BOOK REVIEW: Parasites, not philanthropists

THE INVISIBLE HOOK: THE HIDDEN ECONOMICS OF PIRATES

By Peter T. Leeson

Princeton University Press, $24.95, 271 pages

Reviewed by Claude Berube

One unfortunate consequence of the increase in piracy off the Horn of Africa is that it has again propagated misconceptions about this scourge, emanating from popular myths, movies and children’s stories.

One former Capitol Hill staffer told me that today’s pirates are “brave,” “courageous” and “modern-day Robin Hoods.” But pirates are not now, nor have they ever been, Johnny Depp in “Pirates of the Caribbean,” Errol Flynn in “Captain Blood” or Ragnar Danneskjold in Ayn Rand’s “Atlas Shrugged.” They were and are not philanthropists; they are parasites. They aren’t driven by the romance of the sea, but by the profit they can steal from those whom Neptune is unable to protect.

Authors including John Burnett and Martin Murphy have done yeoman’s work in shedding light on the realities of modern piracy. Others, such as Virginia Lunsford and Doug Burgess, have offered their research on the golden age of piracy during the 17th and 18th centuries. Now Peter T. Leeson has done his part to dispel the pirate myths by using economic theory to explain pirate behavior and organization in his exemplary new book.

“The Invisible Hook: The Hidden Economics of Pirates” is aptly taken from the “invisible hand” metaphor employed by Adam Smith in “The Wealth of Nations.”

“Smith’s invisible hand,” the author writes, “is as true for criminals as it is for anyone else.”

Mr. Leeson found that pirates establish their own governments, relying on the three essential criteria:

c Establish rules and a means to enforce them.

c Regulate behaviors that generate significant externalities.

c Provide important public goods for crew members.

Mr. Leeson appropriately invokes the philosophies of John Locke, Thomas Hobbes and David Hume (in theory, if not by name in two cases) as well as the Federalist Papers during his discussion of pirate governance to support his contention.

Democracy apparently thrived on many ships; a system of checks and balances between the crew, quartermaster and captain ensured all performed their work according to contractual agreements, and crew members who lost a limb in battle were protected by a form of insurance. Mr. Leeson is correct that these pirates could neither exist nor prosper in anarchic conditions; there had to be rules in order to capture ships and prize money.

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