The Invisible Hook: The Hidden Economics of Pirates

An entertaining look at the economic incentives that gave rise to the behaviors of pirates in the late 17th and early 18th centuries, making sense of such seeming paradoxes as crazed, bloodthirsty marauders who ran their ships through constitutional direct democracy more than half a century before the American Revolution. The summary chapter at the end is given as a prospective syllabus for Management 101 by Prof. Blackbeard, and is a hoot. (My wife, who has an MBA, wishes this had come out when she was in school.) Heartily recommended for any storyteller who wants to get into the world of piracy.

The author makes much of the fact that pirates ran quasi-democratic organizations on their ships a hundred years before the Federalist Papers were written. This is not nearly as remarkable as he makes it sound. The average pirate crew only numbered about 60-70 people. Anthropology attests that quasi-democracies have since time immemorial been the rule rather than the exception in autonomous societies of this minuscule size. The problems of democratic organization in states with millions of citizens are of an entirely different nature.

The author's enthusiasm for pirate history is evident, but I think he greatly exaggerates the value of his "economic" explanations for pirate behavior and organization. He simply states logical reasons why show more pirate ships weren't ruled dictatorially, why they used their own flag, why they shared their loot equally etc. Most readers may not have thought of these reasons before, but they're quite obvious and they could be summarized in just a few paragraphs. The book becomes more and more boring as the author elaborates every simple point for 20-30 pages.

The final chapter "Secrets of Pirate Management" is a strange attempt to be humorous. It actually made me double-check if I had misread the name of the publisher, but no, Princeton University Press apparently approved even this garbage. The other chapters are alright for people who like pirates, but they aren't original or interesting from a social-scientific perspective. The organization of criminal activity has been treated from a much deeper theoretical perspective in David Skarbek's The Social Order of the Underworld. show less

I awaited the release of this book with great anticipation as it contains three elements I can't resists: pirates, quirky application of social sciences, and a terrific pun in the title. Overall it did not disappoint. Leeson examines the Golden Age of Piracy (roughly 1680-1720) through the lens of economics, seeking economic reason for what pirates did. Much of pirate behavior is based in reaction to the harsh and unrewarding life of sailors under cruel captains. Leeson shows how pirates preceded both James Madison and Adam Smith by decades by creating democracies and free market capitalism aboard their floating communities. It was beneficial to the crews as a whole to elect their captains and to sign pirate codes that would determine show more fair treatment - and a fair share of the booty. Pirates also should a fair amount of tolerance for black sailors among their crew making their racism subservient to the economic benefits of a good hand on board no matter what his color.

The "Jolly Roger" and the wild antics of pirates like Blackbeard also have an economic purpose - to force the pirates' prey to surrender without a fight. Sea battles would damage the pirates' prize, their own ship, and perhaps even the pirates so it behooved them to act as threatening and crazy as possible to actually prevent violence. For many of these reasons, pirate ships were actually popular among the ordinary sailors who were willing recruits into a society that would allow them a voice in how things are done and take home a greater share of wealth than they'd earn in the merchant marine. The book concludes with a humorous management course as taught by a pirate with a syllabus of articles and books that back up the economics behind the pirate way.

One quibble I have in this book is that Leeson often deviates from economics to slip in Libertarian ideology in tangents that seem odd and out of place. For example, he takes up several pages to convince the reader that all government is based on the threat of violence as opposed to pirate societies which were freely joined. He even writes of the benefits of pirate torture in regulating the behavior of commercial ship captains (who had to treat their sailors well lest they too be caught and tortured by pirates) but seems to see only evil in any regulation whatsover by government. Nevertheless, this is an enjoyable and educational book that brings the dismal science to life through the romance of piracy. Arrr! show less

The Invisible Hook takes a rational choice framework and applies it to the golden age of Anglo-American piracy. The resulting ideas are compelling and fun, and Leeson presents them enthusiastically and clearly. He's excited about pirates, at least as much as he is about econ, and he wants to set the record straight. "Pirate fiction portrays seamen as choosing piracy out of romantic, if misled, ideals about freedom, equality, and fraternity," but Leeson knows the reality was less about utopia and more about "piratical means, used to secure cooperation within pirates' criminal organization, rather than piratical ends, as they're often depicted." And just about all pirate actions will come down to this.

Leeson makes no claim to being a show more historian and makes free use of secondary sources to present the historical record, aiming to interpret that record through the lens of economics. But still, there was plenty for me to learn about the basic history as well: the difference between buccaneers and pirates, for example, or the importance of the quarter-master on a pirate ship. Also the great size of pirate crews in comparison to those of merchantmen, and the truly great potential prize available to pirates in their golden age. And just about everything there is to learn about pirates is interesting. The romantic nature of the subject is really inescapable.

That remains true even when the motives of the outlaws are unwoven. Leeson contends that "only with economics can we make sense of a great deal of otherwise unintelligible individual behavior." It's the only way to understand a group made up seemingly of "libertarians who conscripted nearly all their members, democrats with dictatorial captains, and lawless anarchists who lived by a strict code of rules."

All these seeming contradictions came about because pirates were in unusual circumstances that produced correspondingly unusual incentives. One of the biggest differences between pirate crews and those of legitimate ships, be they merchant or military or even privateer, was the democratic governance of the pirate ship as opposed to the autocratic powers of all other captains. Were pirates just unusually progressive? Probably not; but they lacked an absentee owner and corresponding principal-agent problem. Since pirate ships were stolen, the pirate crews owned them collectively, and they had no need of an autocratic captain to align the interests of the ship's owners with those of its crew--they were already one and the same. In that sense, their very criminality was "the source of pirates' ability to use this system" of "democratic checks and balances."

There are like explanations behind pirates' other surprising habits, all satisfying but not necessarily surprising--especially if you're already given to thinking about such matters from this point of view. But bringing them all together with compelling information about historical events makes for an engaging book.
(more at http://www.bibliographing.com/2009/05/05/the-invisible-hook-by-peter-t-leeson_re... ) show less

If this book were half as good as the title, it would be awesome. Sadly, it’s extremely repetitive and uses really crude rational actor economics. There’s still some fun stuff about how pirates governed themselves, why pirates were democratically governed among themselves, why pirates were so violent to those who resisted piracy, etc. But I can’t recommend a book that says (1) government is coercive by nature, which is its distinctive feature; (2) private organizations like condo associations are not coercive, because you can decide not to follow their rules and leave (ignoring that what ultimately puts you to that choice is that the government will enforce the property/contract rights of the condo); and (3) because people can show more leave the jurisdiction of a government, governments are subject to Tiebout competition. (2) doesn’t make much sense under any circumstances, but it’s laughable to say all three things in a single argument. show less

Smart, funny, well-researched, Libertarian/free markety interpretation of Pirate economics, politics, and culture. The style is breezy and accessible. The information is solid. A great read as a first book to read on economics, actually, since the basic concepts are well-explained.

And on top of all that, there are pirate puns and the author proposed to his girlfriend in the dedication.

I wish I'd had Professor Leeson when I was in college. He clearly knows how to make a topic that could be (usually is) pretty boring. And he avoids making a usually quite interesting topic (pirates) boring.

So how is the pirate life related to economics? Well read the book to find out completely, but the short version is a lot. And when it is over you'll know a lot more about both pirates and economics.

The professor uses a classical model of economics to explain things and I imagine some who hold to some newer economic theories might not like that, but this book is not really for them, it is designed to bring an awesome understanding of economics by using the real world example of piracy.

The author never really diminishes the real crimes show more committed by pirates, but he does avoid harsh judgements. From an economic standpoint it makes sense, but it might feel like the murder, robbery, etc is acceptable.

Well worth the read. show less