Blackbeard Economics

The surprising, and surprisingly tame, self-organization of pirates.

The Invisible Hook: The Hidden Economics of Pirates, by Peter T. Leeson, New Jersey: Princeton University Press, 296 pages, $24.95

Pirates are alluring to novelists and moviemakers because we know they really existed but don’t know enough hard facts to get in the way of a good story. Contemporaneous newspaper accounts and other tales from the early 18th century are colorful but unreliable, tending toward propaganda. They report that these appalling yet appealing “Hell-hounds” marauded for the Jolly Roger, enslaved passing sailors, and tortured the innocent for fun. “Danger lurked in their very Smiles,” one pirate chronicler reported. Pirates were “violators of all Laws, Humane and Divine.”

Portraying the freebooters in the worst possible light worked to the advantage of everyone concerned. For governments, crusading against the outlaws who robbed their merchants and treasury ships was a way to keep public opinion firmly on the side of the state. Practicing pirates, meanwhile, were happy to be depicted as violent and unpredictable outlaws, as this encouraged their prey to surrender and cooperate. In fact, the marauders went to great lengths to ensure that their reputation as heartless ship wreckers and torturers remained intact. The famous Blackbeard, for instance, used to stick sulfur fuses in his great, bushy beard and light them on fire before battles to create a general sense of the demonic. He also occasionally killed his pals without warning, just to keep the fear alive.

But a pirate’s life had less publicized qualities as well: Ships were known among sailors for their relatively decent living conditions, profitsharing opportunities, democratic practices, and racially integrated crews. Life “on the account,” as pirating was known, was often far more civilized than legitimate seamanship.

So how can these two images be reconciled?

Bloodthirsty buccaneers and their progressive alter egos both want the same thing: booty. Cold, hard doubloons drove pirates and their persecutors alike. In The Invisible Hook, George Mason University economist Peter T. Leeson digs into the dollars and cents of piracy. He urges us to see pirates as economic actors, their behavior shaped by incentives, just like the rest of us. Once you’re in an economic state of mind, you can begin to understand actions such as lighting one’s beard on fire, voting, being decent to black people, and torturing captives “for fun”—all equally nutty behaviors to the average 18th-century observer. When Leeson is done guiding you through the pirate world, life on a rogue ship starts to look less like a Carnival cruise with cutlasses and cannons and more like an ongoing condo association meeting at sea.

Robbery on the high seas has existed since ancient times, but the seafaring pirates of popular imagination first arose in the 16th century as agents of the state. These privateers, as they were known, were charged with raiding the ships of enemies—or, more accurately, anyone who couldn’t immediately prove to the pirates that he was a friend. Sir Henry Morgan (yes, the real-life Captain Morgan, for those of you doing rum shots at home) was a big name in 17thcentury state-sponsored piracy. The Welsh-born brute sacked Panama and burned the richest city in New Spain to the ground. For his accomplishments, he was knighted and made lieutenant governor of Jamaica.

Once the War of the Spanish Succession, and with it many opportunities for legally approved pillage, came to an end in 1714, many plunderers realized they preferred piracy to the life of an honest seaman. Others who might rather have stayed on the up and up were unable to find work as the world’s navies contracted.

So the great age of piracy began, and it lasted about a decade. During this period, between 1,000 and 2,000 pirates terrorized the seas at any given time. That may not seem like many, but keep in mind that the entire population of the North American colonies back then was only about 150,000. Navies and merchant sailors outnumbered pirates, with 13,000 men in the British Navy alone, but pirates had the better gig.

Leeson begins with a look inside the piratical pocketbook. In peaceful years, annual pay for legit sailors was £25, equivalent to around $4,000 today. A big haul for a pirate crew, on the other hand, might bring in between £300 and £1,000 per man for a few months’ work. If legally sanctioned sailor pay was bad, the working conditions were worse. Captains on merchant ships held absolute power over their crews, and they regularly ordered floggings, revoked pay or rations, or tied men to the mast. Sailors could sue when they got home, and they occasionally won, but that’s cold comfort when you’re six months at sea, stripes from the lash stinging your back, and ordered to forfeit your rum ration.

This commercial setup, Leeson argues, was the result of a bad incentive structure, not a surfeit of sadistic captains. A ship is a big investment. Once its owner sends it out to sea, lots of bad things can happen. Weather. Navigational errors. Even pirates. If you’re just a schmo sailor on the payroll, it makes sense to slack off when no one is looking and bail out as soon as things get rough. Why not steal from the cargo hold? Why not stay up late drinking and gambling? If pirates attack, of course you will hand over the cargo and beg them to spare your life. It’s not like the slaves, spices, or gold were yours to begin with. Indeed, pirates often compensated the conquered crew so that the sailors would be none the worse for having surrendered, even if their masters were out a significant sum. Captains, who often held a small ownership stake in the ship or were family to the merchant owners, had every incentive to rule by force over their less invested crew.

Pirates, by contrast, were outlaws, with no recognized authorities to settle disputes. So they invented their own ways of doing business. Decades before the American Founders got their act together, pirates were drafting documents full of voting rights, juries, checks and balances, rules for property allocation, even methods for impeachment. The buccaneers may have been less concerned with natural rights than with survival and claiming their fair share of booty, but the end result feels surprisingly like the kind of self-governance we expect from enlightened modern republics. Perhaps even better, since the deal was truly voluntary (for the pirates if not their prey). No one is born a pirate, and everyone has to swear into the contract on each venture.

In his 1724 General History of the Pyrates, Charles Johnson, a probable one-time pirate about whom almost nothing is known, described Capt. Bartholomew Roberts like this: “How indeed Roberts could think that an Oath would be obligatory, where Defiance had been given to the Laws of God and Man, I can’t tell.” Johnson then answers his own question: “He thought their greatest Security lay in this, That it was every one’s Interest to observe them if they were minded to keep up so abominable a Combination.”

So it was that Roberts’ men lived under a kind of constitution, a contract for behavior with rules for the political and the personal all spelled out (albeit with pretty poor spelling). The guidelines were surprisingly tame: Lights out by 8 p.m. No drinking below decks after bedtime. No gambling. No smoking. No brawling. Many a modern American high school student lives a wilder life than pirates did in their heyday.

Yet the outlaw existence between raids wasn’t all wholesome and smoke-free. Going on the account meant agreeing to some unpleasant terms as well. Punishments were harsh on the high seas: Holding back more than a dollar’s worth of treasure from your pirate brethren could result in marooning, “a Barbarous Custom of putting the Offender on Shore, on some desolate or uninhabited Cape or Island,” wrote Johnson, “with a Gun, a few Shot, a Bottle of Water, and a Bottle of Powder, to subsist with, or starve.” Quarrels were to be settled not with fists on deck but with swords or pistols on shore. To bring a lady on board in disguise was punishable by death. Failing to chip in with the fighting could also result in death or marooning.

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  • ||

    What? No Yellowbeard photos?

  • spambot||

    There are no Austrian pirates!

  • Face the Muzak||

    Why does reason have such a hard-on for pirates? I mean, who really gives a fuck?

  • proud libitard||

    yeah, we know Ninjas are WAAAAAAAAY cooler...There whole purpose is to flip out and kill people!

  • proud libitard||

    um, their even....

  • Alan Vanneman||

    "In peaceful years, annual pay for legit sailors was £25, equivalent to around $4,000 today. A big haul for a pirate crew, on the other hand, might bring in between £300 and £1,000 per man for a few months' work. If legally sanctioned sailor pay was bad, the working conditions were worse. Captains on merchant ships held absolute power over their crews, and they regularly ordered floggings, revoked pay or rations, or tied men to the mast. Sailors could sue when they got home, and they occasionally won, but that's cold comfort when you're six months at sea, stripes from the lash stinging your back, and ordered to forfeit your rum ration."

    Well, that's capitalism, right? The free market system. You gotta problem wid dat?

  • ||

    People willing to kill and rob have always been able to make above-market compensation.

    This is news?

  • ||

    The point is not that pirate society is a free society. That's just silly. The point is that even group of violent anarchistic thugs will spontaneous develop a society that operates on the same economic laws that we do. As such, pirates are a useful area of economic inquiry that can provide lessons for today.

  • Jeff P||

    I am more concerned with the sanctioned emergency medical procedures of pirates than with their economics. CPR usually consists of 15 men on a dead man's chest...

  • Gunter||

    "As such, pirates are a useful area of economic inquiry that can provide lessons for today."

    But at Reason, it's EVERY DAY!

  • ||

    The point is that even group of violent anarchistic thugs will spontaneous develop a society that operates on the same economic laws that we do.

    Well, except the laws against killing people and stealing their stuff as an allowable form of economic activity, of course.

  • ||

    I said *economic* laws. It's so sad no one can read anymore.

  • Gunter||

    "The point is that even group of violent anarchistic thugs will spontaneous develop a society that operates on the same economic laws that we do."

    So what you're saying is that our economic laws are tantamount to piracy?

  • proud libitard||

    Good one Jeff P

    but I'd also be worried about my domecile because they would come and...wait for it...Shiver me timbers!

    What would I do then?

  • ||

    My government(US Federal and State) kills people on a daily basis and takes my stuff(taxes). Why is it OK for them but not for pirates.

  • jg6||

    "I am more concerned with the sanctioned emergency medical procedures of pirates than with their economics. CPR usually consists of 15 men on a dead man's chest..."

    . . .and, if the condemned ate a hearty meal, he would give them the old heave-ho . . ?

  • ||

    It is my understanding that these "pirate Codes" were not hard and fast rules. They were more like guidelines.

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