The Invisible Hook by Peter T. Leeson

The Invisible HookThe popularity of pirate histories and popular economics has culminated in The Invisible Hook: The Hidden Economics of Pirates, by Peter T. Leeson. Take a rational choice framework, mix with the golden age of Anglo-American piracy, and shake well (don’t forget to add a great cover). 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 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. Without economics, pirates, for example, are a veritable ball of contradictions. They’re sadistic pacifists; womanizing homosexuals; treasure-lusting socialists; and madmen who outwitted the authorities. They’re stealthy outlaws who loudly announced their presence with flags of skulls and bones. They’re libertarians who conscripted nearly all their members, democrats with dictatorial captains, and lawless anarchists who lived by a strict code of rules. They’re torturous terrorists who command honest men’s adoration.

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.

The presentation is a bit unusual but very helpful. Each of the first seven chapters closes with a summary of the main points. This works especially well since those points often mirror or complement each other and the recap puts things in perspective. And the final chapter presents a further perspective on everything that’s come before. “The Secrets of Pirate Management” lays out a mock syllabus from “Follow the Booty” to “Trademark Yer Terror” applying the economic lessons of pirates to more legitimate situations, and finishes the volume off with a wider view of things.

Thanks to Princeton University Press for a review copy of this book.