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What can be learnt from piracy

About the author

Daniele Archibugi is a director at the Italian National Research Council (CNR), and professor of innovation, governance and public policy at Birkbeck College.

Anyone who thought that the history of piracy was now something out of a Hollywood movie has had to think twice. The events in the Gulf of Aden lead us to wonder what differences there are between ancient piracy and the modern version. Perhaps if we examine the piracy that reached its peak between the end of the seventeenth and the early eighteenth century, and preyed on the major trade routes, we may get a clearer understanding of modern piracy. However, opportunity makes men thieves and the cleverly written and witty book by Peter T. Leeson, The Invisible Hook. The Hidden Economics of Pirates (Princeton University Press, Princeton, 2009), enables us to do so.

According to Leeson, pirates applied economically rational principles aimed at obtaining the maximum result with the least effort and above all minimum risk. They too, in other works, apply the rules of Adam Smith's invisible hand, or rather the invisible hook. Pirates were not cruel out of sadism but simply because by spreading terror they were able to increment their booty. Flying the infamous "Jolly Roger" served the purpose of generating what economists call the "announcement" effect: the potential victims were warned that any attempt to stave off the attack by a pirate vessel would lead to ferocious reprisals. If, on the other hand, the vessel attacked surrendered without any resistance, everything of value on board would be seized but the crew would be spared. The same applies to the pirates' widely publicized ruthlessness against prisoners: many of the latter were tortured, others forced to walk the plank. Also in this case the pirates' intention was to create what economists call the "reputation" effect. Prisoners might try to conceal information about valuable goods or about the routes followed by other trading or navy vessels and would be induced to reveal all their secrets by the terrible reputation enjoyed by the pirates.

Leeson gives credence to the economic interpretation of the pirates' behavior: mutineers were certainly attracted by high profits; in the early 18th century a sailor of a merchant vessel earned no more than 25 pounds a year, and a courageous pirate could earn as much as 300. But as well as borrowing from the trappings of economic theory, Leeson does not disdain also casting a penetrating glance at the social and political motives of these odd outlaw communities. Life on board ship, whether a merchant or a navy vessel, was regulated in an authoritarian and hierarchical fashion (and it might be added that things have not changed much since those times). The ship's commander had the power to inflict very severe corporal punishment, stop crew members' pay without good reason and demand that the crew perform work not envisaged in the original contract, and more besides. On board the captain had the power of life or death without any checks or balances. It is true that the sailors could sue for justice in the courts on returning home, although the latter usually sided with the commanders, also because the judges came from the same social class.

It is thus not surprising that, far beyond the reach of the dominant authority on land, sailors should set up a completely different social organization. And it is striking to see the extent to which this was based on principles of equality. In the first place, political equality. "Every Man has a Vote in the Affairs of the Moment" runs article one of the Code of Conduct on board the private vessel of Captain Bartholomew Roberts. Furthermore, it was the crew members who elected their own captain. Furthermore, the commander could be deposed by the pirates themselves if judged to be inadequate, corrupt or not bold enough, as happen to the famous Captain Edward England. In the rudimentary system of checks and balances characterizing the pirate republics, also a quartermaster was elected to look after the ship's management, and who had the power to avoid individual crew members being unjustly punished. Nor must it be overlooked that, in an era in which the European nations were getting rich from the slave trade, many pirate ships granted equal rights also to colored men.

The pirate communities were in other words far from being anarchic: indeed, they developed a democratic system opposed to the autocratic system prevailing in the other vessels. Pirates had even too many rules: their codes of conduct prohibited sailors from gambling and smoking on board, from drinking after sunset and from keeping lamps alight late at night. They were also prohibited from bringing women on board to avoid causing jealousy.

The distribution of the rewards was much fairer than the pay on merchant or naval vessels: the pay of the captain and the quartermaster was only twice as high as that of ordinary pirates. Moreover, in the case of accidents in the "working place", the pirates' republics had a much more highly developed welfare system than that applied on the other ships: they meticulously specified how much was due to any crew member who had lost a hand, a leg or an eye. On the other hand, desertion during a boarding operation was punished by death or marooning on a desert island.

If piracy offered so much more to its members than was available to other sailors, the question is not so much why there were so many (it is estimated that there were two or three thousand in the early 18th century) but rather why so many sailors did not become pirates. Perhaps it is because when captured they were almost always hanged: a count of executions between 1716 and 1726 indicates that about 400 were hanged, about 40 per year on average. But if we consider the high death rate among law-abiding sailors it must be concluded that the "announcement" and the "reputation" effects worked more for the scaffold than for the Jolly Roger.


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