Link of the Day: Pirate Economics and Democracy

Primary version of this post at Barry Stocker’s Weblog, with fun illustrative picture!

A great discussion of the economics and political organisation of pirates.

Leeson on Pirates and the Invisible Hook

Also this shorter video discussion

I’m later than I would normally expect to be with putting up this link, but it’s still on the home page of EconTalk, at the bottom. I really want to draw attention to what Peter Leeson does with pirates, He looks at the economic rationality behind piracy. The most obvious aspect of this free money through robbery, but there’s a lot more to why sailors became pirates. Conditions were more relaxed on pirate ships than naval or legal trading ships, but not in these sense of chaos. There was a Captain and a Quarter Master General, both elected by the crew. They provided inspiration, leadership, organisation and discipline, in a deal in which crew worked out for themselves which crew member would provide the best combination.

One of Leeson’s most interesting points is that the Quarter Master General provided a kind of constitutional check on the power of the Captain. Leeson argues that this anticipates aspects of the United States constitution and that the experience of mini self-governing republics on pirate ships did have an influence on political thinking in the early modern period, when democratic, constitutional and self-governing republican thought was growing.

Leeson also looks at the economics and calculations of self-interest in piracy. Pirate crew not only benefited from more relaxed conditions than on legal ships of the time, they had considerable employer benefits. Stolen property was shared in a transparent way, pirates were compensated for injuries and received medical attention. So pirate ships provide an early example of social and health insurance from employers.

Pirates used minimal violence, except where they were disposed to sadism anyway. Despite role of illegal violence in piracy, pirates found it is more economically efficient to minimise violence, and keep it as an unused threat. Pirates would torture and murder in order to locate property on ships, but realised that if they behave pleasantly where property was handed over quickly that they could avoid a lot of expenditure of effort. So pirates encouraged publicity which betrayed them as extremely violent and cruel when obstructed, but kind and pleasant when the loot was handed over. Crew and officers on ships robbed by pirates were likely to have more problems with ship owners who suspected them of not trying hard enough to fight off pirates.

Leeson also suggests a real basis for the way pirates talk in literature and then films, a high proportion came from the West of England where people did have that kind of accent and phrasing. Pirate travels also meant they really did have parrots.

All of this refers to Leeson’s book The Invisible Hook: The Hidden Economics of Pirates, which I have not read sadly. However, I hope during the course of this year, and produce several blog posts on what seems like a really admirable book, combining history, politics, economics and literature, with great humour. The title refers to a phrase used by Adam Smith in Wealth of Nations. Smith only uses the phrase once but it does sum up a central idea in the book, that individual pursuit of economic interests often has the unintended consequence of promoting the interests of society as a whole. Leeson looks at how this works within the world of piracy. He is of course not suggesting that piracy itself promotes social welfare, but he does point out that the way pirate ships self-organised did have some unintended consequences in showing how constitutional democracy might work, how individuals can be protected against misfortunes at work, and how employers may benefit from non-autocratic behaviour towards employees.

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