irrational violence of individuals against each other is detrimental to the profitable enterprise

scientificamerican | From countless films and books we all know that, historically, pirates  were criminally insane, traitorous thieves, torturers and terrorists. Anarchy was the rule, and the rule of law was nonexistent.

Not so, dissents George Mason University economist Peter T. Leeson in his myth-busting book, The Invisible Hook (Princeton University Press, 2009), which shows how the unseen hand of economic exchange produces social cohesion even among pirates. Piratical mythology can’t be true, in fact, because no community of people could possibly be successful at anything for any length of time if their society were utterly anarchistic. Thus, Leeson says, pirate life was “orderly and honest” and had to be to meet buccaneers’ economic goal of turning a profit. “To cooperate for mutual gain—indeed, to advance their criminal organization at all—pirates needed to prevent their outlaw society from degenerating into bedlam.” There is honor among thieves, as Adam Smith noted in The Theory of Moral Sentiments: “Society cannot subsist among those who are at all times ready to hurt and injure one another.... If there is any society among robbers and murderers, they must at least ... abstain from robbing and murdering one another.”

Pirate societies, in fact, provide evidence for Smith’s theory that economies are the result of bottom-up spontaneous self-organized order that naturally arises from social interactions, as opposed to top-down bureaucratic design. Just as historians have demonstrated that the “Wild West” of 19th-century America was a relatively ordered society in which ranchers, farmers and miners concocted their own rules and institutions for conflict resolution way before the long arm of federal law reached them, Leeson shows how pirate communities democratically elected their captains and constructed constitutions. Those documents commonly outlined rules about drinking, smoking, gambling, sex (no boys or women allowed onboard), use of fire and candles, fighting and disorderly conduct, desertion and shirking one’s duties during battle. (The last could lead to the “free rider” problem in which the even division of loot among uneven efforts leads to resentment, retaliation and economic chaos.) Enforcement was key. Just as civil courts required witnesses to swear on the Bible, pirate crews had to consent to the captain’s codes before sailing. In the words of one observer: “All swore to ’em, upon a Hatchet for want of a Bible. When ever any enter on board of these Ships voluntarily, they are obliged to sign all their Articles of Agreement ... to prevent Disputes and Ranglings afterwards.” Thus, the pirate code “emerged from piratical interactions and information sharing, not from a pirate king who centrally designed and imposed a common code on all current and future sea bandits.”