Peter Leeson’s book The Invisible Hook: The Hidden Economics of Pirates explores yet another fascinating account of how governance is possible under anarchy. Leeson distinguishes between the invisible hand (the “hidden order” present in metaphorical market anarchy) and the invisible hook (the “hidden order” in the literal anarchy of pirate societies). The main argument being that early 18th century pirates’ own self-interest often led them to discover creative ways of achieving cooperation despite the inability to rely on formal government institutions to settle their disputes or to provide rules or protection (given that pirates were, almost by definition, outlaws). Interestingly, we find that the informal governance institutions of pirate societies, in many ways, would be what we might consider to be, well, progressive.

To be sure, pirates were bad dudes. They certainly stole for a living, sometimes resorted to murder, conscription, torture and slave ownership. But, as Leeson points out, “[through] the necessity of self-interest, disorderly, disagreeable, and violent delinquents managed to maintain surprisingly orderly, cooperative, and peaceful societies aboard their ships.” 

System of governance

Pirates lived by a strict code of rules called the “articles of agreement” (or “pirate code”) which governed their behavior and served as a constitution for their floating societies. This “pirate code” served as a public good to solve the free-rider problem that pirates faced as each individual’s best interest may have been served by slacking on the job while pretending to put forth their best effort. 

Although pirate constitutions varied from crew to crew, Leeson notes, the substance was usually the same. 

Pirates made provisions for social welfare in their constitutions as well. Payments of various amounts were made to pirates depending on the type of injury or limb lost in battle. 

The governance of these floating sea bandit societies also had a strict rule of law – with captains being “legal” equals to crew members. Crews also maintained the “unrestricted right to depose any captain for any reason.” As a check against captain predation, captains only acquired power during battle; during peacetime, the quartermaster settled disputes, administered discipline, and the like. 

Leeson contrasts this relative egalitarianism to merchant ships, in which captain predation was a major problem due to a very different incentive structure. 

Pay scales in pirate societies were also relatively flat. Captains and quartermasters, for example, may have been able to gain a share and a half or two per every share of ordinary crew members, while on merchant ships, the pay of a captain and quartermaster was four or five-fold that of their crews. 

The piratical system of governance was, what we would refer to as constitutional democracy, “[predating] constitutional democracy in France, Spain, the United States, and arguably even England.” 

One might be forgiven for concluding that a historical pirate captain such as Blackbeard might have designed such a system. But one would be wrong for thinking so. As Leeson puts it:

“…to the extent that [the ‘pirate code’] existed as a professionwide body of rules, [it] emerged from piratical interactions and information sharing, not from a pirate king who centrally designed and imposed a common code on all current and future sea bandits.” 

Relative tolerance

Another notable forward-thinking factor of pirate life was the relative treatment that blacks received on pirate ships as compared with merchant and naval ships during that time. Blacks were often offered equal rights as white crew members and were more numerous than their merchant and naval counterparts. (Among merchant ships, blacks were predominantly slaves). 

To understand the historical context, remember that Leeson’s coverage of the golden age of piracy focuses on the first three decades of the 1700s. As a bit of perspective, slavery remained legal in England until 1772 and in British colonies until 1833. 

Some pirates did indeed themselves own black slaves. So, these “bandits of the sea” were by no means particularly enlightened human beings. Quite the opposite. They had prejudices too. But to the extent that pirates demonstrated a relative bit of tolerance, they did so because “they cared more about gold and silver than they cared about black and white.” 

To emphasize the point about pirate tolerance having more to do with cost-benefit considerations than the kindness of a pirate’s heart, consider that 1719 marked the year that the British government’s war on piracy came into full swing. The probability of a pirate being tried and convicted for piracy increased significantly hereafter. Thus, knowing that a slave may be more likely to testify against pirates in court, Leeson argues, pirates became more inclined to extend an invitation to blacks to join their ranks as fellow, free pirates after 1719. Those that were offered such an invitation “had equal voting right in the pirates’ democracy and likely received an equal share of the pirates’ plunder.”

As for another area of social tolerance, Leeson cites historian B.R. Burg who argues that pirates were “a community of homosexuals.” There were, of course, married pirates (to women) and those that pursued prostitutes. In fact, women were usually not allowed aboard pirate ships to avoid sexual distractions that might interfere with successful pirating. 

Although Leeson writes that he thinks that Burg may be overstating the extent of homosexuality among pirate crews, it is certainly reasonable to conclude that “homosexuality wasn’t confined to landlubbers,” and especially if pirate crews did indeed have relatively high representation in this area, that we might find more social tolerance here as well. 

“Enlightened notions about equality or the universal rights of man didn’t produce pirate tolerance, however. Instead, simple cost-benefit considerations driven by the compensation structure of pirates’ criminal employment were responsible for this tolerance.”

Harm reduction

Leeson argues that pirates used their flags (including the notorious Jolly Roger) to signal their willingness to murder and torture crews of target ships who resisted with arms or who hid booty or threw it overboard to avoid pirate confiscation. Such flags were highly effective as targeted ship crews often put up no resistance whatsoever and allowed booty to be taken with ease. The Jolly Roger and its variants served as a credible threat due to the reputation that pirates had built for themselves by indeed committing sadistic forms of torture on crews and captains that fought back, hid booty, or threw it overboard. 

The main objective of pirates, however, was to profit through theft – not to “[blast] their prizes to pieces… [or to brutalize] their captives.” Ironically, “pirates’ ignoble motives—self-interested greed—softened the harms pirate victims suffered.” 

Conscription avoidance

One might expect a bunch of men who stole for a living would have no qualms about conscripting its members. But, as Leeson notes, conscription was the exception, not the rule. 

Piracy was “considerably easier, less abusive, and offered substantially greater income-earning possibilities” than life in the Royal Navy. As such, pirates had little difficulty in recruiting new members, and crews among ships that pirates had targeted would often volunteer to join their pirate captors. 

Leeson notes that as conscripts received no portion of the booty and free men did, one might think that pirates would, as a matter of standard practice, prefer conscription to recruitment for new members. But, as it turns out, conscription presented problems for pirate self-governance. 

All pirates, whether conscripted or otherwise, had to swear oaths to uphold their articles of agreement. Unanimous, voluntary agreement of the articles was the engine that enabled cooperation among thieves. As such, conscripted pirates were more costly to accept as members. In fact, “conscription could undermine the very purpose the articles served.” 

Interestingly, Leeson notes, when the British government caught pirates in the act and tried them in court, if the (suspected) pirate could convince the court that his participation was involuntary, he stood a chance of being set free. As such, many “conscripted” pirates were, as Captain Johnson put it, “willing to be forced.” 

As we see again, incentives matter. 

Concluding remarks

In conclusion, even in a “lawless,” profit-driven society of pirates, we discover a peculiar form of self-governance, emerging spontaneously. Leeson argues that only with the field of economics can we make sense of such a society, with many seeming contradictions.

Without economics, Leeson writes, pirates are “sadistic pacifists; womanizing homosexuals; treasure-lusting socialists; and madmen who outwitted the authorities. They’re stealthy outlaws who loudly announced their presence with flags of skulls and bones. They’re libertarians who conscripted nearly all their members, democrats with dictatorial captains, and lawless anarchists who lived by a strict code of rules. They’re torturous terrorists who command honest men’s adoration.”