One rule of thumb for the design of government, often termed the “subsidiary principle,” is to allocate decision-making authority to the smallest scale of governance institutions that can still manage the problem.1 It's a good rule. The approach generally works for several reasons: it keeps government as closely tied to the problem and those affected by it as possible, rendering it more accountable. It also reduces the free-rider problem, in which one actor (or institution) fails to take effective action in the hopes of benefiting doubly when others expend the resources to do so. It also generally supports a balance of power in government, placing more checks on authority.

But what about when the problem is global in scale? Pandemics, climate change, biodiversity loss, ozone depletion, and nuclear proliferation are just a few of the problems justifying a global governance level. In the language of economists, their “negative externalities”—problems flowing across borders—must be internalized. That is, they must be brought within the boundaries of a newly expanded economic actor that has the incentives to deal with them. This internalization doesn't necessarily imply the creation of a single, central authority; it could be a cooperative arrangement like a treaty, but it needs to be one that is self-reinforcing, locking its participants into their cooperative commitments and perhaps even overriding a recalcitrant minority. In this sense, it must be superordinate.

This chapter argues that the evolution of a unitary planetary economy is firstly, rational, and secondly, that it requires coordinated planning at the planetary level.