Abstract
Peter Leeson’s The Invisible Hook provides a readable and entertaining narrative of the hidden economics of the Golden Age of Piracy. This essay comments on one particular aspect of Leeson’s work: what we can learn from pirates about the emergence and evolution of property rights? I conclude that pirate codes had their origins in part in legally enforceable agreements and that pirates’ blend of individual and communal property rights bore some resemblance to the property rights of wandering tribal peoples.
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Notes
Augustine (1998) at 147-48 (Book IV, Chapter 4).
Demsetz (1967) at 350.
Demsetz (1967) at 350.
A lengthy excerpt of Demsetz’s article appears in Dukeminier et al. (2006, 35-41), the leading property law casebook in US law schools. Two other popular casebooks cite the article—Kurtz and Hovenkamp (2003, 35) and Cribbet et al. (2002, 15-16). And most others contain other material that presents Demsetz’s ideas.
See Merrill (2002, S331): “The point of departure for virtually all efforts to explain changes in property rights is Harold Demsetz’s path-breaking article, ‘Toward a Theory of Property Rights.’”
Just to be sure not to get too far afield from piracy in this section, it is worth noting that Lodowick Post’s father Nathan Post began amassing his fortune as a privateer captain during the American Revolution; from his privateering earnings, Nathan Post was able to build a fortune as a merchant ship owner in the West India trade. Berger (2006) at 1127-29.
In the further interest of keeping this diversion into Pierson v. Post on point with piracy, Judge Livingston’s dissent says of the fox: “Both parties have regarded him, as the law of nations does a pirate, ‘hostem humani generis’ ” (i.e., an enemy of all humanity).
Berger (2006) at 1093–94.
Fernandez (2009) at 166.
Leeson (2009) at 58-60, 62-63.
See Leeson (2009) at 63-66.
Leeson (2009) at 64-65.
Leeson (2009) at 52–53.
Demsetz (1967) at 353 n.7.
Leeson (2009) at 53-56.
Leeson also points to a third factor that made pirate governance work: the ability to solve a public goods problem linked to the nonrivalrous aspect of full pirate effort. See Leeson (2009) at 56-58, 71-74.
Leeson (2009) at 41.
Leeson (2009) at 58.
At the symposium session where this paper was presented, Professor Leeson stated that the pirates abandoned their ships at the end of a voyage by running them aground. While I have no reason to dispute this historical fact, it does seem odd that something as valuable as a ship would simply be run aground and left to rot. Stealing a new ship was a costly activity, so it would seem that a working pirate vessel would have some value to another pirate crew. After all, the crew had modified the ship for uses in piracy by stripping down the decks for speed and adding weaponry for better fighting. Why then did pirates not sell their ship to another crew? Were the transaction costs of finding a willing buyer too high to make it worth the time and effort to wring a little more profit out of the boat? Were potential buyer pirate crews too liquidity-constrained at the outset of a voyage to buy a new vessel? Were the ships so worn out and damaged by the end of the voyage that salvage was not cost-effective? While the acts of pirates in running their ships aground at the end of a voyage suggest an answer to the residual claimant problem (i.e., there was not a residual claimant), it raises a whole new host of questions about the worth of the ship at the end of the voyage.
References
Augustine. (1998) [c. 410]. The City of God against the Pagans. Trans. R.W. Dyson. Cambridge, UK: Cambridge University Press.
Berger, B. R. (2006). It’s not about the fox: the untold history of Pierson v. Post. Duke Law Journal, 55(6), 1089–1143. April.
Coase, R. H. (1960). The problem of social cost. Journal of Law & Economics, 3, 1–44.
Cribbet, J. E., Johnson, C. W., Findley, R. W., & Smith, E. E. (2002). Property: Cases and materials (8th ed.). New York: Foundation.
Demsetz, H. (1967). Toward a theory of property rights. American Economic Review (Papers and Proceedings), 57(2), 347–359. May.
Demsetz, H. (2002). Toward a theory of property rights II: the competition between private and collective ownership. Journal of Legal Studies, 31(2, part 2), S653–S672. June.
Dukeminier, J., Krier, J. E., Alexander, G. S., & Schill, M. H. (2006). Property (6th ed.). New York: Aspen.
Fernandez, A. (2009). The lost record of Pierson v. Post, the famous fox case. Law and History Review, 27(1), 149–178. Spring.
Kurtz, S. F., & Hovenkamp, H. (2003). Cases and materials on American property law (4th ed.). St. Paul: Thomson West.
Leeson, P. T. (2009). The Invisible Hook: The Hidden Economics of Pirates. Princeton: Princeton University Press.
Merrill, T. W. (2002). Introduction: the demsetz thesis and the evolution of property rights. Journal of Legal Studies, 31(2, part 2), S331–S338. June.
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I thank Tom Odegaard and Elizabeth Dratz for helpful comments and Bridget Fuselier for giving me access to her cache of property law casebooks. This comment was written originally for a symposium held during the annual meeting of the Southern Economic Association in November 2009. The usual disclaimer applies.
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North, C.M. Not just guidelines: Pirate codes and the emergence of property rights in The Invisible Hook . Rev Austrian Econ 23, 307–313 (2010). https://doi.org/10.1007/s11138-010-0110-8
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DOI: https://doi.org/10.1007/s11138-010-0110-8