Conspiracy theory.

• Author: Katyal, Neal Kumar

CONTENTS

1. TWO VIEWS OF CONSPIRACY A. The Dangers to Society from Group Behavior 1. Psychological Analysis of Social Identity a. Polarization and Risk-Taking b. Acting Against Self-Interest c. Dissuasion d. Success in Tasks 2. Economic Analysis of Specialization of Labor and Economies of Scale B. The Benefits to Society from Group Behavior 1. Information Extraction 2. Physical Evidence and Perpetration Cost II. THE THEORY OF CONSPIRACY A. Price Discrimination B. Reversing Contract Law Principles To Increase Transaction Costs and Uncertainty C. Norms and Trust: Undermining Group Efficiencies 1. Fracturing Trust a. Encouraging Costly Monitoring b. Compartmentalizing Information and Chilling Effects 2. Destabilizing Group Identity 3. Exacerbating Team-Production Problems 4. Targeting Stakeholders 5. Promoting Cost Deterrence and Attacking Leadership 6. Reversing Intellectual Property Law III. THE DOCTRINE OF CONSPIRACY A. Traditional Features 1. Extra Punishment for Group Activity 2. Pinkerton 3. Inchoate Liability 4. Impossibility 5. Withdrawal B. Further Aligning Theory and Doctrine 1. Sentencing Reforms 2. Exculpatory Flipping 3. Nonsentencing Rewards 4. Publicity 5. Prosecutorial Reforms CONCLUSION Consider how a law school textbook might introduce the elements of traditional conspiracy law: Imagine that Joe and Sandra agree to rob a bank. From the moment of agreement, they can be found guilty of conspiracy even if they never commit the robbery (it's called "inchoate liability"). Even if the bank goes out of business, they can still be liable for the conspiracy ("impossibility" is not a defense). Joe can be liable for other crimes that Sandra commits to further the conspiracy's objective, like hotwiring a getaway car (it's called "Pinkerton" liability, after a 1946 Supreme Court case involving tax offenses). He can't evade liability by staying home on the day of the robbery (a conspirator has to take an affirmative step to "withdraw"). And if the bank heist takes place, both Joe and Sandra can be charged with bank robbery and with the separate crime of conspiracy, each of which carries its own punishment (the crime of conspiracy doesn't "merge" with the underlying crime).

   Why should conspiracy liability begin at the moment of "agreement," before any crime is committed? Why can a conspirator be charged with both the inchoate offense of conspiracy and the robbery? Why should the law punish conspirators even if it's impossible for them to commit the crime they planned? Why is withdrawal from a conspiracy so difficult? And what about that oddball Pinkerton doctrine?

   For more than 50 years, these questions have prompted a series of critiques of conspiracy law. The major scholarly articles have alleged the doctrine "unnecessary" (1) and stated that the "assumed dangers from conspiracy ... have never been verified empirically." (2) And such views have successfully permeated the criminal law. The Model Penal Code, a blueprint for state law first written by a commission of experts in the early 1950s, rejected many of the traditional features of conspiracy law. Over the past fifteen years, the Federal Sentencing Commission similarly eliminated many of the traditional features of conspiracy doctrine, so that, for example, it is not generally possible to punish someone for conspiring to commit a crime and for committing it.

   These cutbacks are likely to be a mistake. For some years now, I have been arguing that realistic models of crime control must incorporate, and sometimes reconcile, economic and psychological reactions to penalties. (3) This is particularly the case with the offense of conspiracy. Psychologists have made many advances in understanding the ways in which people in groups act differently than they do as individuals. So, too, economists have developed sophisticated explanations for why firms promote efficiency, leading to new theories in corporate law. These insights can be "reverse-engineered" to make conspiracies operate less efficiently. In reverse engineering corporate law principles and introducing lessons from psychology, a rich account of how government should approach conspiracy begins to unfold.

   This is a central issue in criminal law, since more than one-quarter of all federal criminal prosecutions and a large number of state cases involve prosecutions for conspiracy. (4) Virtually every state recognizes the crime. (5) Yet criticisms of the doctrine are pervasive, and generally take two forms. First, the rationale for the offense of conspiracy is questioned. Why should group behavior receive additional punishment, and why should any punishment at all attach at the moment of agreement? (6) In the second critique, conspiracy law is excoriated for giving prosecutors too much power. (7) This Article concerns itself with answering the first of these criticisms by offering a functional justification for punishing conspiracy. The debate about the best way, if any, to implement conspiracy law must naturally take place, but it should occur only after a sober assessment of the underpinnings of the doctrine itself. These underpinnings are not understood, which is not surprising since the last major articles on conspiracy were written in 1959 and 1973, (8) and because the dominant motif in criminal law scholarship has veered too far toward retributivist analysis. (9)

   This Article outlines a case for traditional federal conspiracy doctrine by returning to fundamental points about group behavior. By looking at groups, the Article holistically addresses both the necessity of the offense of conspiracy, as well as the doctrinal questions about Pinkerton liability, impossibility, and the offense's other traditional features. This view of conspiracy is part of a larger trend emerging in legal scholarship, one that trains its eye on groups instead of on individuals. In corporate law, Eric Talley, Lynn Stout, and Margaret Blair have drawn much attention to the team-production problem; (10) in torts and business organizations, Lewis Kornhauser, Reinier Kraakman, Alan Sykes, and others have usefully analyzed vicarious liability and gatekeepers, (11) and Donald Langevoort has similarly studied employer monitoring; (12) and in civil law, David Schkade, Cass Sunstein, and Daniel Kahneman have developed an understanding of the jury system based on group dynamics. (13) Most law professors, used to writing articles on their own, think about crime as a solo enterprise--a tendency reinforced by the individualist prism of microeconomics and the case-driven method of studying specific parties. The damage here, and elsewhere, in legal education is apparent. (14)

   Part I outlines two reasons why conspiracies are harmful: the specialization of labor/economies of scale and the development of a pernicious group identity. The former is easily understood by thinking about how difficult it is for an individual to rob a bank alone. Several individuals are needed to carry weapons and provide firepower (economies of scale), someone needs to be the "brains behind the operation" (a form of specialization of labor), and another should serve as a lookout (specialization again). Conspiracy creates obvious efficiencies, efficiencies predicted by Ronald Coase in his path-breaking article about why firms develop. (15)

   What are somewhat less obvious, but at least as important, are psychological accounts of the dangers of group activity. Advances in psychology over the past thirty years have demonstrated that groups cultivate a special social identity. This identity often encourages risky behavior, leads individuals to behave against their self-interest, solidifies loyalty, and facilitates harm against nonmembers. The psychological and economic accounts explain why law treats conspiracy in a distinctive way. The law focuses on "agreement" because that decision has drastic consequences. The law seeks to attach a broad and potentially uncognizable set of penalties at this early stage to deter many from becoming conspirators.

   The second half of Part I discusses the converse: When A conspires with B, B can turn around and flip--implicate--A to the authorities in exchange for a lighter sentence. In the eyes of law enforcement, therefore, criminal conspiracy is not always harmful. The more conspirators, the more witnesses there are to flip and the more ominous the prisoners' dilemma for a conspirator. Teachers of criminal law today already consider economics, psychology, and flipping to some extent. What this Article tries to do is systematically review the interdisciplinary literature to detail its implications for the doctrines surrounding conspiracy. Part I therefore sets the stage on which the tough drama about conspiracy is played out, and will move quickly because the play is more exciting than the stage itself.

   Part II explains how conspiracy law resolves the tension of group behavior through a method of price discrimination. The law strives to prevent conspiracies from forming with high up-front penalties for those who join, but also uses mechanisms to obtain information from those who have joined and decide to cooperate with the government. Federal law itself has come to recognize such a tension, although scholars have not, and this can explain the function of doctrines such as Pinkerton liability and the exclusion from merger. These doctrines not only further information extraction, they also make conspiracies more difficult to create and maintain by forcing them to adopt inefficient practices. The possibility of defection forces the syndicate to use expensive monitoring of its employees for evidence of possible collusion with the government. Mechanisms for defection also erode trust within the group and lead members to think that others are acting out of self-interest. This analysis will suggest that other doctrines in criminal law--apart from conspiracy--have information-extraction advantages; today, however, conspiracy law is...