The Economics of Piracy (the Real Kind, With Peglegs and Pieces of Eight)

I just received galleys of what looks like an interesting book: The Pirate’s Dilemma: How Youth Culture Reinvented Capitalism, by Matt Mason. I haven’t cracked it yet, but the Mason book reminded me of another recent book about piracy — the real, old-fashioned kind, with peglegs and pieces of eight — called Empire of Blue Water: Captain Morgan’s Great Pirate Army, the Epic Battle for the Americas, and the Catastrophe That Ended the Outlaws’ Bloody Reign. It’s by Stephan Talty, a writer I know a little and admire a lot. It includes a lot of material that will interest readers of this blog. For instance:

The pirates voted on how many shares of treasure each pirate would get. The captain got five or six shares to the common pirate’s one; the master’s mate got two; the cabin boy one-half. Skilled tradesmen were well compensated: The carpenter who’d be responsible for fixing any breaches of the hull from cannonballs or storm damage was often paid 150 pieces of eight; the surgeon and his “chest of medicaments” got 250. Men of both professions were so sought after that pirates would sometimes attack merchant ships just to steal away their shipwright or doctor, who was then forced into piracy.

And this one:

The most extraordinary clauses in the [ship’s constitution] were the ones addressing the “recompense and reward each one ought to have that is either wounded or maimed in his body, suffering the loss of any limb, by that voyage.” Each eventuality was priced out:

Loss of a right arm: 600 pieces of eight
Left arm: 500
Right leg: 500
Left leg: 400
Eye: 100
Finger: 100

Some articles even awarded damages for the loss of a pegleg. Prostheses were so hard to come by in the West Indies that a good wooden leg was worth as much as a real one.

This list reminded me of a similar workmen’s comp list we included in Freakonomics, although it was a recent one compiled by the State of Connecticut:

Arm (master): 208 weeks pay
Arm (other): 194 weeks
Leg: 155 weeks
Eye: 157 weeks
Finger (index): 36 weeks

So the left arm of a pirate was worth 16 percent less than his right arm, while the left arm of a Connecticut state worker is worth only 7 percent less. But the Connecticut worker’s legs are worth relatively far less than his arms, although there is no discount on the left leg as there is for the pirate. The big gap is for the eyes. In Connecticut, an eye is worth a leg; on a pirate ship, it was worth just 20 percent of the master leg. A pirate’s finger, meanwhile, had the same relative value to his master arm as a Connecticut state employee’s finger does to his master arm: about 16 percent.

Here’s one more interesting passage from Talty’s book:

With his hefty shares, Henry Morgan could (and did) buy large estates and stock them with slaves; other captains or even thrifty buccaneers sailed back to England and bought property. But on his share a common pirate would have to buy a smaller plot in Jamaica, purchase some cheap indentured servants, watch them slowly, whip them when needed, and husband his money. In other words, become a kind of tight-fisted farmer with regular hours and work seven days a week. He might set up shop in town, but these were uneducated men used to a life of drinking and freedom. How could they go and buy a grocer’s stall and nickel-and-dime their way to a living? It went against the whole joy of being a pirate. After years in the life, pirates had become accustomed to long periods of drunken tedium interrupted by binges of extreme violence and spending. If they had been meant to be shopkeepers or yeoman farmers, they would never have ended up on Henry Morgan’s ship in the first place.

For further reading:

The economist Peter Leeson has been writing some really interesting academic papers on piracy, and the economic logic thereof; Jim Surowiecki of the New Yorker recently summarized Leeson’s work nicely.

Jack Hitt wrote a good piece in the New York Times Magazine a while back about modern-day pirates; recently, such incidents seem to be on the decline.


When "Dead Man's Chest" came out (2nd Pirates of the Carribean installment- Summer 2006) it seemed likeke there were two dozen or more pirate books which were all released at once, riding that wave... which is fine... I mean, who doesn't like Pirates, really?



Avast! Universal Health Care!

Rebecca I don't like pirates.

Linda Loomis

It appears that the piracy described in this blog entry was a reaction to the autocratic traditions within the British Royal Navy. What about examples of piracy other than that which is Brit-derived? Do you have any idea when the British pirates first enacted workers' compensation? Was the system of compensation aboard pirate ships also derived from British Royal Navy practices or traditions? In other words, was there institutionalized naval liability before pirates began their system of payouts?

Thanks for the link to the New Yorker article written by Jim Surowiecki. Since pirate lifestyle and seafaring culture are not high on my list of interests, it was fascinating to learn that for operations other than battle, the day-to-day business was left to the quartermaster. And aboard pirates' ships, there were trials by jury. What is the most famous pirate jury trial, and about what issue? Do Talty or Leeson know?



Linda, having read both books mentioned Talty's book and the Republic of Pirates by Colin Woodward, the British navy and merchants at the time were notorious for simply forcing sailors into servitude. There was no compensation for injuries sustained on the boats, and if a sailor would perish during the journey, his family would likely see nothing from it. Additionally, sailors would get paid quite poorly and often in the form of IOUs which they could turn in for money at a later date. During the War of Spanish Succession in the early 1700's, it was quite common that a sailor would be just arriving in a dock after a trip on a merchant ship just to be impressed by the Navy. This policy of impressment was actually one of the factors leading to the War of 1812, the British seizing thousands of sailors from American vessels.

Little wonder why piracy sounded like a good idea, huh?


Pirates and economics.

Its like a match made in heaven.


Timely piece. See here:


The online multiplayer puzzle game has a similar payout system. Players vote on the doubloon dispersal scheme after a successful conquest. They would have tons of data to wade through.

Luis Jerez

I don't like pirates either.

A Ninja


Me neither


#3, #9 & #10--Yarrr, you're all swabbies!


A few nights ago, I watched "Captain Blood," the Erroll Flynn movie made in the late 1930s. At one point, Flynn pays off each of his pirate crew with a base salary plus a specific bonus for particular wounds received. Apparently, Warner Brothers had a fix on pirate workman's comp seventy years before Matt Mason wrote his book.

I find the movies an invaluable source of historical information; not always accurate, but often quite enjoyable.


I heard they're coming out with a movie based on the book.

It's rated ARRRRRRRRR!

Rita: Lovely Meter Maid

Arrrr! Avast!! Avast!! Tomarra (9/19/07) is International Talk Like A Pirate Day!! Arrrrr, Maties, so gather ye Grog where ye may, ye blighted bunk of landlubbers and talk like a Pirate if ye senseless pile o'Bilge Rats got the bollocks for it!!! Arrrrrr!!!!!


Pirate walks into a bar with a steering wheel in his pants. He asks the bartender for a drink and sits down. The bartender says "buddy, you know -- it looks like you've got a steering wheel down your pants. Doesn't that bother you?" Pirate replys, "yarrr, it's drivin' me nuts!"

Cap'n Jefe

Yaaaarrrrrrgh! In my day, the value of a limb was determined by the free maaaaarrrrrrrket!


The "economics" for pirate capital don't look so good right now:


Actually, the real pirates captured the White House about 7 years ago and shanghaied the economy, which is why neither it nor we nor the national debt look too good right now: all that monetary raping and pillaging (matched only by actual raping and pillaging when our troops got to Iraq), while at least one apologist for Ayn Rand watched and said nothing. The only question left is who was really in charge -- Shrub the cabin boy, or those evil Bobbsey twins Rummy and Cheney.


So workman's comp. is for pirates, then! But just who, may I ask, are the pirates?


When "Dead Man's Chest" came out (2nd Pirates of the Carribean installment- Summer 2006) it seemed likeke there were two dozen or more pirate books which were all released at once, riding that wave... which is fine... I mean, who doesn't like Pirates, really?