Did Pirates Create The Credit Crunch?

Dr Peter Hayes is Senior Lecturer in politics at the University of Sunderland. In his latest paper ‘Pirates, Privateers and the contract theories of Hobbes and Locke’ Dr Hayes argues that the roots of modern democracy were not in Britain or the USA, but were the ‘corporations’ which were created on pirate ships during the golden age of buccaneering.

Dr Hayes says: “Pirates elected their captain, voted on major decisions and distributed their booty in roughly equal shares, and there is something in the idea that a pirate ship is the equivalent of a modern corporation.

“In the 17th and 18th century privateers were backed by financiers, much like modern multi-national PLCs. The way that privateering was operating back in the golden age of buccaneering, is that a group of individuals come together, and agree to kit out a ship to sail the seven seas to see if they can pull in some gold. It was a global gamble for enormous rewards. These predatory voyages are the roots of modern venture capitalism, with these modern multi-national corporations out to get all they can get. That’s the sort privateering that led to the Credit Crunch.”

Dr Hayes argues that this raises troubling questions about whether rights in modern democratic states can truly be said to be human rights, as opposed to the rights held only by a select few corporations.

Dr Hayes says: “Pirates had a democratic structure, and relative equality, but they were doing all of this to violate the rights of other people. The idea of a social contract is that it protects human rights. But what if you create a social contact to say that we’ll observe rights towards each other, but we won’t observe rights for outsiders?”

Privateering was encouraged by governments including England where it was considered perfectly acceptable to capture a Spanish ship as long the Crown got a cut of the booty. Pirates even set up their own states in places like Madagascar, where they could hide their wealth from governments, and also share information – rather similar to offshore bank accounts for modern businesses.

Dr Hayes says: “Eventually the state stepped in to reward successful pirates, by calling them ‘privateers’ giving them knighthoods, and making them part of society, so it is more than likely that direct descendents of pirates like Henry Morgan are wandering around the ‘deck’ of modern companies today.”