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35 of 38 people found the following review helpful
5.0 out of 5 stars Peter Leeson's Invisible Hook
What begins as a simple story of Pirates soon turns into an unique journey through Economics and History. Peter Leeson, who is an Economist, uses methodological individualism to analyze the behavior of Pirates as simple profit seekers. This allows Leeson to give a different view of the Pirates then most of us are used to. He also introduces us to many unknown facts about...
Published on April 21, 2009 by Justin E. Williams

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7 of 8 people found the following review helpful
3.0 out of 5 stars Fascinating, but strays a bit from the topic at times.
This book examines the behavior of 18th-century pirates through an economic lens, demonstrating how many of their seemingly bizarre behaviors were actually quite logical given the unusual conditions they worked under. It also illustrates how pirates pioneered concepts like democracy and racial integration, not for noble reasons, but because they made economic sense...
Published on January 26, 2010 by David Brodbeck


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35 of 38 people found the following review helpful
5.0 out of 5 stars Peter Leeson's Invisible Hook, April 21, 2009
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What begins as a simple story of Pirates soon turns into an unique journey through Economics and History. Peter Leeson, who is an Economist, uses methodological individualism to analyze the behavior of Pirates as simple profit seekers. This allows Leeson to give a different view of the Pirates then most of us are used to. He also introduces us to many unknown facts about Pirates, who are a common cultural obsession. The secret to his book is the fact that he teaches us both Economics and History without you even realizing it. Books like More Sex is Safer Sex by Steve Landsburg and Freakonomics by Steven Levitt teach you an unconventional way to look at problems, but often not through a classic historical case. This book will do both without you hardly noticing.

The Invisible Hook is not written in a way that is hard for non-Economists to understand. It is written just for that type of audience. This book now ranks top on my list of books to recommend those as an introductory lesson into the economic way of thinking. At the same time, if you do study Economics you will not be bored as the historical mechanism takes over. For example, you may know what signaling is but the economics student likely does not know exactly how the Pirates used the flag, the Jolly Roger, to signal to other ships.

One of the most interesting parts of the book is the very last chapter. Leeson sets up a class in Pirate Management with the professor Blackbeard. Without giving to much away, he goes through and restates points in the book with modern literature. He also provides a very good reading list for those who want to read further into Economics in that chapter. This is the most unique way I have ever seen anyone end a book. It allows Leeson to review the points and restate them in a new light without putting the reader to sleep, as I am famous for skimming through conclusions.

I would highly recommend this book to anyone who wants to learn anything about Pirates or Economics. It is probably likely that most of Leeson's readers will buy the book for the former, but the reader will soon find himself interested in the latter. Dr. Leeson is a rising star in the field of Economics and this is a good way for him to start.
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16 of 17 people found the following review helpful
5.0 out of 5 stars Perfectly delicious piratical pop econ, May 5, 2009
By 
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 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.
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9 of 10 people found the following review helpful
5.0 out of 5 stars Adam Smith? Meet Blackbeard, April 29, 2009
Economist Peter Leeson has written an excellent new book on the economics of pirates and pirate governance, and it is a must read for anyone interested in the history of pirates.

Leeson wades through original source material as well as pirate histories to draw surprising insights into the pirate life, using economic analysis to explain their tactics as well as the reasoning behind the peculiar structure of pirate articles and codes. Many with deep knowledge of pirates won't find a lot truly new in the book. Rather, it's the way Lesson connects the dots that makes this book stand out. Indeed, with citations to our own Federalist papers, Leeson does an excellent job of showing how the choices pirate communities made about their captains and on-board ship behavior foreshadowed many of the basic principles that underly the U.S. version of Constitutional government and its unique system of checks and balances on power. He also provides an excellent and crisp analysis of the calculated use of terror by pirates to achieve their objectives.

The book is eminently readable compared to most books by economists. No need to worry about math, supply and demand curves, or jargon. Leeson also keeps the pace of the book flowing through solid organization and an admirable ability to avoid straying off theme or subject. But, be forewarned. The Invisible Hook is targeted toward adults. The author is thorough and takes his subject seriously.

Professors and teachers: This would be an excellent supplemental text for courses on political economy, public choice economics, public policy, economic history, or criminal justice.

This review was written by S.R. Staley, author of [...]
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7 of 8 people found the following review helpful
3.0 out of 5 stars Fascinating, but strays a bit from the topic at times., January 26, 2010
This book examines the behavior of 18th-century pirates through an economic lens, demonstrating how many of their seemingly bizarre behaviors were actually quite logical given the unusual conditions they worked under. It also illustrates how pirates pioneered concepts like democracy and racial integration, not for noble reasons, but because they made economic sense.

It's a fascinating read, although it feels a bit padded. Each chapter ends with a summary, and then much of this material is summarized yet again in chapter 8, a syllabus for an imaginary course on pirate management.

Chapter 8 is also where the author awkwardly inserts his own political views, using the pirates' use of self-regulation to argue that corporations should be allowed to self-regulate and that the ADA should be abolished. It's a bit of a non sequitur, and I kept thinking, "I get it. You're a libertarian. Can we get back to talking about pirates, now?" It also seems a bit odd to use the example of people who stole from the populace -- until eventually restrained by the government -- to argue that the government should not exercise restraint on corporations. Surely they have the same theft-inducing incentives?

In spite of these flaws, it's a fascinating read and brings a lot of insight into why pirates operated the way they did.
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7 of 8 people found the following review helpful
5.0 out of 5 stars High-quality scholarship combined with highly entertaining prose!!, May 25, 2009
Who says economics can't be fun? Not Peter Leeson, author of The Invisible Hook: The Hidden Economics of Pirates. The Invisible Hook is a rare example of high-quality economic scholarship combined with highly entertaining prose.

At the core of the book is the application of the economic way of thinking to 18th century piracy. In extending the rational choice framework to piracy, Leeson parses through many popular stereotypes of pirates and shows how they are either inaccurate or incomplete. Readers will learn how pirates, contrary to the common view that they were violent brutes, only turned to violence as a last resort. Leeson also shows how pirate ships were organized democratically including constitutions complete with checks and balances to prevent abuse of power. Other topics covered include the economics of the Jolly Roger, the economics of pirate torture, and the economics of pirate conscription and tolerance. Leeson concludes by extending the lessons of his analysis to modern day management. This concluding chapter is but one example of the creativity found throughout The Invisible Hook. The chapter is structured as a course syllabus from Blackbeard including the main lessons from the book's analysis as well as suggestions for further reading.

It is easy to recommend this book for all readers because there is something for everyone. One of the greatest strengths of The Invisible Hook is that Leeson is able to communicate complex economic concepts in a manner that is understandable to economists and non-economists alike. Social scientists and historians will enjoy the application of economics to pirates and pirate history. Non-specialists will gain insight into the universal applicability of the economic way of thinking while enjoying Leeson's wit and skill of storytelling. I highly recommend this book.
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4 of 4 people found the following review helpful
4.0 out of 5 stars The Economics of Piracy---and Less, June 7, 2010
By 
Herbert Gintis (Northampton, MA USA) - See all my reviews
This is a completely captivating account of the "great age of piracy" (1716-1726) and surrounding years, by an economist who loved pirates as a boy, has had an economics supply and demand diagram tattooed to his bicep since he was 17, and who proposes to his girl friend Ania in the dedication, declaring that if she turns him down, he will join the legion of pirates about whom he writes.

Leeson correctly notes that most historians do not know economics and hence cannot deal with important parts of the piracy phenomenon. Throughout the book he stresses that the supply of pirates is a function of the wage and level of demand for "legitimate" seamen, which is itself a function of the level of inter-country hostilities. He notes that the penchant of pirates for torturing their captives was limited to those who refused to divulge the whereabouts of the booty or who resisted capture. Torture was thus just a reputation-making device that lowered the cost of doing business for pirates. Leeson also stresses that pirates had much better working conditions than legitimate seamen, who were subject to the arbitrary and often cruel and bitterly selfish authority of the ship's captain.

In one important respect, Leeson is putting one over on the innocent reader. He suggests that the democratic structure of the pirate ship can be understood in terms of standard economic theory of the rational self-interested actor. A democratic ship was a preferred work environment for pirates, so they instituted political democracy (electing and recalling pirate captains) because they controlled the organization of production on the pirate ship. This may well be true, but this is hardly what we learn in standard economic theory. First, why would a rational self-interest pirate bother to attend meetings, listen to speeches, and vote for a captain? Assuming one vote cannot change the outcome of the election with more than infinitesimal probability, voting is an altruistic act, not a self-interested act.

Now of course perhaps it could be argued that pirate ships only have a maximum of 500 pirates, so the probabilities, costs, and benefits indicate that democratic participation is a self-regarding act of a rational pirate. But Leeson says nothing about this at all, leaving it to the unsophistication of the reader not to notice the problem.

Moreover, standard economic theory of the firm suggests that informational and agency issues lead to a set of owners virtually disjoint from the set of producers; i.e., since Alchian and Demsetz at least, firms have managers hired by owners, and managers hire and control workers. The idea of democratic worker control flowing from the standard theory is bizarre, to say the least. Leeson does address the principal-agent problem, saying "On the pirate ship, then, the principals were the agents." (p. 41) But this quite misleading. In the principal agent model there is a single principal, not a group of principals. The model does not work at all unless the principals, supposing they are a plurality, can somehow be aggregated into a single decision-maker. Moreover, the fact that the principals are the agents in no way solves the principal-agent problem---each agent still has an incentive to shirk, indeed almost as great an incentive as when there is a single, separate, owner of the ship serving as agent.

I conclude that there is still a lot more to be said about the organization of piracy than is touched on in this book. But Leeson has given us an exciting start.
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4 of 4 people found the following review helpful
5.0 out of 5 stars Surprising and entertaining, May 5, 2009
By 
This is an interesting history of early eighteenth century pirates with an economist's insights into what influenced them to have institutions such as democracy and to be in many ways pleasanter to serve on than commercial or military ships of the same time.

He has a fairly open bias toward portraying pirates favorably. I sometimes wondered whether there's enough evidence to support his sometimes surprising conclusions. He makes plausible claims to be getting his historical information from the relevant experts, but without careful checking I can't tell whether he has slanted his story to make it more entertaining.

He describes some good reasons why "workers' democracy" doesn't work as well in modern corporations as it did on pirate ships. But he is too willing to accept the observed absence of corporate democracy as evidence of its inefficiency. I can easily imagine that managers grab more power than is good for the company, and that principal-agent problems let them get away with it (pirates' relations with the law made it easier for them to remedy this via mutiny). Also, he overstates the claim that "workers don't have the finances required" for worker ownership of corporations. There are plenty of companies with low enough capital requirements for this to be unimportant. The big difference I see between modern corporations and pirate ships is that pirates had strong reasons to stick together until their venture got enough loot for them to all retire at once and divide the results. Employees in modern corporations want much more flexibility in when they leave the company, which creates complications for workers' democracy or for the employee who wants to leave however it is handled.

One analysis whose absence disappointed me was whether the long-term benefits to joining a pirate ship were better than those of commercial or military ships. What fraction of pirates retired wealthy? How many of them were fooled by a temporary shortage of law enforcement into adopting a career with an abnormally high death rate once governments increased law enforcement?

He occasionally digresses into standard economics rants that have no relevance to pirates, such as the two pages on lobbyist rent-seeking.
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11 of 14 people found the following review helpful
4.0 out of 5 stars almost perfect!, July 26, 2009
By 
Many pirate books seem to recycle the same historical facts, or to make intriguing, but poorly supported claims about sea banditry. Peter Leeson avoids doing either. This book broadens our understanding of pirates in innovative and convincing ways. The many surprising insights into pirate life make this book well worth its cover price.

For example, the book explores the political checks and balances that existed aboard pirate ships. Leeson shows how pirate ships were democracies that prevented tyranny by dividing power among a ship's officers. The US Constitution would come suspiciously close to emulating this system 80 years later. While Leeson doesn't make the argument, its intriguing to wonder whether American Democracy was shaped by the example of successful buccaneers.

The book also sheds light on many pirate paradoxes. I've always wondered why Pirates created such sadistic reputations. To me, it seemed this would make merchant crews fight harder to avoid capture. After you read the book, you'll understand why that's not true (it involves the Jolly Roger flag system). You'll also understand why the crew of the Black Pearl would not have needed to mutiny against Captain Jack Sparrow, and be able to spot other inaccuracies in pirate related pop culture.

I would give this book five stars except for one annoyance: in the last chapter, Leeson completely stops explaining pirates and begins preaching laissez faire capitalism. Greed has lead to significant advances in material luxury. But it has also created a system that erodes community, increases inequality, and depletes natural resources. Leeson's argument against government regulation is the most strange: Since pirates regulated smoking near gunpowder to increase their profits, businesses should be left to self regulate as well. Surely a business will self regulate when profits are involved, but why would it tackle things like fair treatment for people with disabilities (Leeson's example)? Pirate crews addressed this issue because they were worker democracies, but Leeson dismisses *that* concept in chapter 8 section 2.

The first seven chapters encourage a probing and analytical mindset. Its difficult to reverse course and accept a sermon in the final pages. The Invisible Hook would be much better if it ended by examining the role of violence within economies. How did Spanish galleons get loaded with gold in the first place? Who did the pirates emulate when they made their own wars as "free princes"? The right to take by force seems at the heart of piracy ...and legitimate government. This similarity is alluded to in the epigraph by Lord Byron, which got my hopes up. It seemed anti-climatic not to explore it.

I heartily recommend this book; just be prepared to fend off an intellectual boarding in the final pages.
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5 of 6 people found the following review helpful
5.0 out of 5 stars Pirates and Economics!, April 28, 2009
This is a great book which is both entertaining and informative. Even if you are not interested in economics, this is still a very readable and interesting book. And if you are into economics this books is an unique window into the phenomenon of spontaneous order, and creation of rules of law without intervention (including govt).

Watch out, here comes the next big, Economist!
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5 of 6 people found the following review helpful
5.0 out of 5 stars Great Fun!, April 28, 2009
By 
This is a phenomenal book that is as fun as any pirate story but with some serious ideas behind it. Great read.
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The Invisible Hook: The Hidden Economics of Pirates
The Invisible Hook: The Hidden Economics of Pirates by Peter T. Leeson (Paperback - July 25, 2011)
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