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Brooks Wilson's Economics Blog: Pirates (Repost)

Tuesday, October 13, 2009

Pirates (Repost)

Many games, books and movies have themes of good guys versus bad guys. Pirates were the bad guys. Why then are they often romanticized? Why did Disney build a ride, and an E ticket one at that, honoring villainous pirates? Could someone really be a "good man and a pirate" as Captain Jack Sparrow suggests in "Pirates of the Caribbean"?

Peter Leeson, an economist at George Mason University, has written extensively about 18 century pirates. In an article entitled, "In Defense of Pirates (The Old Time Ones)," (NPR, April 10, 2009) he reminds us why pirates are bad but continue to hold our interest.
All pirates are thugs, and the world would be better off without them. But not all pirates are equal. Unlike their Somali successors, early 18th century pirates, men like Blackbeard, "Black Bart" Roberts, and "Calico" Jack Rackam, weren't only thieves. They were also early experimenters with some of the modern world's most cherished values, such as liberty, democracy, and equality.
The 16th and 17th centuries saw an increase in exploration, colonization and trade. Merchants did not man their ships; they hired a captain and a crew. This organization created a principle-agent problem. The captain and crew did not have incentives to care for the ship nor its cargo. Merchants overcame this problem by selling or granting a captain shares in the ship. Unfortunately for the crew, the captain then had incentives to impose harsh discipline, docked wages, and cut food rations. It increased his profit.

Seaman came from the lowest socioeconomic elements of society, and were often abused by merchant captains. Piracy was an alternative career choice that gave some protection from predation and a chance at wealth. Pirates owned their ships and operated them as a floating stock company. They behaved democratically as shared owners.

Pirates still needed captains to find prey and make decisions in battle. Experience made them wary of predation by their captains, and they limited it using several techniques common in today's governments. The first was to democratically elect captains. Leeson observes ("An-arrgh-chy: The Law and Economics of Pirate Organizations, Journal of Political, vol. 115, no. 6, 2007),
...pirates could and did democratically elect their captains without problem. Since the pirates sailing a particular ship were both the principals and the agents, democracy did not threaten to lead to captains who served the agents at the principals’ expense. On the contrary, pirate democracy ensured that pirates got precisely the kind of captain they desired. Because pirates could popularly depose any captain who did not suit them and elect another in his place, pirate captains’ ability to prey on crew members was greatly constrained compared to that of merchant ship captains.
Pirates further limited the captains power through divided authority, much as we do with separation of powers in a modern democracy.
The primary “other officer” pirates “constituted” for this purpose was the quartermaster. The way this office worked is straightforward. Captains retained absolute authority in times of battle, enabling pirates to realize the benefits of autocratic control required for success in conflict. However, pirate crews transferred power to allocate provisions, select and distribute loot (there was rarely room aboard pirate ships to take all they seized from a prize), and adjudicate crew member conflicts/administer discipline to the quartermaster, whom they democratically elected...
To limit abuse by the quartermaster, pirates instituted articles of agreement or constitutions defining the rights and punishments of crews.
Articles of agreement required unanimous consent. Consequently, pirates democratically formed them in advance of launching pirating expeditions. “All [pirates] swore to ’em,” sometimes on a Bible or, for one pirate crew, “upon a Hatchet for want of a Bible.” The crew forged its articles alongside the election of a captain, quartermaster, and occasionally other smaller officers. Pirates sought agreement on their articles (ex ante “to prevent Disputes and Ranglings afterwards” (Johnson 1726–28, 342). In the event a pirate disagreed with their conditions, he was free to search elsewhere for more satisfactory terms.
Finally, pirate crews were often more racially tolerant than government operating contemporaneously.
Some historical pirates even embraced racial tolerance before their legitimate counterparts. England didn't abolish slavery until 1772. In the United States slavery persisted until 1865, and blacks didn't enjoy equal rights as citizens, politically or in the workplace, until even later than this. Some historical pirates, however, extended suffrage to their black crewmembers and subscribed to the practice of "equal pay for equal work," or rather, "equal pay for equal prey," in the early 1700s.
Democratic social innovations by pirates does not make them good guys, but it does make them interesting. Leeson has interested me enough in pirates that I am placing his book, "The Invisible Hook," on my summer reading list.


  1. This article is very interesting. I had no idea that pirates where that organized. It seems like they ran their ships like a corporation runs its business. Apparently there was honor among thieves and they worked toward a common goal. We could all take a lesson from that side of it.

  2. Dana Neeper19/10/09 6:37 PM

    It's amazing how even the bad guys,such as pirates, are able to be so organized. This article comes to prove that every organization runs like a country/government. We have our leader, laws/rules, and a common goal.

  3. It is interesting to see that the injustices that pirates do against the people and ships that they steal from do not extend beyond their prey and create problems amongst themselves. I have always believed that bad judgment calls that come along with criminal activity would translate into bad judgment in the way that a criminal organization is run. Surprisingly this is not the case. The way that pirates conduct criminal conduct is surprisingly similar to the way that our government is run today. This makes you question how a criminal organization solved fundamental problems within their organization long before the American government was able to do so.

  4. Roberson.Ryan21/10/09 9:28 PM

    Pirates are merely portrayed as these vicious thugs because it amusing to children to see a dirty man with an eyepatch, missing teeth, and a wooden leg; and so this is what is shown. In the eyes of the movie producers, the young kids watching these movies don't care so much for the societal mechanisms behind these plunderers so much as their strange lingo and ideals.

  5. Davenport,

    I to thought this article was very interesting. It is kind of funny that it seems like we have kind of adopted the formalities that the pirates used to control and order to their organization. It is true that pirates believed in honor. My children love to learn about pirates and they understand a lot more than I do about the organization of pirates. I thought this was very interesting something to talk with my kids about.

  6. Michelle Toups3/11/09 10:42 PM

    Pirates have a whole system. They aren't just random men at sea trying to usurp the biggest ships and kill everyone else. They have a routine. They assemble a crew based on written agreements and oral oaths to stay loyal, have a plan of attack, take over the ship successfully, then decide who owns it. They have a government of their own, based on authority, ability, and intelligence, not on race. They are a whole new society, not just "bad guys". Often times, these men are more organized than the nation's government. I agree, it is interesting. I agree with Laura. We can learn teamwork from this.

  7. Kolby Kilgo4/11/09 7:35 PM

    The pirates show organized way of life. However different sets of pirates conduct themselves and their rules differently. Just like there are of different sets of government styles. they show more of a style as a dictator today would. They even regulate their own capita. If they are short on revenue, they do something to change that

  8. people learn from observing other people. pirates are people. therefore we can learn from them, just as they can learn from us, which is why we're similar.

  9. Hunter Tunmire10/11/09 5:25 PM

    It amazing how the pirates all overcame such simple problems that plagued the merchants of their time by uniting under the common goal of gaining more money. How they took away racism, social divisons, and even elected their leaders all because they recognized the barriers that stopped them from being the most productive.

  10. Erin Wilbanks18/11/09 11:02 AM

    I had no idea that pirates were so organized. Growing up and watching movies pirates are always portrayed as the bad guy, which is not always the case. Yes there are good pirates and bad pirates, as there are good and bad forms of government.

  11. Rina Patel16/3/10 9:00 PM

    Interesting. This article really opens your eyes about pirates. Who ever thought that these scary, bad guys in all the Disney and other movies were so smart? They may have a bad reasoning behind their actions, but their action is their goal. In order to achieve the goal they know that they need to work together, and achieve it. By working together it shows us that they worked as a small business, or corporation. Organized they achieved their goal. Maybe these pirates could open the eyes of some of our local businesses and/or corporations.

  12. This was an interseting read Dr. Wilson! Enjoyed it! Didn't realize that pirates were so oraganized! I never knew even this much about them and how they came to be...i just thought they were theives.....i just might have to read "The Invisible Hook" too!
    Thanks for posting this blog!

  13. Slade Rodriguez
    this is great, to think that pirates believed in equal rights. Also on how they elected their captains and other high ranking officials. So what if they had taken advantage of the weak and greedy people back then. So in a way you can say that pirates were some what the robin hoods of the seas. Except they did not give it to the poor they gave it equally among themselves. So in their own way pirates are like little companies each wanting to put their competition out of business.

  14. Andi Thomas16/2/11 10:04 PM

    It's interesting to me to see the type of politics that pirates used. In a way you can almost compare this to gangs or mafia groups as well. There is always a type of organization or a level of authority that can be compared to any type of formal government. Although pirates have such a bad reputation, maybe we really could have learned something from them. And perhaps although themselves were greedy, they also helped spread some wealth around.

  15. One could argue the pirate concept also applies to publically owned corporations. Shareholders choose directors to oversee the corporation. The directors appoint a CEO and a management team to run the day to day operations. If management is successful shareholders are rewarded by an appreciated stock price and or dividends being paid. If management is not successful, shareholders could remove board members and replace them with new board members who would be willing to change management.

    Ken Haltom

  16. Missy Hardeman20/3/11 9:00 PM

    This is the first time I've come across any un-biased info on piracy like this.. and I find it absolutely hilarious that pirates got it right, when sea captians couldn't. Its a trend you can see now in other less than appealing sub-societies, such as gangs and other bands of criminals... they are sustaining and successful because of the distribution of power.... While there is always a leader, it is truely democratically chosen, and works for the good of the group instead of selfishly, to maintain leadership... Seems something goes wrong when we try the same system lawfully as a nation....perhaps if the repercussions were the same as in a gang or pirate ship, there would be better results...

  17. Carl Schulz21/3/11 6:56 PM

    Fascinating. That's the only word I could think of to describe this article. I do find it somewhat interesting when the article compares the delegation of authorities on a pirate ship to the separation of powers in a democracy. Seems our government has taken lessons from pirates and is run more like a pillaging gang, than a freedom defending body. We need to make most of our "leaders" walk the plank!!

  18. Ester Anderson said......
    WOW!!! Tons of info.I pretty shocked at how similar pirates and politics are so much alike.The book refers to principle 4 "People respond to incentives". That proved to be true in the 18oo's with pirates.The merchants gave thier ship captians incentives.The book refers to incentives and how it causes a person to act.In the pirates case it wasn't too good for the crew members.A quate from the book states "people respond to incentives the rest is commentary".This is exactly how our economy is now,Because if incentives arn't given now and days most people won't want to work as hard for there bosses.Incentives can make a big difference , the only thing is that it isn't always for the best.Like the pirates were able to make the crew members pay or punish them,so can people today.It's a shame though because some people take advantage of the power that comes with this likie a promotion.Who would of thought pirates started this.Go figure you learn something new everyday.:)

  19. This is a really interesting post. I had no idea that pirates ran things that way. It's amazing to think that there was kind of already a system in place that ran like our government before our government was created.

  20. The article about pirates is very interesting. I had no idea that pirates had been that organized. A good thing about the pirates was that they believed in equal rights among its workers. And that they had democracy like we do. I think that some people have learned from what the pirates did during their time which can be clear that it influenced some of the economists today.

  21. It's hard to know the truth about pirates. Accounts like this giving us the impression that they were good people goes against the very definition of pirating, which is that of taking from others without permission. However, it is hard to judge because noone really knows!