Hooked

Dec 1, 2024

pirateseconomicsweb3governance

I've been reading about pirates recently, and not just with my two year old. The Invisible Hook by Peter T. Leeson playfully interrogates 17-18th century pirates through the lens of economics.

Notably, it describes the surprising innovations in "democracy, equality and social safety" which took place on pirate ships - I was particularly struck by the separation of powers between a pirate's captain and the quartermaster.

But far from being "enlightened" ends in and of themselves, these were actually rational, incentive-aligned characteristics, given the pirates' plunderous profit-seeking goals. If you're a band of criminals living outside the law, it turns out that this is the best way to organise.

Should we all be like pirates, then? That depends on the circumstances.

"There's no such thing as the efficient form of managerial organization. What's organizationally efficient for one firm may be totally inappropriate for another... What we should take away from pirates' worker's democracy, if one insists on calling it that, isn't the universal desirability of democratic management, but rather the universal desirability of allowing profits to drive firms' organizational forms".

A more general lesson then. In web3, where governance is often driven more by ideals, other people's ideas and regulatory constraints, it is unsurprising that the results have so often been underwhelming.

Meanwhile we can all learn from the lasting brand power of the skull and crossbones.

Avast, me hearties.