The Invisible Hook: The Hidden Economics of Pirates Kindle Edition

Great lessons in history, leadership, and organizing a crew to function effectively, while not following the established laws of the times.
The themes are ageless, allow people to work out solutions locally, with the human resources they have, and while outside the "box of the day" it works. From pirates to Hans Solo, people want to be free to prosper. While pirate methods create more harm to enterprise than good you have to admire their innovations, and their acceptance of people from all backgrounds was noteworthy.
An exploration of the good side of a bad business.

As any reader of GURPS: Swashbucklers knows, the buccaneers of the golden age of piracy were a remarkably enlightened bunch, establishing on their ships a system of egalitarian, democratic civil administration.

Oh, you haven't read GURPS: Swashbucklers?

Well never mind that. What's important to know is that, despite their reputation as blood-thirsty cut-throat savages, life aboard a pirate ship in the Carribean was a damn sight more free and civilized than serving aboard a navy ship or merchantman in the same era.

Pirates operated their ships according to "articles of agreement," deliberated by and signed off by each member of the crew. These "constitutions" governed all aspects of shipboard life and how major decisions concerning the enterprise would be conducted. Pirate captains were elected by their crews and could be removed at any time for any reason. What's more, authority was not centered in the position of captain as it was in the navy or merchant service, but rather power was divided between several officials, probably the most important being the quarter-master (who divided the loot!)

Why did these pirate crews exhibit such modern tendencies toward democracy, separation of powers and equality - many years before actual governments did?

Leeson answers these questions by arguing that there are essentially economic reasons for these behaviours. Pirates were not any more enlightened than anyone else of their time. They were handicapped by all the same human flaws and foibles that everyone else was. What was different was their situation which allowed for different economic calculations.

For example, Leeson argues that the decentralized, egalitarian administration of pirate vessels was due to the "agency problem" in economics. Essentially, because merchant vessels were owned by an "absentee landlord" who was not on site, the ship owner had to rely on the services of an agent who could be relied on to be loyal, as opposed to diverse agents (crew) who would rob him blind. This required the loyal agent to be granted dictatorial power to keep the others in line.

Pirate crews, on the other hand, owned their own vessels. Thus, one pirate stealing would be stealing from his fellow shipmates. Therefore, Leeson argues, a decentralized administration could be much more effective as, essentially the pirates would police each other. This decentralization then further increased "pirate happiness" by reducing the ability of an authority figure to prey on his crew.

The Invisible Hook is a fun an interesting read. Both for its delving into a history not widely known beyond Jack Sparrow films, and for providing an interesting economic explanation for the behaviours of the participants which can be scaled up to provide lessons for society as a whole.

This libertarian analysis of pirates (mainly their economics) is good, but would have been better at half the length. Pirate "Articles" (or constitutions) are a fascinating subject, as are pirate cruelties and where they got their ships - all discussed here. There is, however, a tendency to repeat with added or shifted emphasis; I found the book hard to get through for that reason.

(On a side note, what's shown here is that even very libertarian criminals "against all flags" have to fly one... and underraise a government, limited or not. Doctrinaire libertarians of the unarchist persuasion, take note.)

Peter T. Leeson spoke at my college when I was a freshman (six years ago now) and I went for an extra credit in my gen ed econ class. His talk was so memorable that even six years later, when I needed to research piracy and wanted a unique angle, I remembered him and purchased his book. It didn't disappoint!

THE INVISIBLE HOOK provides a very interesting look into the life of pirates, examining the role of economics in everything from self-governance to torture. While maintaining a conversational, often amusing tone, Leeson does a fabulous job of blending the (potentially dry) foundations of economics with the fascinating life and customs of pirates. Definitely would recommend to pirate lovers, and/or reluctant economics students!

This has easily become one of my all time favorite books. I have a lot of respect for the way in which Leeson approaches the intellectual world. Like all economists, he understands the driving rationality and self interest of human action. However he doesn't hide this approach away in the ivory tower with confusing charts and pointless jargon about macro concepts. Instead Leeson takes these intellectual insights and applies them to things much more interesting. He explores the day to day incentives that pirates faced. He takes seriously the reasons for why they did the things hey did. Awesome stuff! It's both hyper rational and romantic. I recommend this book to anyone interested in economics, pirates, history or just anyone who wants to expand the way they look at the world.