Book review: The Invisible Hook - The hidden economics of pirates, by Peter T Leeson

Peter Leeson leaves his moral compass ashore for these salty tales of honour among thieves.

by Howard Davies
Last Updated: 25 Oct 2010

The Invisible Hook: The hidden economics of pirates
Peter T Leeson
Princeton University Press
£16.95

The dedication page of The Invisible Hook reads: 'Ania, I love you; will you marry me?'. I worry about the semi-colon, but then I have never been in the Lynne Truss class when it comes to punctuation. What it does tell you, though, is that Peter Leeson is a bit of a card. The author's photo, with his wry 'come hither' smile, underlines the point. And his whole approach to the economics of the Jolly Roger has an element of the jolly hockeysticks about it.

The title is a stroke of genius, and whoever at Princeton University Press dreamed it up deserves a gold star. The idea of analysing 17th and 18th-century piracy using the framework of market economics is a witty one too. It would have made a brilliant article. But at (even short) book length, it is a touch forced, and the excess packaging should be unfashionable in these environmentally sensitive times.

The new, pirate-specific material does not stretch very far. So when he details the 'branding' of the most distinguished pirate captains, we get a page or so on the brand values of Mercedes Benz and Honda. When he discusses the racial composition of pirate vessels, we get a couple of pages of homily on the economic irrationality of discrimination in hiring practices.

Yet there is some fun to be had as one passes through the eight pieces of text. (Yes, publisher, I noticed). They are called things like 'Walk the plank', a happy heading for a chapter on the economics of pirate torture, and 'An-arrgh-chy', a not very enlightening essay on the economics of the pirate code.

Leeson's thesis is that one can apply rational-choice theory to the piracy industry. At a time when the economics profession is under the cosh for the shortcomings of its understanding of markets and economic cycles, it's exciting to find someone who argues that the rational-choice framework 'truly is a universal way of understanding human behaviour'. Self-doubt hasn't yet infected the economics department at George Mason University in Washington DC, where Leeson is 'professor for the study of capitalism'.

Leeson maintains that piracy operated according to a logical set of rules and practices. So the ships operated their own version of democracy, and captains who lost the confidence of their crew were summarily removed from office on a show of hands.

He also argues, less convincingly, that a pirate's life was 'orderly and honest'. Setting off on a voyage of looting and pillaging was known as to 'go on the account'. Pirates operated a version of fair-value accounting, and the distribution of the spoils certainly looks much more egalitarian than is usually the case in the private-equity industry at present, which might be the nearest modern equivalent.

Leeson tells us: 'The pirate pay scale was very flat', with the captain receiving only twice as much as the common-or-garden pirate as a proportion of the value of a prize. Blackbeard was much more committed to equal pay for equal work than, say, Blackstone. This may explain why pirate ships were often high-performance outfits, with great congruence between the aims of different crew members.

Leeson paints a surprisingly idyllic picture of piracy at its high-water mark in the 1720s: democratic ships, staffed by volunteers, operating according to the best co-operative principles, with high morale, superior productivity and good social benefits. There was a well-established tariff for paying off injured buccaneers - so much for a right arm, so much for a left, and rather less for an eye.

As a rational-choice theorist, Leeson sails an ethics-free ocean, so the minor inconveniences suffered by merchantmen going about their lawful business are not his concern. Royal Navy actions that severely constrained piracy thereafter are presented almost as a matter of regret. Naval captains are cast as tedious school prefects getting in the way of the boys' fun.

In his brief description of the modern-day Blackbeards operating off Somalia, Leeson accords them neutral treatment, even offering them some credit for adopting a 'social insurance system reminiscent of that of their forefathers: if a pirate dies on the job, his family receives $15,000'. He notes that they have produced a written manual with rules on how crew members should treat prisoners. Perhaps the corsairs who killed their French hostage this April had left their copy in port that day.

So the joke stretches so far, and no further. Halfway through The Invisible Hook, ho-ho-ho gives way to ho-hum, and then to hunh?

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