In economics, the invisible hand of the market is a metaphor conceived by Adam Smith to describe the self-regulating behavior of the marketplace. In The Invisible Hook: The Hidden Economics of Pirates, economist Peter Leeson plays off the metaphor to examine how life aboard pirate vessels mimicked self-regulating behavior and examines how the impact of their sociopolitical systems may have been instrumental in the formation of modern government.
Pirates’ exploits are legendary and resonate with cultures all over the world. Their rebellious defiance of authority and ability to live by their own wits strikes an appealing tone particularly as modern governments feel more and more oppressive. However, these men were clearly criminals and to glorify them as anything else is romanticism. Yet despite their lives of lawlessness, their ships were bastions of order. They functioned for the greater good and as such required all participants to adhere to a ship’s “constitution.” Leeson examines these floating hyper-local governments as early snapshots of what would later emerge as constitutional republics in modern government.
The book starts by refuting the popular misconception that pirate ships were disorderly, drunken outposts of chaos and shows that they were in fact orderly and efficient systems for maximizing profits. Anything that stood in the way of efficiently locating and acquiring wealth was controlled through a refined constitutional system. The really surprising aspect of this system was the division of power within each ship. Unlike the merchant ships that the pirate preyed upon, power was not centralized at the captain. The captains of pirate vessels were elected by the crew and could be ousted for any breach of conduct. As a result, some ships would have a string of captains on a single voyage. They were also not the pinnacle of authority onboard. The captain exercised complete control only during battles that required quick decisions and unified movements. When not engaged in chasing, fighting, or being chased, the second officer exercised the greatest authority. This officer was the quartermaster, whose purpose was to check the captain’s power. As with their captains, pirates democratically elected their quartermasters. This meant the captain himself was under the authority of the quartermaster and was subject to the same rules as the rest of the crew. This balance of power was distinctly different from the tyrannical rule of captains on merchant ships and was arguably an incentive to get sailors to join the ranks of the pirates. Better pay, fair treatment and the freedom of self-determination.
This is starting to sound vaguely like a familiar governmental system or at the very least, modern business.
There are a number of additional things that were surprising like early racial integration into crews as full members and very refined disability benefits for the loss of limbs and other significant injuries. All the while the author never loses sight of the fact that this was a criminal enterprise. Yet despite its unlawful basis, the picture of pirate crews as precursors to modern governments and business structures was a surprising and fascinating discovery.