Abstract
Peter T. Leeson’s The Invisible Hook provides an illuminating economic analysis of how pirates established governance structures regulating their organization. Leeson is successful in showing economic rationales for piratical institutions and adopts the view of the piratical enterprise as a for-profit business firm to further illustrate the point. This essay argues, however, that modern theories of the firm are not fully compatible with the nature of piratical organization. Rather, pirates seem to have suffered from problems much like those in traditional cooperatives, arising from organizing collective action and joint ownership of the means of production.
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Notes
Asset specificity is defined as “durable investments that are undertaken in support of particular transactions, the opportunity cost of which investments is much lower in best alternative uses or by alternative users should the original transaction be prematurely terminated” (Williamson 1985, p. 55).
Compare Hansmann’s statement on cooperative governance that it is common for them “to require that most members of the board of directors also be members of the cooperative” and “that all or nearly all of the cooperative’s directors not be hired managers” (Hansmann 1999, p. 397).
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Bylund, P.L. Piracy, Inc.—on the bearing of the firm analogy to pirate organization. Rev Austrian Econ 23, 299–305 (2010). https://doi.org/10.1007/s11138-010-0106-4
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DOI: https://doi.org/10.1007/s11138-010-0106-4