Book review: The invisible hook

Sina Ataherian reviews 'The Invisible Hook: The Hidden Economics of Pirates.'
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The infamous eighteenth century pirate, Captain "Black Sam" Bellamy is rumoured once to have once said, "I scorn to do any one a mischief, when it is not for my advantage." His crew even referred to themselves as Robin Hood's Men. In The Invisible Hook, James Leeson, Professor for the Study of Capitalism at George Mason University, explores this idea that even pirates are driven by rational self-interest.

Professor Leeson belongs to the Austrian School of economics, a tradition that emphasises entrepreneurial decision making as the means through which people increase their own prosperity, and in the process, that of their society. This principle is applied to pirates, whose key feature is that, as criminals, they cannot rely on the state to provide them with a social structure. Instead they must create their own. This book shows how this led to pioneering experiments with modern liberal values, such egalitarian democracy.

The differences between pirate and merchant models of on-board governance were a result of economic rather than moral principles. Operating outside of the law, pirates were free to develop the most effective power structures to ensure maximum efficiency in their criminality. Leeson noted that the success of piracy during its Golden Age, in the late seventeenth and early eighteenth centuries, was partly due to the evolution of these structures. They encouraged co-operation and honesty amongst pirates - values often lacking on the merchant ships that they raided as well as the navies that pursued them.

According to Leeson, pirates, like any other society, had to confront the paradox of power. On the one hand, power must ultimately be vested in a small number of individuals. Otherwise, each pirate could act in a way that would benefit them personally but not the ship as a whole. Without a captain, no pirate would risk their life on a raid but may still demand a share of the loot. Leeson shows that in trying to figure out the right balance of powers, pirates were improbable pioneers of modern democracy. They experimented with collective decision making, elections and the separation of powers. Captains and quartermasters were often elected by popular vote of the whole crew. The former acted as commander during raids and naval skirmishes, whilst the latter guaranteed equal division of booty. This was a full century before the American Revolution.

Pirates lived according to codes, which (mis)spelled out exactly what was expected of them. These codes were collectively decided and had to be universally approved before each voyage. They defined acceptable standards of behaviour and the prescribed punishments for any deviation. They also included insurance policies for members of the crew in case of injury. Lesson seeks to correct the popular view of pirates as "sadistic pacifists, womanising homosexuals and treasure-lusting socialists." He does not condone their criminality, instead he presents a balanced view of piratical society.

Pirates understood the dangers of taking crew members against their will. The crew needed to be suited to high-risk, high-return conditions. To ensure that everyone shared this vital mindset, only volunteers were taken. Thus pirates shunned the then lucrative slave trade as a source of labour. The popular myth that most pirates were forced into the business was purely a product of captured pirates pleading mitigating circumstances before the law.

Surprisingly, piratical society demonstrates the natural bias of free markets against violence. The cost of an actual battle for pirates was huge - repairing the ship, not being able to complete a voyage, and possibly sinking. They preferred to fly their fearsome skull and crossbones flag and hope that their reputation preceded them. Usually, they were in luck and merchant ships surrendered without a fight. The need to preserve this reputation also explains the popular image of them as insane and extremely violent. They did not pick fights, but when forced into one, made use of the captives. Forms of torture included live-cooking and forcing captives to eat their own facial features. At the same time, surrender was incentivised with mercy.

This book has two great features. In common with Stephen Dubner and Steven Levitt's Freakonomics, it uses economic insights to analyse behaviour previously seen as the preserve of other disciplines. But it also provides an enjoyable account of everyday life on the high sees.

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