Pirates and the invisible hook

Where there is a sea, there are piratesGreek proverb

 The average man will bristle if you say his father was dishonest, but he will brag a little if he discovers that his great-grandfather was a pirate.  Bern Williams

 Merchant and pirate were for a long period one and the same person. Even today mercantile morality is really nothing but a refinement of piratical morality. Friedrich Nietzsche

             Blackbeard, Sir Henry Morgan, Anne Bonny, Black Bart Roberts, and Calico Jack Rackam – these names have become part of our collective consciousness. These pirates come from a different age but the word is also in vogue now. The other day I typed it into the Guardian search engine and got 438 hits just for this year. This is not just about those Somali pirates wreaking havoc in the Horn of Africa. The scandal about Westminster expenses is all down to a pirate disk that the Daily Telegraph acquired. Last April saw the conviction of Fredrik Neij, Gottfrid Svartholm, and Peter Sunde, the men behind Pirate Bay, the world’s most notorious filesharing hub. And finally the worst news of all Hollywood is planning to unleash Pirates of the Caribbean 4 in 2012. Oh, I can’t wait for that one! What can you expect from a film that has its origins in a Disney amusement park ride? Give me the real stories about the pirates.

              As the Greek proverb shows piracy goes back a long way – maybe the second ship that was ever built was built by pirates. Julius Caesar was kidnapped by pirates from Asia Minor as a young man. When the pirates asked for twenty talents, the future dictator was most miffed and suggested that they should actually ask for fifty. He warned them that they would pay for their illegal act. They were captured and Caesar had them crucified. The period we most associate with pirates is The Golden Age of Piracy a period spanning from the 1650s to the 1720s. This is where we get our image of the pirate.

             In his book The Invisible Hook: The Hidden Economics of Pirates, l Peter Leeson looks at pirates as economic actors. They may be operating outside the law but they still respond to economic incentives. They are businessmen who seek to maximise their profits. Violence had to be used in a calculated way. Your victims needed to know that if they resisted they would suffer the consequences but if they surrendered it was important to treat them well to incentivise this behaviour in the future. They preferred to surrender the minute they were approached by a pirate ship, seeing piracy as one of the costs of doing business. If there had been resistance, this would have been more costly for the pirates. A lot of the pirate cruelty shown in the movies did not really happen. Walking the plank seems to have been a myth. If the pirates had wanted to get rid of someone they would have just thrown him overboard.

            Pirates are also interesting terms of their organisational structure. One intriguing paradox is the parallels between our modern democratic constitutional government and in the institutions created by the pirates. Leeson points out that they created self-regulating, democratic societies aboard their ships, complete with checks and balances, more fifty years before the American and French revolutions. They also initiated an early system of workers’ compensation, health care plans, and in some cases they practised racial tolerance and equality. They operated in this way not out of the goodness of their hearts but because they needed to stick together in order to pursue profits. This is what Leeson means by the invisible hook, an obvious allusion to Adam Smith.

            Modern piracy is not really about getting booty – it’s about taking hostages.  Now we face the threat of the Somali pirates. The majority of them used to be fishermen. After the collapse of the Somali government in the 1990s, the coast around Somalia was subject to over-fishing. Some of the fishermen banded together to protect their resource. They armed themselves went to try to stop the over-fishing, making trawlers pay a toll. They soon realised it was a much more lucrative business and inevitably it experienced huge growth. Under maritime law it is illegal to carry weapons so these pirates could get easy prey. It is a hostage-taking business. In general they treat their hostages well – of the 815 people kidnapped last year by the Somali pirates, only four were killed. This is pure economic rationality. It looks like pirates will be around for many years to come.


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