it might. If traits and behaviors that affect the probability of sanctions are correlated with other characteristics, then groups threatened with collective sanctions will tend to become homogeneous along these dimensions as well. Homogeneity of group membership will have several predictable consequences. Because cultural homogeneity lowers the costs of monitoring members= compliance with group norms, homogenous groups should be more solidary and more efficient in controlling wrongdoers.230 They may also become more radical. 7227See Abraham, supra note __, at 15; George A. Akerlof, The Market for ALemons@: Quality
Uncertainty and the Market Mechanism, 84 Q. J. Econ. 488 (1970).

8228See Miller, supra note __, at 174-77.

So Wrong, 49 Rutgers L. Rev. 485, 513 (1997); Sontag, supra note __, at 69-70.

9229See Philip Shuchman, It Isn't that the Tort Lawyers Are So Right, It's Just that the Tort Reformers Are 0230See supra text accompanying note __.

Deliberation among homogenous individuals tends to exaggerate and intensify the views they hold in common.231 This Agroup polarization@ effect may lead homogenous groups to pursue more extreme versions of the collective goods toward which members were initially disposed. Of course, the normative implications of these effects will depend on whether groups are pursuing goals that are compatible with the sanctioner=s interests. Collective sanctions can also affect the size of groups. For one thing, homogeneity places an upper limit on group size: large, heterogeneous groups will tend to fragment into smaller homogenous ones. For another, group members may be better off opting into a regime of individual sanctions by dropping out of groups altogether. This latter point warrants elaboration. Where collective sanction regimes are more efficient than individual ones, expected sanction costs to potential wrongdoers will tend to be higher. We have seen that collective sanctions may increase the probability that wrongdoers will ultimately bear costs. We have also seen that collective sanctions may reduce sanctioning costs, so that at any given level of investment by the sanctioner, compared to a regime of individual sanctions, greater levels of expected sanctions will be generated. For both these reasons, the same course of conduct by an individual may result in lower expected sanctions if she is sanctioned individually rather than collectively. If the value of group membershipCthe value of the collective goods provided by the group above and beyond what the individual could achieve acting on her ownCis less than the additional cost of sanctions, then she will prefer to exit the group (or not join in the first place). This explains, for example, why the medieval British Crown invested heavily in auditing the frankpledge system to ensure that all eligible men were members of some group. 232 Criminals would obviously find it advantageous to opt out of the primary law enforcement system; the system could only function by making group membership mandatory. Similarly, the advantages of vicarious, corporate, and joint and several liability regimes will be reduced if insolvent defendants can opt into individual liability regimes instead. Firms may externalize liability costs by spinning off risky operations into undercapitalized subsidiaries, as when owners of taxi enterprises incorporate each cab separately.233 Employers, likewise, may avoid vicarious liability for the torts of their employees by hiring fewer employees and more (potentially insolvent) independent contractors. 234 The magnitude of the group-exit effect will be highly contextual. Even where individual sanctions are more costly, the sanctioner may be willing to incur higher costs to equalize expected sanctions across members and non-members of groupsCespecially if this will remove the exit incentive and thereby reduce overall sanctioning costs. In addition, even if a collective sanction regime threatens higher expected sanctioning costs, it may in fact carry lower net sanctioning costs for group members who are risk averse. Collective sanction regime will typically reduce 1231See Cass R. Sunstein, Deliberative Troubles? Why Groups Go to Extremes, 110 Yale L. J. 71 (2000). 232See Morris, supra note __, at chptr. 6.
Toward Unlimited Shareholder Liability for Corporate Torts, 100 Yale L.J. 1879, 1913-15 (1991); Mark J. Roe, Corporate Strategic Reactions to Mass Tort, 72 Va. L. Rev. 1, 39-42 (1986).

3233See Posner, Economic Analysis, supra note __, at 445-46; Henry Hansmann & Reinier Kraakman,

4234Employers ordinarily are not liable for torts committed by their independent contractors. See Sykes,
Economics of Vicarious Liability, supra note __, at 1261-71.

risk, by spreading the cost of the external sanction from the individual wrongdoer to the rest of the group and by administering internal controls in the form of higher-probability, lowermagnitude sanctions. Liability insurance is the paradigmatic example, but many other collective sanction regimes will also reduce the risk, and therefore the cost, of sanctions for group members. And, of course, the benefits of group membership unrelated to sanctions may simply exceed the additional costs, if any, of opting into a collective sanction regime. To the extent that collective sanctions do, in fact, drive individuals out of groups, groups will be smaller but not necessarily weaker. Fewer members means less total resources for the group but also lower costs of monitoring and control, which in turn should yield greater solidarity. With respect to group strength, centrifugal and centripetal forces may be offsetting. Taking account of all the effects collective sanctions may have on the composition of mutually voluntary groups, the overall picture is of groups that are somewhat smaller, more homogeneous, and more solidary. F. Summary Solidary groups are often in a better position than outsiders to monitor and control the behavior of their members. Where a group is sufficiently solidary, an outside sanctioner can sometimes more efficiently deter wrongdoing by collectively sanctioning the group rather than attempting to target individual wrongdoers directly. Specifically, collective sanctions will carry efficiency gains where, in order to achieve a given level of deterrence, the costs of maintaining or executing the threat of sanctions against the group plus the costs of group-level control are less than the costs of maintaining or executing the threat of sanctions applied directly to the individual wrongdoer. Broadening the focus from efficient deterrence, and taking a more dynamic view of group relationships, the policymaker must also take account of several side-effects of collective sanctions. Collective sanctions build group solidarity. Solidary groups may be driven to excessive control of members, and they may be more successful in pursuing various collective goods which may conflict with the interests of the sanctioner or society more generally. Finally, where members can freely exit groups, collective sanctions may also effect group composition along the dimensions of size, strength, and homogeneity. IV. Applications A. Microcredit Microcredit institutions, like the well-known Grameen Bank in Bangladesh, have been an intriguing, and in some cases stunningly successful, innovation in international development.235 These institutions have succeeded in extending credit to desperately poor populations in developing countries in Africa, Asia, and Latin America that historically have had no access to productive capital.236 Rural credit markets in developing countries have been undermined not only by the poverty of the borrowers but also by the lack of institutional infrastructure. Property rights
For empirical assessments of the success of microcredit institutions around the world, see Jonathan Morduch, The Microfinance Schism, 28 World Development 617 (2000); Abhijit Banerjee, The Uses of Economic Theory: Against a Purely Positive Interpretation of Theoretical Results, MIT Dept. Econ. Working Paper 02-24, May 30, 2002.

5235For a journalistic account of the Grameen Bank, see David Bernstein, The Price of a Dream (1996).

are poorly defined and enforced, credit histories are undocumented, legal systems are costly and unreliable, and complementary insurance markets are, for similar reasons, non-existent. As a result, banks cannot assess credit risks, hold collateral, or legally enforce repayment.237 Village moneylenders, who loan only to a handful of individuals and cannot diversify their portfolios or capture economies of scale, charge usurious interest rates. 238 For many of the world=s poorest people, therefore, formal sector credit is unavailable and informal sector credit is unaffordable. Microcredit institutions overcome these barriers by using a strategy of collective sanctions borrowed from nineteenth-century European credit cooperatives.239 Their key innovation is group lending. In the case of the Grameen Bank, loans are granted not to individuals but to self-selected groups of five borrowers who are held collectively accountable for repayment and whose eligibility for future loans depends on successful repayment by all group members.240 Group lending has a number of advantages. Most significantly, at the stage of group formation, peer selection by borrowers mitigates the huge information asymmetries inherent in underdeveloped credit markets. While assessing the credit risks of Bangladeshi villagers would be prohibitively costly for a bank, the villagers themselves are intimately acquainted with each other=s honesty, financial status, and work ethic. They are also well-situated to assess the local economy and the prospects of fellow borrowers = business plans.241 Borrowers who risk losing their own capital if someone in their group fails to make payments will carefully screen potential group members and select for good credit risks. Specifically, group lending affects group composition through assortive matching. Because lowrisk borrowers will refuse to cross-subsidize high-risk borrowers, borrowers of the same risk level will sort themselves into homogenous groups.242 And because the cost of credit for any individual 6236There are also hundreds of microcredit programs in poor areas of the United States, though they have
been less successful for a number of reasons. See Microlending from Sandals to Suits, The Economist, Feb. 1, 1997, at 75. One of the earliest, modeled on the Grameen Bank, was founded by Bill Clinton in 1988, when he was the governor of Arkansas. See Morduch, Problem, supra note __, at 1575.

7237See Jameel Jaffer, Microfinance and the Mechanics of Solidarity Lending: Improving Access to Credit
through Innovations in Contract Structure, 9 J. Transnational L. & Policy 183, 187 (1999).

8238See Hal R. Varian, Monitoring Agents with Other Agents, 146 J. Inst. & Theoretical Econ. 153, 154 (1990) (noting that village moneylender in Bangladesh have been known to charge annual interest rates of 150%). 9239See Timothy W. Guinnane, A Failed Institutional Transplant: Raiffeisen =s Credit Cooperatives in
Ireland, 1894-1914, 31 Explorations in Econ. Hist. 38 (1994); Jonathan Morduch, The Microfinance Promise, 37 J. Econ. Lit. 1569, 1573 n.4 (1999).

0240See Morduch, Promise, supra note __, at 1575. 1241See Jaffer, supra note __, at 201.
Theory and Practice, 60 J. Dev. Econ. 195, 201 (1999); Maitreesh Ghatak, Group Lending, Local Information, and Peer Selection, 60 J. Dev. Econ. 27, 32-35 (1999); Joseph E. Stiglitz Peer Monitoring and Credit Markets, 3 World Bank Econ. Rev. 351, 361 (1990). By forbidding relatives from joining together in groups, the Grameen Bank removes one obvious temptation to dilute group quality. See Hal R. Varian, Economic Scene, New York Times, Nov. 22, 2001, at C2.

242See Maitreesh Ghatak & Timothy W. Guinnane, The Economics of Lending with Joint Liability:

will depend on the risk of default presented by the other members of her group, the effective interest rate will be calibrated to her risk of repayment. At an appropriately fixed nominal interest rate,243 therefore, low-risk borrowers will select into the group lending scheme and high-risk borrowers will select out. 244 More simply, any group that does apply for credit will quickly be cut off, at minimal cost to the bank, as soon as the first individual loan is not repaid. The benefits of group lending extend through the course of the loan, and beyond. Microcredit loans are usually made for investment in productive capital put to use in small-scale enterprises (looms, livestock, and the like). Collective responsibility gives group members an incentive to help out with each other =s businesses, contributing labor, money, or advice in times of need.245 It also gives them an incentive to mobilize group-level sanctions against members who fail to repay loans. In contrast to the financial sanctions available to traditional banks when borrowers default, which are useless as applied to a borrowing population without wages or collateral, peer pressure brought by fellow villagers, especially when augmented by cultural and religious norms of communal responsibility, may create powerful incentives to repay loans.246 By leveraging group solidarity in selection, assistance, and sanctioning, the Grameen Bank has maintained repayment rates of well over 90%.247 The group lending practices of the Grameen Bank have had remarkable spillover benefits. As the theory of collective sanctions predicts, collective liability among borrowing groups builds solidarity that can be used to pursue collective goods beyond loan repayment. The Bank makes use of borrowing groups in an organizational structure designed to educate members about public health, family planning, child care, and business opportunities.248 More than 90% of Grameen Bank borrowers are women (who have proven to be better credit risks than men), and borrowing groups have provided them with an institutional base for pursuing their social and political interests.249 In addition to improving the economic status of women and bolstering their authority within the household, group lending has created the cohesion necessary to engage in social action and protest against gender-based injustices like illegal divorce and domestic violence.250 3243The Grameen Bank loans at 20%. See Varian, Economic Scene, supra note __. 4244Ghatak, supra note __, at 43. 5245See Varian, Economic Scene, supra note __. 6246See Timothy Besley & Stephen Coate, Group Lending, Repayment Incentives, and Social Collateral,
46 J. Dev. Econ. 1 (1995); Jaffer, supra note __, at 200.

7247The Bank reports repayment rates of up to 99%. See Varian, Economic Scene, supra note __. A skeptical analyst calculates the rates to be in the 92-95% range, which is still remarkably high. See Banerjee, supra note __, at n.19. 8248See Bornstein, supra note __, at 95-98. 9249See Varian, Economic Scene, supra note __ (90% women borrowers); Simeen Mahmud, Informal
Women=s Groups in Rural Bangladesh: Operation and Outcomes, in Group Behaviour and Development 209 (Judith Heyer et al. eds., 2002) (borrowing groups as an institutional base).

0250See Bornstein, supra note __, at 106, 298-99; Mahmud, supra note __, at 213.

Borrowers tell stories of groups uniting to confront men who abuse their wives.251 Studies have also shown that borrowers are as much as 50% more likely than comparable non-borrowers to use birth control, and that their children are more likely to be immunized and better nourished, and less likely to be contracted out for work. 252 B. Criminal Conspiracies Criminal law doctrines of conspiracy and accomplice liability sometimes apply the same threat of punishment to all participants in a criminal group, regardless of their individual contributions.253 An important example is the Pinkerton rule of federal conspiracy law, which holds co-conspirators responsible for one another=s crimes committed in the course of the conspiracy.254 Commentators tend to deride these doctrines as invasions by private law principles of vicarious liability that have no place in criminal law.255 But the analogy to vicarious liability is actually quite illuminating. Thinking of conspiracy and related doctrines as a collective sanction regime casts light on several functional advantages they might bring to law enforcement. First, where individual members of conspiracies are difficult to apprehend, conspiracy law makes it possible to inflict costs on them indirectly by punishing other members who are more accessible. For example, if high-level managers of a drug organization are difficult to identify or reach, conspiracy law allows the government to punish lower-level drug dealers, who will in turn demand higher compensation from the managers in exchange for bearing greater liability costs. 256 Second, like other forms of collective sanctions, conspiracy liability can serve as an informationforcing tool. Conspiracy law makes it possible for prosecutors to threaten low-level conspirators with severe sentences and then offering them reductions in exchange for inculpatory evidence about higher-level conspirators.257 Harvesting information from criminal groups by Aflipping@ conspirators is analogous to threatening collective sanctions against frankpledge groups or the Brownsville soldiers in order to induce them to snitch on primary wrongdoers. Third, conspiracy law, along with other accomplice liability doctrines, gives criminal groups an incentive to monitor and control excessively harmful activity.258 Under Pinkerton, every member of a drug organization is liable for every murder committed by another member of the organization and therefore has an incentive to police unnecessary violence. Similarly, the felony murder 1251Bornstein, supra note __, at 98. 252Id. at 106, 298. 3253See George P. Fletcher, Basic Concepts of Criminal Law 190-94 (1998). 4254See Pinkerton v. United States, 328 U.S. 640, 647 (1946). 5255See Fletcher, supra note __, at 191-93. 6256See Neal Kumar Katyal, Conspiracy Theory, 112 Yale L. J. [forthcoming 2003]. 7257See id. at [cite].
control might make some sense in the field of torts, but it is patently absurd to think of conspirators controlling each other =s acts.@).

8258But see George P. Fletcher, Rethinking Criminal Law 663 (1978) (AVicarious liability based on actual

ruleCwhich makes any participant in a dangerous felony liable for murder if someone is killedCgives the get-away car driver in a bank robbery an incentive to do everything he can to make sure the gunman does not get carried away. Like other collective sanction regimes, conspiracy law will have predictable effects on group dynamics. Conspiracy law raises the costs of group, relative to individual, crime in several ways. By facilitating the flipping of witnesses, conspiracy liability increases the probability of apprehension.259 The expected costs faced by conspirators are further increased by the additional sentence that attaches to the inchoate crime of entering into a conspiracy and by the Pinkerton rule.260 In addition, conspiracy law shifts some of the costs of monitoring and controlling criminals from government onto criminal groups.261 Increasing the costs of group crime will cause some criminals to substitute individual crime. The conventional understanding of conspiracy law regards group crime as significantly more dangerous than individual crime because criminal organizations can take advantage of greater resources, economies of scale, specialized labor, and perhaps greater commitment to the criminal enterprise on the part of their members.262 On the other hand, large groups of criminals may be less dangerous inasmuch as they are more likely to leak information and evidence to law enforcement.263 Whether the net result of these competing effects on group composition and solidarity is beneficial or detrimental to law enforcement is difficult to say in the abstract, but the theory of collective sanctions at least helps to predict the group dynamics that conspiracy law puts into play. C. Suing Government Democratic governments respond to the votes of their constituents. Sanctioners who hope to affect government behavior typically do not have access to votes. To exert influence over government actors, therefore, they must create political incentives indirectly. They can do so in some cases by collectively sanctioning constituents in order to motivate them to use their votes to change government policy. The use of contempt sanctions in the Yonkers housing segregation litigation offers an example of the successful use of collective sanctions to leverage votes. A federal district court judge attempting to enforce a consent decree ordered the Yonkers city council to enact a plan to build public housing units in white neighborhoods.264 When the city council voted down the plan, 9259See Katyal, supra note __, at [cite]. 0260See id. at [cite]. 1261See id. at [cite].
Conspiracy, 72 Harv. L. Rev. 920 (1959); see also Krulewitch v. United States, 336 U.S. 440, 448-49 (1949) (Jackson, J., concurring) (A[T]he strength, opportunities and resources of many is obviously more dangerous and more difficult to police than the efforts of a lone wrongdoer. @).

262See id. at [cite]; Posner, Criminal Law, supra note __, at 1218-19; Developments in the Law CCriminal

68 Yale L.J. 405, 414 (1959).

3263See Katyal, supra note __, at [cite]; Abraham S. Goldstein, Conspiracy to Defraud the United States, 4264The history of the Yonkers litigation is recounted in Lisa Belkin, Show Me a Hero (1999); Peter H.

the judge imposed two types of contempt sanctions. The first type treated the recalcitrant legislators as individual wrongdoers and imposed direct sanctions on them: each council member who voted against the plan was imprisoned and fined $500 per day until he changed his vote. The second type imposed what were in effect collective sanctions on the population of the city: for each day the plan was not enacted, a fine against the city set originally at $100 would double, so that the fines would total $12,700 after one week, $1.6 million after two, and $26.8 billion after a month.265 On appeal, the Supreme Court stayed the individual sanctions but allowed the collective ones to remain in place.266 The Emergency Financial Control Board, in charge of Yonkers= finances, adopted a Adoomsday plan@ to lay off most city workers while preserving emergency services for as long as possible as the city ran out of money. Political pressures in the city shifted from strong opposition to the plan toward compliance.267 At last, when one more day of holding out would cost the city $820,000, two council members switched their votes, and the plan was enacted.268 The failure of individual sanctions in the Yonkers case was overdetermined. For one thing, sanctioning the council members for failing to vote a certain way may have been unconstitutional. The legal basis for the Court =s reversal of these sanctions was not entirely clear, but the Justices expressed concern that coercing legislators to vote in a certain way based on their personal interest in avoiding punishment was a Aperversion of the normal legislative process.@269 Even if the sanctions were constitutionally permissible, they may never have worked. The holdout council members might well have regarded spending some weeks or months in jail, or paying fines to the extent of their personal wealth, a small price to pay for the political popularity they would have gained as martyrs.270 If the councilmen were responsive only to political incentives, then collective sanctions targeted as the city=s taxpayers were the judge=s only hope. Residents of the city could avoid losing jobs and essential city services only by shifting their political preferences in favor of implementing the public housing plan. Collective sanctions against the city worked because they effectively leveraged group-level sanctions, in the form of the expected votes of constituents, against the holdout city council members. In other governmental liability contexts, by contrast, collective sanctions will predictably fail. Just compensation for takings is one such example. Conventional wisdom and legal doctrine have it that government must pay just compensation so that it will internalize the costs of taking
Schuck, Judging Remedies: Judicial Approaches to Housing Segregation, 37 Harv. C.R.-C.L. L. Rev. 289, 324-64 (2002).

$337 million. Id.

5265See Douglas Laycock, Modern American Remedies 725 (2d ed. 1994). The city=s annual budget was 6266Spallone v. United States, 487 U.S. 1251 (1988). 7267See Laycock, supra note __. 8268Id. 9269493 U.S. at 280; see also Robert A. Schapiro, Note, The Legislative Injunction: A Remedy for

Unconstitutional Legislative Inaction, 99 Yale L.J. 231 (1989) (laying out the constitutional basis for legislative immunity).

0270See Belkin, supra note __, at 82.

property and only choose to take where the benefits of putting that property to public use exceed its value to the condemnee.271 But this way of thinking about just compensation misses the point that government responds only to political incentives, not financial ones.272 Government does not, in fact, internalize the costs of compensation payments: taxpaying citizens do. Nor does government benefit from takings: some constituency of citizens does. For purposes of understanding the effects of compensation requirements on government behavior, government is most usefully understood not as independent actor with its own interests, wealth, and incentives but as the institutional structure through which members of the political community organize collective action. Just compensation, like any other type of financial assessment on government, is effectively a collective sanction imposed on the members of this political community. In predicting the effects of just compensation, therefore, the question becomes how much solidarity the political community can create through its governance structures. A perfectly solidary political community interested in maximizing its wealth would redistribute property entitlements through takings only where the benefits of public use exceeded the costs to the condemnee.273 The relevant misbehavior in this context, at least from an economic perspective, consists of taking property where the costs exceed the benefits. When inefficient takings occur, the wrongdoer might usefully be identified as the constituency that benefits from the taking while externalizing the costs onto other members of the community. Presumably, it is the political support of this constituency that causes elected officials to go forward with the taking.274 So, we should expect the success of collective sanctions to depend on the ability of the political community to monitor and control wrongdoing constituencies through the political process. As it happens, many political communities have low solidarity and limited capacity to control wrongdoing constituencies because the political process is structured to reward bare majorities or well-organized interest groups. If, as will be typical, the costs of just compensation are broadly dispersed through general taxation, while the benefits of takings are concentrated on a minimum winning coalition or an efficacious interest group, government officials will often have political incentives to redistribute property inefficiently.275 Where group solidarity is inadequate to control wrongdoers, individual sanctions may be 1271See Posner, Economic Analysis, supra note __, at 58, 64; Frank I. Michelman, Property, Utility, and Fairness: Comments on the Ethical Foundations of AJust Compensation @ Law, 80 Harv. L. Rev. 1165, 1218 (1967). 272See Daryl J. Levinson, Making Government Pay: Markets, Politics, and the Allocation of Constitutional Costs, 67 U. Chi. L. Rev. 345 (2000). 3273Of course political communities have goals other than wealth maximization, even in the narrow
context of takings. Nevertheless, the simplifying assumption of wealth maximization, common to economic analyses of takings, is harmless for present purposes.

4274Recall that the discussion of the Yonkers contempt sanctions identified the elected officials themselves as individual wrongdoers, rather than the constituents who supported them. Both of these understandings are potentially useful. The first will be more illuminating where there is significant slack between representatives and constituents. In the present discussion, by contrast, representatives are assumed to be perfect agents of some subset of constituents. See generally Hanna F. Pitkin, The Concept of Representation chptr. 7 (1967) (discussing the debate between Amandate@ and Aindependence@ understandings of representation). 5275See Levinson, supra note __, at 364-67, 375-77.

the better policy tool. One strategy of Aindividual@ sanctions in this context would be to concentrate the costs of just compensation on the constituency that benefits from the taking. Forced to bear the costs as well as the benefits, that constituency will only support efficient takings.276 Not surprisingly, a number of commentators on takings law have suggested reforming the just compensation requirement along these lines. AWindfalls for wipeouts@ schemes, for example, would have government finance just compensation from assessments on the beneficiaries of takings.277 D. International Sanctions Governments use international sanctions to exert influence beyond their jurisdictional boundaries.278 Where the goal of sanctions is to affect the behavior of the target state, the mechanism is the same as for other forms of governmental liability. Sanctions impose costs on the target state =s population in order to motivate them to exercise political control over their leaders.279 In a stable democracy, this will mean voting for different policies or governments. In an unstable or nondemocratic state, it may mean overthrowing the government. The efficacy of sanctions in either case will depend heavily on the capacity of the population to control their leaders= behavior. The theory of collective sanctions should lead us to predict that international sanctions will be more effective when targeted at states that are democratic or especially vulnerable to non-democratic regime change and less effective when targeted at states that are non-democratic or capable of repressing internal opposition.280 Recognizing that the success of sanctions depends heavily on the internal political structure of the target state helps to explain recent cases in which sanctions seem to have failed spectacularly.281 United Nations economic sanctions against Iraq over the past decade, for 6276See id. at 365.
Abraham Bell & Gideon Parchomovsky, Givings, 111 Yale L.J. 547 (2001); Levinson, supra note __, at 366, 418; Saul Levmore, Takings, Torts, and Special Interests, 77 Va. L. Rev. 1333, 1355-56 (1991).

7277See Windfalls for Wipeouts 31-71 (Donald G. Hagman & Dean J. Misczynski eds., 1978); see also

8278For an overview of international sanctions from an instrumental perspective, see Jonathan Eaton &
Alan Sykes, International Sanctions, in 2 The New Palgrave Dictionary of Economics and the Law 352 (1998).

9279Compare the vicarious liability strategy of targeting leaders in order to induce them to control
elements of their population, as when the Israelis threaten to overthrow Yassir Arafat in order to motivate him to rein in Palestinian suicide bombers.

sanctions. That literature seems largely uninterested in the mechanisms through which sanctions are meant to effect political change. For instance, the leading study of the variables affecting the success of international sanctions does not even mention the internal political or social structure of the target state. See Gary C. Hufbauer et al., Economic Sanctions Reconsidered (2d ed. 1990). Like most discussions of governmental liability in other contexts, the international sanctions literature tends to personify states as unitary actors. Notable exceptions are cited in note __, infra.

0280This is a rather intuitive point, but it gets surprisingly little attention in the literature on international

1281To be sure, there are other factors that affect the success of sanctions. In particular, economists emphasize that sanctions seldom inflict significant economic damage on the target economy because potential trading partners have an incentive to defect. See William H. Kaempfer & Anton D. Lowenberg, The Problems and Promise of Sanctions, in Economic Sanctions 61, 62 (David Cortright & George A. Lopez eds., 1995).

example, have immiserated the Iraqi people and resulted in the deaths of hundreds of thousands of children from disease and malnutrition, but it is not clear that they have done much to affect the behavior of a strong dictator who has successfully repressed opposition.282 The prolonged U.S. boycott of Cuba has been similarly brutal and, inasmuch as the goal was regime change, unsuccessful.283 The theory of collective sanctions should remind policymakers that control over wrongdoers is a necessary condition of their success (not to mention morality). Where leaders can insulate themselves from both the economic costs of sanctions and the political costs that might stem from the suffering of their populations, there is little reason to expect that international sanctions will change their behavior.284 Here again, collective sanctions fail because the relevant group lacks sufficient solidarity to control wrongdoersCthe leaders or firm elites who set national policy. Individual sanctions aimed directly at these actors are an obvious alternative. Leaders can be targeted individually through mechanisms ranging from international criminal tribunals to military invasions or even assassination.285 Each of these methods has obvious problems of its own. In particular, as with individual sanctions in other contexts, the costs of reaching the target may be prohibitive.

Of course, just looking at cases where sanctions are actually imposed tells us little about their general efficacy. If sanctions are very effective, then many target nations will immediately comply when sanctions are threatened, obviating the need actually to impose them. If sanctions are very ineffective, than senders will not bother to impose them in the first place. See Eaton & Sykes, supra note __, at 357.

282See Report of the Second Panel Established Pursuant to the Note by the President of the Security
Council of 30 January 1999 (S/1999/100) Concerning the Current Humanitarian Situation in Iraq, P 13, U.N. Doc. S/1999/356, Annex II (1999) (statistics compiled by the World Health Organization); Eric Hoskins, The Humanitarian Impacts of Economic Sanctions and War in Iraq, in Political Gain and Civilian Pain: Humanitarian Impacts of Economic Sanctions 91 (Thomas G. Weiss et al. eds., 1998); David E. Reuther, UN Sanctions Against Iraq, in Economic Sanctions 121 (David Cortright & George A. Lopez eds., 1995); Cassandra LaRae-Perez, Economic Sanctions As a Use of Force: Re-Evaluating the Use of Sanctions from an Effects-Based Perspective, 20 B.U. Int'l L.J. 161, 163-68 (2002).

3283On the purposes of sanctions, see United States Economic Measures Against Cuba (Michael Krinsky
& David Golove eds., 1993). On the humanitarian costs, see LaRae-Perez, supra note __, at 168-71 (providing an overview and citing sources). The comparison between the success of U.S. destabilization efforts directed at the Allende regime in the early 1970s in Chile with the failure of its roughly contemporaneous efforts directed at the Castro regime in Cuba is illuminating. One important distinction between the two countries was that, whereas Allende =s Chile was a democracy with relatively independent political and social institutions, Castro =s Cuba is a dictatorship with consolidated authority. As a result, constituencies immiserated by economic sanctions had channels of influence in Chile that do not exist in Cuba. See Gil Merom, Democracy, Dependancy, and Destabilization: The Shaking of Allende=s Regime, 105 Pol. Sci. Q. 75 (1990).

4284Famine is a perspicuous analogy. Leaders do not go hungry during famines, but in democracies they will suffer heavy political costs if the population is starving. Famines only occur in non-democracies, where the leaders can insulate themselves not just from hunger but also from political retribution. See Amartya Sen, The Economics of Life and Death, Scientific American, May 1993, at 40; Amartya Sen, Freedom and Needs, The New Republic Jan. 10 & 17, 1994, at 31. 5285See John Norton Moore, Toward a New Paradigm: Enhanced Effectiveness in United Nations
Peacekeeping, Collective Security, and War Avoidance, 37 Va. J. Int =l L. 811, 875-76 (1997).

Another alternative, akin to vicarious liability, is to aim sanctions more precisely at politically efficacious interest groups or entities within the target state. 286 If sanctions can be tailored to inflict costs on powerful groups like the military or wealthy elites, even a relatively insulated leader might feel political repercussions.287 Recently, human rights advocates have attempted to cast multinational corporations in this role. Multinationals will often have significant economic leverage over the governments of developing countries in which they do business.288 Sanctioning these corporations liable for the human rights abuses may be a useful way of motivating them to exercise greater control over government wrongdoers. For example, diamond companies that buy Aconflict@ diamonds from the Revolutionary United Front (RUF) in Sierra Leone have been accused of complicity with human rights violations perpetrated by the RUF.289 Bracketing the question of whether the diamond companies= economic transactions with the RUF are sufficient to support direct liability for human rights violations,290 it seems likely that international sanctions brought against the companies would generate considerable economic pressure on the RUF to comply with human rights norms. The Unocal caseCin which the corporation was sued in an American court for human rights violations associated with a jointventure pipeline project in BurmaCmight be understood as an analogous attempt to enlist a multinational corporation in policing human rights violations by an otherwise out-of-reach foreign government.291 We have seen in other contexts that collective sanctions may provoke the target group to rebel against the sanctioner=s authority rather than comply with its commands. International sanctions that impose costs broadly on the population of the target state often cause that population to Arally around the flag.@292 United States sanctions against Cuba, for instance, have been used by Castro to foster anti-American sentiment that has arguably strengthened his 6286If these groups or entities wield great influence, they might even be conceived as wrongdoers themselves, so that sanctions applied to them would count as individual rather than vicarious. See supra note __. 7287See William H. Kaempfer & Anton D. Lowenberg, The Theory of International Economic Sanctions:
A Public Choice Approach, 78 Am. Econ. Rev. 786 (1988) (emphasizing that economic sanctions are likely to be most effective when they concentrate costs on interest groups in the target that state that benefit from the policy the sanctioner hopes to change); see also William H. Kaempfer et al., Divestment, Investment Sanctions, and Disinvestment: An Evaluation of Anti-Apartheid Instruments, 41 Int =l Org. 457, 470-72 (predicting the effects of economic disinvestment in South Africa on the apartheid regime by reference to domestic economic consequences and political economy).

L.J. 443 (2001).

8288See Steven R. Ratner, Corporations and Human Rights: A Theory of Legal Responsibility, 111 Yale 9289See id. at 528-29. 0290There is a fine line, though for present purposes an irrelevant one, between holding the diamond

companies directly liable for violating human rights norms on account of their close business relationship with the RUF and holding them vicariously liable based on the direct liability of the RUF. See id. at 496-524 for a discussion of how corporations might be found directly liable.

1291See Doe v. Unocal Corp., 110 F. Supp. 2d 1294 (C.D. Cal. 2000).
of Rhodesia, 19 World Pol. 378, 388-90 (theorizing that economic sanctions may increase political integration in the target state); Hufbauer, supra note __, at 12 (citing examples).

292See Johan Galtung, On the Effects of International Economic Sanctions: With Examples from the Case

regime.293 Sanctions against Iraq have similarly been blamed for fostering resentment toward America throughout the Middle East. 294 Sanctions that create nationalist backlash may turn out to be not just ineffective but actually counterproductive as a tool of foreign policy. E. Political Parties Voters in democracies direct their political support and opposition toward both individual politicians and groups of politicians comprising political parties.295 To the extent voters (and campaign contributors) hold parties accountable for governance outcomes, the electoral system can be can be usefully understood as a collective sanction regime and contrasted with an individual sanction regime focused on the performance of particular candidates. Party-focused voting potentially offers constituents greater control over government by helping to solve agency problems with representation stemming from voters= limited information and sanctioning capacity.296 Because individual representatives play only a marginal and indeterminate role in generating policy outcomes, candidates lack the capacity to make meaningful policy commitments to constituents, and voters often lack the information necessary to assess an individual representative=s performance while in office.297 Moreover, for representatives in their last terms, retrospective candidate voting is not available as a sanction for poor performance. 298 Consistent with the theory of collective sanctions, voters might seek to overcome these barriers by delegating responsibility for monitoring and controlling representatives to political parties. Assuming parties are sufficiently solidary, they will be able to translate party-focused voting by constituents into effective incentives for individual politicians. Party solidarity will depend on a number of institutional features of the electoral system. The greater the control of parties over the candidate selection process, for example, the more leverage they will have over politicians who hope to win office.299 In closed list proportional
and the Dominican Republic, 25 World Pol. 387, 405 (1973).

3293See Anna P. Schreiber, Economic Coercion as an Instrument of Policy: U.S. Measures against Cuba 4294See, e.g., The Roots of Hatred, The Economist, Sept. 22, 2001, at [cite] ( AWe have also pointed out

that the policy of sanctions against Iraq, whatever its intention, in practice punishes innocent Iraqis and thus allows Saddam Hussein to blame the West, notably America, for the deaths of thousands of Iraqi children. Perhaps nothing does more to fuel anti-American resentment in the Arab world. @).

government and, to a lesser extent, the party-organization, but it obviously excludes the party-in-the-electorate. See V. O. Key, Politics, Parties, and Pressure Groups 163-65 (5th ed. 1964).

5295This understanding of political parties focuses on, in Key=s standard terminology, the party-in-

6296Political parties obviously serve a number of other important functions. See Aldrich, supra note __, at
28-61: Larry D. Kramer, After the Founding: Political Parties and the Constitution [unpublished draft].

7297See Adam Przeworski et al., Elections and Representation, in Democracy, Accountability, and
Representation 29 (Adam Przeworski et al. eds., 1999).

8298See James D. Fearon, Electoral Accountability and the Control of Politicians: Selecting Good Types
versus Sanctioning Poor Performance, in Elections and Representation, in Democracy, Accountability, and Representation 55, 63-67 (Adam Przeworski et al. eds., 1999).

9299See Hechter, supra note __, at 88.

representation systems, parties have complete control over which politicians become candidates and their relative probabilities of winning a seat. 300 At the opposite extreme, in the majoritarian electoral system of the United States, progressive reforms have minimized the power of party leadersCas opposed to voters and interest groups Cto choose candidates. The system of campaign finance will also determine the extent to which candidates are dependent on parties for the resources necessary to win elections.301 In addition, the ability of parties to dispense powerful cabinet positions or committee assignments,302 and the success of parties in organizing and stabilizing majority coalitions,303 will increase their influence over members. In the British Westminster system, where access to power depends on maintaining a legislative majority, party solidarity is predictably much higher than in a presidential system like that of the United States. 304 In the United States, advocates of Aresponsible party government@ worry that declining party solidarity and increasingly candidate-focused voting have undermined government accountability.305 Without strong parties to enforce the Acollective responsibility@ of politicians, the argument goes, voters will have no way of transmitting political incentives to the individual officeholders responsible for government decisionmaking.306 Consequently, responsible party government theorists push reforms intended to strengthen party solidarity and encourage partyfocused voting and campaign contributing. In a responsible party government regime of collective political sanctions, parties will act as Aagen[ts] of the electorate @ to monitor and control the behavior of individual officeholders in the service of coherent, programmatic policy platforms.307 F. Reprisals and Resistance Occupying armies, colonial powers, and governments facing internal opposition all have resorted to collective sanctions to retaliate against acts of resistance. Most infamously, Nazi armies of occupations implemented a policy of reprisals for attacks on German soldiers. Division commanders specified a ratio of civilians to be executed for each German killed by resisters, ranging from ten in France to hundreds in the Soviet Union (the Nazis regarded eastern lives as 0300See Samuel Issacharoff et al., The Law of Democracy 1094-98 (2d ed. 2001). 1301See id. at 89-92. 2302See id. at 93-95. 303John H. Aldrich, Why Parties? 29-45 (1995). 4304See Hechter, supra note __, at 95-100. 5305On the decline of parties in recent decades, see Aldrich, supra note __ , at 15-17, 252-53; David
Mahew, Placing Parties in American Politics (1986). For arguments in the responsible party government vein, see Am. Pol. Sci. Ass'n, Toward a More Responsible Two-Party System: A Report of the Committee on Political Parties, 44 Am. Pol. Sci. Rev. 75 (Supp. 1950); Morris Fiorina, Divided Government 107-09 (1996); Austin Ranney, The Doctrine of Responsible Party Government (1962); E. E. Schnattschneider, Party Government (1942); Morris P. Fiorina, The Decline of Collective Responsibility in American Politics, 109 Daedalus 25 (1980).

6306See Fiorina Collective Responsibility, supra note __, at 26-27. 7307American Political Science Association, supra note __, at 16.

worth less than western ones).308 These numbers were often exceeded. In the well-known 1944 massacre at Oradour-sur-Glane, in central France, 642 villagers were burned or shot to death, allegedly in reprisal for the existence of a cache of arms hidden in the town. 309 In another notorious incident, in retaliation for the assassination of a high-ranking German official, the Czech village of Lidice was obliterated: all the men over fifteen were shot, the women were sent to concentration camps, and the village was burned to the ground.310 In 1941, in reprisal for a raid by Yugoslav partisans that killed ten German soldiers and wounded twenty-six, the Germans retaliated, per official quota, by executing 2300 people from the town nearest to the location of the raid, KragujevacCand then proceeded to kill 5000 more for good measure.311 Collective reprisals can be an effective, if barbaric, way of controlling a large and resistant population. The Nazis were contending with underground resistance groups that blended into a hostile and uncooperative civilian population. Individual resistance fighters were difficult to identify, let alone apprehend. Moreover, many resisters were sufficiently committed to their cause as to be undeterrable by the threat of torture or death. Collective sanctions solved these problems for the Nazis by coercing the population to self-police. Threatened with murder for acts of resistance, many civilians did what they could to discourage guerillas. After five Norwegians were executed in retaliation for the sabotage of a German troop train, thousands of civilians joined a public demonstration against the saboteurs.312 During the Warsaw uprising, as the Nazis massacred hundreds of thousands of Poles in reprisal, civilians refused to shelter non-wounded insurgents.313 Some informed on insurgents to save themselves and their families.314 In addition to these kinds of external pressures, insurgents had to bear the moral costs of their acts of resistance. Willingness to sacrifice one=s own life to the cause was one thing; willingness to sacrifice the lives of one=s countrymen, neighbors, and family was another.315 Whatever the benefits of armed resistance to the Nazis, collective sanctions placed high costs on the other side of the balance. But collective reprisals can also be costly for the sanctioner. Collective punishment pulls otherwise acquiescent bystanders into the rebellion by giving them a personal stake in defeating or evading the sanctioner. If a civilian will be punished whether she plays any role in the resistance or not, she may well decide to pitch in. The result may be a rebellion that grows in size and solidarity.316 Indeed, insurgent groups have been known to provoke collective sanctions just for the purpose of mobilizing broader support for their cause. The Communist resistance in the 8308See Rab Bennett, Under the Shadow of the Swastika 102-03 (1999). 9309See William L. Shirer, The Rise and Fall of the Third Reich 993 (1960); Sarah Bennett Farmer,
Oradour-sur-Glane: Memory in a Preserved Landscape, 19 French Hist. Stud. 27, 29-30 (1995).

0310See Shirer, supra note __, at 991-93. 1

311

Id. at 143-44.

2312See Bennett, supra note __, at 37. 313Id. at 38. 4314See id. at 115. 5315See id., passim.

Soviet Union and Yugoslavia pursued such a strategy of deliberate provocation during the Nazi occupation.317 As one Communist guerilla explained, AWe would choose the quietist settlement, with a population loyal to the occupants. Then we would kill a German soldier, or we would mine the railroads in the vicinity; and the Germans would retaliate upon the whole village and the peasantry learned a cruel lesson.@318 Algerian nationalists successfully pursued a similar strategy against the French. Terrorist acts Awere designed to provoke a hugely disproportionate violent response, thereby revealing the true face of French rule and driving Algerians into the hands of the FLN.@319 In sum, the efficacy of collective reprisals will depend on the relative magnitudes of the deterrence and backlash effects.320 G. Families Familial responsibility has been a consistent theme in legal and social sanctioning regimes since ancient times. From a functional perspective, it is easy to understand why. Families are strongly solidary groups that can often exercise low-cost and highly effective control over their members.321 Moreover, love and altruism among family members means that sanctions directed against one will inflict direct disutility on all.322 Social sanctions directed at familial reputation can have powerful incentive effects. In traditional societies where an individual=s opportunities, including marital and employment prospects, are heavily influenced by his family=s reputation, an individual who brings shame upon 6316German officials occasionally spoke out against reprisals for just this reason, arguing that they were counter-productive. See id. at 145. In a very different context, at least one study has documented that the Israeli military=s use of collective reprisals in response to Palestinian uprisings in the West Bank (in the form of curfews, travel restrictions, mass searches, economic blockades, and the destruction of houses) has caused protest activity to increase. See Marwan Khawaja, Repression and Popular Collective Action: Evidence from the West Bank, 8 Soc. Forum 47 (1993). 7317See Bennett, supra note __, at 130-31. 8318Nicholas Vakar, Belorussia 193 (1956), quoted in id. at 141. 9319See Shatz, supra note __, at 55-56; Alf Andrew Heggoy, Insurgency and Counterinsurgency in Algeria, 234-35 (1972).
Hewitt, The Effectiveness of Anti-Terrorist Policies (1984). Hewitt looks at the struggle in Cyprus in the late 1950s between Greek Cypriot militants and the British colonial government. The government used collective reprisals, in the form of fines and property seizures, against villagers in the vicinity of acts of terrorist violence. Examining data on the incidence of terrorism in areas subject to collective sanctions compared to other areas, Hewitt finds that Acollective punishments do reduce violence, in the areas which are punished, the first time they are imposed,@ but that, Awhen collective punishments are repeated they have less impact, and in some cases a rise in violence ensues.@ Id. at 59.

0320For empirical evidence about the net effect of collective reprisals in one context, see Christopher

1321Cf. Hechter, supra note __, at 174-76 (examining the effect of divorce on the family=s Anormally ...
extremely high control capacity@).

2322See, e.g., Euripides, Medea, in The Complete Greek Tragedies: Euripides 108 (David Grene &
Richmond Lattimore, eds. & Rex Warner trans. 1959). When Jason leaves Medea for Creon =s daughter, Medea takes vengeance on him by killing their two children.

his family by committing a crime or otherwise misbehaving will inflict heavy costs on his relatives (just as an individual who succeeds will bestow great benefits on them).323 Even modern, liberal societies reflect individual glory and shame onto relatives. Concern for their collective reputation gives families good reason to monitor and control the behavior of their members.324 We should expect to find that tightly-knit families will be a consequence as well as a cause of intense societal concern with familial reputation. In families that are knit too tightly, controls established to protect familial reputation can become tragically excessive. For example, virginity exams in Turkey and child marriages in Nigeria are forced upon females by relatives concerned with maintaining the family=s standing in the community, which depends heavily on the premarital virginity of its women.325 Intrafamily murder for the sake of family honor is common in certain cultures.326 In some Muslim societies, for example, females are routinely killed by their fathers or brothers (or driven to commit suicide) in response to socially prohibited sexual associations.327 A number of legal regimes formally punish family members for their relatives= crimes. Of course most legal penalties will inflict costs on family members, whether by incarcerating a parent 323See, e.g., Susan Hutson, Social Ranking in a French Alpine Community, in Gifts and Poison 41, 46 (F.
G. Bailey ed., 1971) (A[An individual =s social] ranking may be strongly influenced by the reputation of his familyCfor example, the wealth, education, morality of his ancestors, relatives or children. @); Karin Wang, Battered Asian American Women: Community Responses from the Battered Women's Movement and the Asian American Community, 3 Asian L.J. 151, 169-70 (1996), at 169-70 (AThe group focus of Asian cultures protects family reputation at the expense of the individual. In many Asian cultures, >keeping face= is an important social rule. Because the individual is viewed as an extension of the group, one family member's guilt or shame transfers to the rest of the family.@).

4324See E. Posner, Norms, supra note __, at 74-75 (theorizing that parental involvement in their children =s marital choices is motivated by concern for family reputation); Jack L. Carr & Janet T. Landa, The Economics of Symbols, Clan Names, and Religion, 12 J. Leg. Stud. 135, 147 (1983) ( ASince surnames are inherited and transmitted from generation to generation, great care is taken by rich and powerful families to maintain or preserve the reputation of well-known names since reputation is an invaluable intangible asset. @); David D. Haddock & Daniel D. Polsby, Family as a Rational Classification, 74 Wash. U. L. Q. 15, 19 (1996) (AFamily members have incentives to constrain one another =s behavior in order to maximize the family=s equity in such reputational assets as honesty, virtue, trustworthiness, community-mindedness, and so on, because Ahaving a good name@ will translate into increased latitude for the members of the family function in the larger community.@). 5325See Sarah Y. Lai & Regan E. Ralph, Recent Development: Female Sexual Autonomy and Human
Rights, 8 Harv. Hum. Rts. J. 201 (1995).

6326See Douglas Jehl, Arab Honors Price: A Woman's Blood, N.Y. Times, June 20, 1999, at A1 (citing
estimates of hundreds of honor killings in Arab nations each year). The practice of honor killing might be seen as disturbingly similar to the familiar, Western homicide pattern of a man killing his wife or girlfriend in response to infidelity. See Victoria F. Nourse, Law=s Constitution: A Relational Critique, 17 Wis. Women =s L.J. 23, 40 & n. 64 (2002).

141 (1981); see also Pierre Bourdieu, The Sentiment of Honour in Kabyle Society, in Honour and Shame 191, 21920 (J. G. Peristiany ed., 1966) (presenting the example of a father who kills his daughter in order to preserve family honor as an illustration of the high value placed by the Kabyle on Athe sacred of the >right-hand =, for the name and good repute of the agnatic family).

7327See Gideon M. Kressel, Sororicide/Filiacide: Homicide for Family Honour, 22 Current Anthropology

and reducing the family=s human capital or imposing a fine and reducing its wealth.328 But a smaller category of laws explicitly imposes punishment on relatives of primary wrongdoers with the self-conscious purpose of leveraging familial solidarity. For example, the U.S. Supreme Court recently upheld a federal statute requiring public housing agencies to evict entire families when any family member living in the household is convicted of a drug-related crime.329 The collective sanction scheme was designed to conscript family members to police and prevent their relatives= criminal behavior.330 Its success will obviously depend on the level of solidarity that the targeted families can create or maintain.331 The Israeli Supreme Court recently rejected a similar strategy.332 The Israeli military had deported three family members of Palestinian terrorists from the West Bank to the Gaza Strip. The Court recognized the deterrence justification for deporting relatives: suicide bombers who obviously are not deterred by the threat of individual punishment might be influenced by some combination of altruistic regard for their relatives and susceptibility to pressure from them. Nevertheless, the Court concluded that punishing relatives was impermissible. AFrom our Jewish Heritage,@ Chief Justice Barak admonished, Awe have learned that >Fathers shall not be put to death because of their sons, and sons shall not be put to death because of their fathers; a person shall be put to death for his own wrongdoing.=@333 H. Discrimination and Assimilation As the introductory discussion of Brownsville suggested, discrimination against minority groups can be understood as a type of collective sanction. Negative judgments are formed about the group as a whole based on characteristics that are perceived to be common among group members.334 Discrimination is then directed against each member of the group irrespective of 8328See supra notes __ and accompanying text. 9329Department of Housing and Urban Development v. Rucker, 535 U.S. 125 (2002). Cf. Bennis v.
Michigan, 516 U.S. 442 (1996) (upholding the forfeiture of a car jointly owned by a husband and wife because the husband used the car to engage in a criminal transaction with a prostitute).

and Urban Development v. Rucker, 535 U.S. 125 (2002).

0330See Reply Brief for the Department of Housing and Urban Development at 12, Department of Housing 1331There is some evidence that law enforcement initiatives that include Cbut are not limited toCno-fault

eviction policies for family members have been effective in reducing crime in public housing. See Jason Dzubow, Fear-Free Public Housing?: An Evaluation of HUD=s AOne Strike and You=re Out@ Housing Policy, 6 Temp. Pol. & Civ. Rts. L. Rev. 55, 67-69 (1997).

2332Ajuri v. IDF Commander, HCJ 7015/02 (2002). 333Id. at [cite], citing Deuteronomy 24:16. But see Deuteronomy 21:1-9 (holding the elders of the nearest town accountable for an unsolved homicide in the surrounding fields). Cf. Edward L. Rubin, Jews, Truth, and Critical Race Theory, 93 Nw. U. L. Rev. 525 (1999) (emphasizing the theme of collective responsibility in the Jewish Bible: ATime and again, Jews are described as a people; when they sin, they often do so as a group, and God often punishes them as a group. It is as a group that they are condemned to wander in the desert for forty years, it is as a group that Isaiah, Amos, and Jeremiah threaten them with destruction for their apostasy, and it is as a group that they suffer at the hands of the Assyrians. @). 4334For present purposes, it does not matter whether the characteristics attributed to the group are

whether she personally possesses those characteristics. This gives members of minority groups an important stake in each other=s appearance and behavior, since if some members of a group appear or behave in ways that invite discrimination, all members of the group will suffer the consequences. Groups may respond to this predicament in two ways, both of which are anticipated by the theory of collective sanctions. They may exert (arguably excessive) control over their members by encouraging them to conform their appearance or behavior to norms designed to minimize discrimination. Alternatively, they can encourage their members to revolt against these norms in order to undermine the legitimacy of the discriminating agent. The experiences of Jewish Americans and African Americans in the early twentieth century illustrate both of these strategies. Factions within each group attempted to steer other members toward avoiding discrimination by assimilating or, alternatively, combating discrimination by militantly embracing group identity. Wealthy, assimilated German-Jews were threatened by waves of Eastern European immigrants around the turn of the twentieth century. The arrival of hundreds of thousands of Jewish East European immigrantsCpoor, visible, concentrated in the huge ghettos of the large American cities, seemingly troublesomeCdid nothing to improve the public (and private) standing of the Jewish upper class of German origin in the eyes of the gentiles, who mostly did not distinguish between different sorts of Jews.335 Unable to sort themselves into a separate group, the uptown German Jewish elites sought to assimilate the downtown immigrants as quickly as possible. Jacob Schiff emblematically pleaded with Lower East Side leaders to discourage immigrant parents from speaking Yiddish to their children.336 Politically, the elites were intent on suppressing cultural pluralism and containing Zionism. In their view, assimilation, not separation, was the best hope for Jews to escape antiSemitic persecution. Explaining the goals of the newly created American Jewish Committee in 1906, Louis Marshall explained, AWhat I am trying to avoid more than anything else is, the creation of a political organization, one which will be looked upon as indicative of a purpose on the part of the Jews to recognize that they have interests different from those of other American citizens.@337 The ideological Zionists had precisely this purpose. Separation and self-defense seemed to them a more effective response to discrimination than assimilation. By 1919, they had taken control of a competing organization, the American Jewish Congress, which predominantly represented the downtown Jews. Whereas the uptown Committee membership drew the line at cultural Zionism, understanding their Jewishness in religious but not ethnic terms, leaders of the
statistically accurate or not. The dynamic described in this section could be motivated by accurate or inaccurate stereotyping.

5335Evyatar Friesel, Jacob H. Schiff and the Leadership of the American Jewish Community, 8 Jewish Soc.
Stud. 61, 65 (2002).

6336Lewis, supra note __, at 551. 73371 Louis Marshall: Champion of Liberty 22 (Charles Reznikoff ed., 1957).

Congress were full-blooded political Zionists, committed to Jewish nationalism.338 Their political strategy was voice, not exit.339 When Israel Zangwill declared in an address to the Congress that the absence of a Jewish vote was a Adisgrace,@ Louis Marshall responded that it would be a Amisfortune@ if Jews ever became an voting bloc, and a leader of the Committee proposed a resolution denouncing ethnic voting as Acontrary to American Democracy.@340 The stakes of this debate were raised during World War II, when Nazi horrors radicalized some American Jews while convincing others that pushing harder to save European Jews would only bolster domestic anti-Semitism.341 Jewish and black elites were closely alliedCthrough the NAACP among other organizationsCin pursuit of common assimilationist interests. Franz Boas spoke for both when he wrote in 1921 that Aman being what he is, the Negro problem will not disappear in America until the Negro blood has been so much diluted that it will no longer be recognized just as antiSemitism will not disappear until the last vestige of the Jew as a Jew has disappeared.@342 Just as newly-arriving immigrants posed a threat to established Jews, the Great Migration of southern blacks to northern cities threatened to erode the status of elite blacksCthe northern, urban, college-educated black elites who comprised Du Bois=s ATalented Tenth.@ As one black woman expressed a view that was widely reported in studies of urban black communities, AThere was no discrimination in Chicago during my early childhood days, but as the Negroes began coming ... in numbers it seems they brought discrimination with them.@343 A prominent member of Chicago=s black community and NAACP likewise complained: Those of the race who are desirous of improving their general condition are prevented to a great extent by being compelled to live with those of their color who are shiftless, dissolute and immoral. ... Prejudice of landlords and agents render it almost impossible for [a black person] to take up his residence in a more select quarter of the city ... no matter ... how much cultivation and refinement he may possess.344 As much as black elites might have wished to sort themselves into a distinct group, white 8338See Henry L. Feingold, A Time for Searching 158-61 (1992). 9339See Albert O. Hirschman, Exit, Voice and Loyalty (1970). 0340Id. at 198-90. 1341Id. at 225-65.
Levering Lewis, Parallels and Divergences: Assimilationist Strategies of Afro-Americans and Jewish Elites from 1910 to the Early 1930s, 71 J. Am. Hist. 543, 544 (1984).

2342Franz Boas, The Problems of the American Negro, 10 Yale Rev. 395 (1921), quoted in David

3431 St. Clair Drake & Horace R. Clayton, Black Metropolis: A Study of Negro Life in a Northern City 73
(1970), quoted in Lewis, supra note __, at 550. See also James R. Grossman, Land of Hope 140 (1989) ( AFearful that the migrants, with their rural southern manners, would disrupt the community and embarrass the race, middle-class black Chicago tried to protect its respectability by instructing newcomers in acceptable forms of behavior. @).

4344Grossman, supra note __, at 131.

stereotypes lumped them together with the new arrivals. This drove the elites to attempt to Acivilize@ and AAmericanize@ the migrants by instructing them in grammar, manners, dress, and hygiene.345 AIf you do well,@ the Urban League exhorted them, Ayou will serve not only yourself but the entire race.@346 Understandably, many of the migrants resisted or ignored these lessons, choosing instead to maintain cultural ties to the rural South. Rather than pushing for integration, they created their own, segregated businesses, churches, social clubs, and political organizations.347 And rather than seeking to ingratiate themselves with whites, they demanded better treatment. The black community made itself an important constituency for the Republican party and was rewarded with social services and patronage jobs.348 When whites lashed out violently, blacks fought back: the Chicago race riots of 1919 left twenty-three blacks and fifteen whites dead. The riots only increased racial solidarity: AIn the past we Negroes have failed to appreciate what solidarity means. ... Since the riots we are getting together and devising ways and means of protecting our interests.@349 Blacks who shared such sentiments were bound to be attracted to Marcus Garvey=s AAfrican Zionism,@ which scorned integration and instead urged separation, selfsufficiency, and self-defense.350 Garvey=s Universal Negro Improvement Association attracted as many as seven thousand black Chicagoans in the early 1920s.351 This was, of course, over the vehement opposition of community leaders, who predicted that Garveyism would lead to even greater racial polarization and, inevitably, white repression.352 I. Ethnic Conflict Ethnic conflict is often understood as the manifestation of nonrational ethnic hatred based on ancient grievances or deep-seated cultural differences between groups.353 Alternatively, ethnic groups may be viewed as contingent social or political coalitions mobilized to pursue material benefits, so that ethnic conflict is best understood as analogous to interest group competition for power or resources.354 Yet each of these approaches fails to explain something important about 5345Lewis, supra note __, at 551-52. 6346Grossman, supra note __, at 144. 7347Id. at 129-30, 153-60. 8348Id. at 172-78. 9349Chicago Commission on Race Relations, The Negro in Chicago 46 (1922). 0350Lewis, supra note __, at 556-57. 1351Grossman, supra note __, at 264. 2352Lewis, supra note __, at 557.
(1985).

353See Hardin, supra note __, at 147-50; Donald Horowitz, Ethnic Groups in Conflict 97-99, 135-39 4354See Horowitz, supra note __, at 105-35. This is the basic approach of Hardin, supra note __.

ethnic conflict or identity.355 Explanations based on group animosity have difficulty accounting for the fact that most of the ethnic groups that are supposed to bitterly hate each other have in fact managed to coexist peacefully, if not cooperatively, throughout most of history.356 Materialist explanations have difficulty accounting for the apparent salience and stability of ethnic identification over time. A novel theory of ethnic conflict may help to fill these explanatory gaps.357 The theory focuses on the potential role of ethnic groups in maintaining social order through the use or threat of collective sanctions. Suppose that the state is weak and ethnic groups are left to their own devices. It is easy to imagine these groups dealing with one another on the model of an iterated prisoner=s dilemma and pursuing a strategy like tit-for-tat: when a member of group A interacts with a member of group B and defects, members of group B may wish to punish her (by defecting in subsequent interactions, or in some other way).358 If identifying or sanctioning the wrongdoing member of A is prohibitively costlyCas it often will be where members of ethnic groups interact primarily with their own kindCthen members of group B will be tempted to resort to collective sanctions.359 Collective retaliation back and forth between ethnic groups may spiral into indiscriminate and prolonged ethnic violence, in the manner of blood feud.360 Anticipating that unhappy outcome, however, ethnic groups will have an incentive to prevent their members from defecting in inter-group interactions.361 Ethnic groups composed of homogenous, closely-knit members with dense social networks and low-cost access to information about one another=s behavior will have a relatively easy time achieving high levels of solidarity and controlling their members= behavior.362 When the occasional defection does occur, moreover, groups may implicitly agree not to engage in inter-group retaliation but rather to rely on intra-group policing and punishing of defectors. 363 Mutual reliance on strong intra-group controls may thus support peaceful coexistence and social order. On this collective sanction-based model of ethnic group relations, then, inter-group
status or esteem. See Horowitz, supra note __, chptr. 5; Richard H. McAdams, Cooperation and Conflict: The Economics of Group Status Production and Race Discrimination, 108 Harv. L. Rev. 1003 (1995).

5355Other prominent theories of ethnic conflict emphasize competition among groups for relative social

6356See Hardin, supra note __, at 148.

715 (1996).

7357See James D. Fearon & David D. Laitin, Explaining Interethnic Cooperation, 90 Am. Pol. Sci. Rev. 8358See Fearon & Laitin, supra note __, at 719-22. 9359See id. at 722. 0360See id. 1361This is analogous to the scenario contemplated by Greif in the context of trading relationships among

merchants in late medieval Europe. See Grief, Impersonal Exchange, supra note __; text accompanying notes __.

2362See Janet T. Landa, Trust, Ethnicity, and Identity (1994). 363See Fearon & Laitin, supra note __, at 722-23.

interactions may follow two equilibrium paths, one cooperative, the other conflictual. Vacillation between these two equilibria may help explain historical patterns of ethnic group interactions, which are often characterized by long periods of peaceful coexistence punctuated by outbreaks of violent conflict.364 Before ethnic violence broke out in Yugoslavia in 1991, for example, Serbs and Muslims had lived together peacefully and cooperated politically and economically for the previous forty-five years.365 Explaining ethnic conflict in the Balkans by reference to primordial hatred between Serbs and Muslims dating back to the Battle of Kosovo in 1389 both overpredicts violence and fails to explain cooperation. The collective sanction based-model also goes beyond materialist theories of ethnic conflict in explaining the persistence of ethnicity. A regime in which solidary ethnic groups maintain social order through the mutual threat of collective sanctions will reinforce and perpetuate ethnic differences.366 It is worth noticing that such a regime will also build the solidarity of ethnic groups and strengthen their control over members, arguably to the point of excess. For example, the millet system of the Ottoman Empire enabled self-governing communities of Muslims, Christians, and Jews to live in relative peace for half a millennium by granting Aeach religious/nationality group ... a high degree of autonomy as long as [its] leaders successfully policed their own communities ... and monitored members ... in interactions with outsiders.@367 But the strong intra-group controls necessary to maintain social stability by preventing inter-group provocations also did away with individual freedom of conscience.368 The price of social order in ethnically divided societies may be some measure of intra-group tyranny. J. Team Production In many competitive settings, rewards and punishments can be based either on individual or group performance. Employees of firms can be evaluated and compensated based on individual performance, the performance of intra-firm teams, or the performance of the entire firm. Similarly, competitive athletes can be evaluated based on individual or team performance. Attempts to maximize productivity in both the economic and athletic settings illustrate the costs and benefits of collective versus individual sanctions. Group-based incentive schemes in employment contexts take many forms.369 Profitsharing plans, whether in the form of bonuses or employee stock ownership, tie individual compensation to firm performance. Partnerships and other types of employee-owned firms do the 4364Id. at 716-17. 5365See Hardin, supra note __, at 148, 156-63. 6366See Fearon & Laitin, supra note __, at 731. 7367Fearon & Laitin explain that Aeach religious/nationality group ... received a high degree of autonomy
as long as their leaders successfully policed their own communities within their millet and monitored members ... in interactions with outsiders. @ Id. at 728-29. For an overview of the millet system, see generally Jews in the Ottoman Empire (Benjamin Braude & Bernard Lewis eds., 1982).

8368See Will Kymlicka, Multicultural Citizenship 156-58 (1995). 9369See Paul Milgrom & John Roberts, Economics, Organization, and Management 413-18 (1992).

same. Some firms evaluate and compensate employees based on the performance of small work teams. These and other group incentive schemes are counterintuitive inasmuch as free-rider problems might be expected to undermine individual performance incentives.370 As in many other contexts, however, groups of workers may be able to overcome collective action problems and create high levels of solidarity through repeat-play and informal sanctions in the currency of cooperation or esteem.371 Solidarity will be easier to build in relatively small groups, where members work together closely and can easily observe each other =s efforts.372 Building solidarity will also be easier where there is some preexisting foundation. We should not be surprised to find that partnerships are often formed among friends or family members, who have established a base of solidarity upon which to build.373 (Of course many companies attempt to manufacture friendship-based solidarity by encouraging and subsidizing group Arecreational@ activities like softball teams and picnics.) Where solidarity among groups of employees can be created and maintained, group incentive arrangements have several clear advantagesCcorresponding to the advantages of collective sanctions generally. Most significantly, in situations where it is costly or impossible for managers to determine individual employees= contributions to work output, group incentive schemes can be used to leverage the employees= better information about the contributions of their peers.374 Managers can reward or punish based on group output, which is relatively easier to observe, and then leave it to the group to transmit appropriate incentives to individuals according to their marginal contributions.375 In addition to leveraging peer monitoring and sanctioning, incentive schemes that base compensation on group productivity encourage teamwork. 376 Waiters
(1991); Bengt Holmstrom, Moral Hazard in Teams, 13 Bell J. Econ. 324 (1982).

0370See Eugene F. Fama, Time, Salary, and Incentive Payoffs in Labor Contracts, 9 J. Labor Econ. 25, 39

1371See Yeon-Koo Che & Seung-Weon Yoo, Optimal Incentives for Teams, 91 Am. Econ. Rev. 525 (2001); Eugene Kandel & Edward P. Lazear, Peer Pressure and Partnerships, 100 J. Pol. Econ. 801 (1992). 2372See Milgrom & Roberts, supra note __, at 416. 373See Kandel & Lazear, supra note __, at 808. 4374See Milgrom & Roberts, supra note __, at 416. 5375Notice that the basic problem that collective sanctions solve in this context Cthe nonseverability, or
nonobservability, of the individual contributions to a collective effort Cis the starting point for the team production model of the firm, and that collective sanctions for failing to meet performance goals is a prominent feature of this model. See Armen A. Alchian & Harold Demsetz, Production, Information Costs, and Economic Organization, 62 Am. Econ. Rev. 777 (1972); Holstrom, supra note __; see also Margaret M. Blair & Lynn A. Stout, A Team Production Theory of Corporate Law, 85 Va. L. Rev. 247 (1999) (developing a theory of corporations and corporate law based on the team production model). Hansmann argues persuasively that this account is of limited value in explaining existing patterns of employee ownership, which do not seem to correspond to information asymmetries between owners and employees that make individual output difficult to observe. He points out, for instance, that employee ownership is the norm in professional services, like law firms, where the quantity and quality of individual work output is readily observable. See Hansmann, supra note __, at 70-71.

Many Agents, 51 Rev. Econ. Stud. 433 (1984); see also Hideshi Itoh, Cooperation in Hierarchical Organizations: An Incentive Perspective, 8 J. L. Econ. & Org. 321 (1992) (emphasizing cooperation in the form of swapping

6376See Milgrom & Roberts, supra note __, at 416; Dilip Mookherjee, Optimal Incentive Schemes with

who pool their tips will be less likely to ignore customers sitting at other tables, and workers compensated based on group productivity will be more willing to share information and invest in training newcomers. In sum, where groups of employees can monitor one another =s efforts and create effective intra-group incentives, group incentive schemes have the potential to generate higher levels of productivity than individual-based ones.377 Empirical studies confirm that group incentives can create significant increases in labor productivity and firm performance.378 Group-based incentive schemes may have other advantages, as well. The theory of collective sanctions predicts that where group membership is mutually voluntary, individuals will sort themselves into groups that are homogenous with respect to the characteristics that affect the probability and magnitude of sanctions.379 We should expect to observe, therefore, that partnerships with equal-sharing compensation schemes will tend to form among individuals of similar productivity.380 This observation may help explain the prevalence of the partnership form in human-capital intensive professional service firms (for example, in law, medicine, investment banking, and accounting.)381 Profit-sharing creates incentives for partnerships to refuse to add additional partners whose productivity is below the partnership average, and for potential partners to refuse to join partnerships whose average productivity is below their own. In equilibrium, then, partners should sort themselves into partnerships that are homogenous by productivity. Moreover, under certain assumptions, partnerships will have a higher quality threshold for employment, and offer a uniformly higher quality product, than corporations and other firms that have incentives to hire any employee whose marginal product is above the market wage. 382 The ability of partnerships to credibly signal a higher quality product will provide a competitive advantage in markets where product quality depends heavily on human capital and therefore is difficult for clients to assess ex ante.383 Professional services are the paradigmatic example of this
monotonous tasks among employees in order to reduce tedium and thereby improve productivity).

7377See David I. Levine & Laura D=Andrea Tyson, Participation, Productivity, and the Firm =s
Environment, in Paying for Productivity 183-87 (Alan S. Blinder ed., 1990); Bengt Holstrom & Paul Milgrom, Regulating Trade Among Agents, 146 J. Inst. & Theoretical Econ. 85 (1990); Hideshi Itoh, Coalitions, Incentives, and Risk-Sharing, 60 J. Econ. Theory 410 (1993).

8378See Haig R. Nalbantian & Andrew Schotter, Productivity Under Group Incentives: An Experimental
Study, 87 Am. Econ. Rev. 314, 316 (1997) (reviewing the empirical literature). In particular, see Marc Knez & Duncan Simester, Firm-Wide Incentives and Mutual Monitoring at Continental Airlines, 19 J. Labor Econ. 743 (2001). Knez & Simester conclude, incredibly, that Continental Airline =s introduction of an incentive scheme offering monthly bonuses to 35,000 eligible employees if the airline met firm-wide performance goals significantly improved on-time performance. The authors argue that Continental employees were able to overcome free-rider problems and maintain a high level of solidarity because of Continental =s use of autonomous work groups and various structural features of airport and airline operations, which facilitated mutual monitoring.

9379See supra notes __ and accompanying text. 0380See Kandel & Lazear, supra note __, at 813 (observing that Apartnerships tend to occur among individuals of similar types and quality@).
Program in Law and Economics, Working Paper 244, October 2002.

1381See Jonathan Levin & Steven Tadelis, A Theory of Partnerships, Stanford Law School, John M. Olin 2382Id. at __.

type of market.384 Studies of individual and group performance in sports have generated similar insights about the trade-offs between individual- and group-level performance evaluation. If performance is assessed only at the group level, and individual contributions are invisible even to group members, free-rider effects diminish the performance of teams. For example, in the famous Ringelmann experiments, individual effort in a rope-pulling exercise decreased with group size, so that the average individual force of two-person groups was 93% of the average individual force of solo pullers; for three-person groups, 85%; and for eight-person groups, 49%. 385 (In a variation on this experiment designed to control for possible coordination losses in group efforts, the subject is blindfolded and told she is pulling in conjunction with others, when in fact she is pulling alone. The results are the same, confirming that the mechanism of reduced group performance is motivational.386) But when individual effort is identifiable to other members of a solidary group, 383Id. at __. 4384The connection between the locus of economic returns on productivity and the theory of collective
sanctions can be generalized further, albeit perhaps with diminishing constructive returns. Suppose we think about the costs and benefits of property ownership as a type of sanction. Now the theory of collective sanctions runs parallel to the theory of common versus individual property rights. Individuating property rights creates efficient incentives for individual owners and avoids the collective action problems that lead to the tragedy of the commons. Where individual property rights are costly to create and enforce, however, common property regimes Cwhich allow the costs and benefits of ownership to fall on a group Cmay be more efficient. Common property owners avoid the tragedy of the commons by developing solidarity through norms or governance structures which, if successful, can duplicate the efficient incentives created private property at lower cost than legal enforcement of individual entitlements. Solidarity among common property owners may have various noneconomic benefits, as well, allowing groups to pursue the kinds of intangible collective goods prized by communitarians. See Hanoch Dagan & Michael A. Heller, The Liberal Commons, 110 Yale L.J. 572-74 (2001); Robert C. Ellickson, Property in Land, 102 Yale L.J. 1315, 1354-57 (1993). The theory of collective sanctions also maps on to Coase=s theory of the firm. Production can be organized through a network of market contracts or through the internal governance structure of a firm. Market contracts allocate economic returns to individuals based on the value of their productive inputs. When individuals are organized into firms, by contrast, economic returns are realized at the level of the firm and not disaggregated based on individual contributions (unless the firm does so internally). Entrepreneurs create firms where the agency costs of firm governance are less than the transaction costs of market contracting. Where individual sanctions (in the form of contractual returns on investment) are costly to parcel out, and groups of individuals (organized into firms) can be made sufficiently solidary through governance structures, entrepreneurs will choose to organize production within firms. See Coase, supra note __. The choice between market and collectivist economies can be understood in much the same way. Market economies reward productivity at the level of individuals. In collectivist economies, the means of production are collectively owned and operated through the governance structure of the state. The collective, which receives all returns on productivity, must create incentives for individuals to contribute and then distribute the total product among them. Under totalitarian governance structures, collectivist states have attempted to build solidarity through various forms of excessive control Cideological indoctrination, enforced cultural homogeneity, pervasive monitoring, and the gulag. These methods have failed to rival the efficiency of markets. They have also failed to deliver the non-economic benefits of solidarity that Marx thought essential to human flourishing. The transition of collectivist states to markets is an example of individual sanctions clearly dominating collective ones.

Haslam, Psychology in Organizations: The Social Identity Approach 244 (2001).

5385See Diane L. Gill, Psychological Dynamics of Sport and Exercise 295 (2d ed. 2000); S. Alexander 6386See Ingham et al., The Ringelmann Effect: Studies of Group Size and Group Performance, 10 J. Exp.

the free-rider effect not only disappears but may in fact be reversed.387 Studies comparing individual and relay times of swimmers, both in actual meets and experimental settings, have found that relay times were at least as fast as individual times, in some cases faster. 388 These results suggest that peer pressure among teammates may be a stronger motivation for athletes than the desire to win individual competitions. K. Academic Co-Authors Academic journals, professional organizations, and universities have developed various guidelines and norms about the extent to which authors of academic papers should be held responsible for the mistaken or fraudulent contributions of their co-authors. 389 For example, Stanford University=s policy on multi-authored research papers assigns Aall authors in a group effort ... shared responsibility for the published result. @390 At the opposite extreme, when his coauthor=s research was recently revealed to be fraudulent, a scientist disclaimed any responsibility for results he had previously trumpeted: AWhen I am a passenger in a car and the driver drives through a red light, then I am not to blame.@391 How to assign responsibility among co-authors can be usefully understood as a question of individual versus collective sanctions. Individual contributions to collaborative research may be difficult to disaggregate from the outside, especially after fraud has been discovered and the authors have selfish incentives to distance themselves from the work. Co-authors who work together closely on a project will often be in a better position than outsiders to police fraud and either preempt it or blow the whistle on the responsible contributor. On the other hand, collective responsibility for co-authors might create conspiracies of silence among collaborators who would otherwise be willing to whistleblow. Co-authors share not just blame but credit. Here, too, there is a choice between assigning responsibility to the co-authorship group as a whole or disaggregating responsibility among the individual authors. Co-authors can influence this choice with respect to journal articles by choosing whether to list their names in order of contribution, which facilitates individualized attribution of credit, or alphabetically, which discourages individualized attribution. Different
Soc. Psychol. 371 (1974).

reveal that individuals cheer less loudly in groups than on their own, but that this effect can be made to disappear if they are convinced that their individual level of cheering will be identified and revealed. See Kipling D. Williams et al., Identifiability and Social Loafing: Two Cheering Experiments, 40 J. Personality & Soc. Psychol. 303 (1981).

7387See Gill, supra note __, at 296-97. This is true of fans as well as athletes. Cheering experiments

8388See id. at 323-24; Kipling D. Williams et al., Social Loafing and Swimming: Effects of Identifiability on Individual and Relay Performance of Intercollegiate Swimmers, 10 Basic & Applied Social Psychol. 73 (1989); see also Jeffrey A. Miles & Jerald Greenberg, Using Punishment Threats to Attenuate Social Loafing Effects among Swimmers, 56 Org. Behavior & Human Decision Processes 246 (1993) (finding that punishment threats for failing to meet a performance goal made the free-rider effect disappear even without individual identifiability). 9389See Rochelle Cooper Dreyfuss, Collaborative Research: Conflicts on Authorship, Ownership, and
Accountability, 53 Vand. L. Rev. 1162, 1188-91 (2000).

0390See Multi-Authored Research Papers, Stanford University Research Policy Handbook 2.7,
<http://www.stanford.edu/dept/DoR/rph/2-7.html>.

1391George Johnson, At Lawrence Berkeley, Physicists Say a Colleague Took Them for a Ride, New York
Times, October 15, 2002, at F1.

academic disciplines have different norms. For instance, 90% of co-authored papers in economic journals alphabetize the authors= names, whereas only 30% of biology journals do.392 Why would economists and biologists have different preferences about individual versus group credit for scholarship? Based on the number of collaborators on published papers, Laband and Tollison find that intellectual cooperation is more valuable in economics than in biology.393 They suggest that equalizing rewards for scholarship among co-authors may encourage them to cooperate rather than compete.394 In this context as well, collective sanctions may have the effect of building group solidarity. V. Conclusion [To be written.]

2392See David N. Laband & Robert D. Tollison, Intellectual Collaboration, 108 J. Pol. Econ. 632, 659
(2000). Predictably, the authors find a statistically significant difference in the rates of co-authorship between economists whose last names start with A through M and those whose last names start with N through Z. (There is no alphabetical difference for biologists.) Id. at 660-61.

393See id. at 654-58. 4394See id. at 658-61.