Saturday, January 14, 2012

Five top books about Austrian economics

Peter Boettke is professor of economics at George Mason University. His books include Why Perestroika Failed and, as editor, The Elgar Companion to Austrian Economics.

He discussed five books on Austrian economics with Sophie Roell at The Browser.

One title on the list:
The Invisible Hook
by Peter Leeson

You gave me two other examples as well. One was the The Invisible Hook, by Peter Leeson, which is a really fun book about pirates.

I gave you these two books because I think economics is both a deadly serious subject – ultimately it’s about life and death, whether people are living on $2 a day or if they can have longer and healthier lives – but it’s also this fascinating subject that you should read with a great smile on your face. As I tell my students, economics is the sexiest subject you will ever study.

I think The Invisible Hook does a fascinating job of communicating to people the enjoyment of just thinking through a problem like an economist. Pete takes on the organisation of pirate ships and points out how pirates represented a community in and of themselves. Even in a world of thieves, they had to respect rights in order to be able to coordinate with one another. He goes through and explains the elaborate methods by which they organised their activities on a ship. Those ships were not as small as we might think, the ventures actually required people of diverse ethnic backgrounds and sexual preferences, and yet somehow they came to work together. They signed actual constitutions among themselves. So it’s a fascinating read, it’s all about the secret economics of the pirates and how they organised their ventures, and how actually their ventures, a lot of times, were more humane than those of the Royal Navy.

Do you agree with his analysis, ultimately?

I’m persuaded by the economic logic. I don’t know enough about the history to offer an informed criticism of some of the things he might say. What carries the weight for me is the fact that he is pursuing the rational choice model and I can see the logic of what he is saying. But at some level, with this book, the people who would be the best judges of the empirical validity of what he’s arguing would be pirate historians. When I read his book, what compels me is the logic of his argument and then the history as illustrations of that logic, so I’m completely swept up in it – I find it this great story. If I knew more about pirates, I’m sure I’d have quibbles with him.

I loved his point about Blackbeard, probably the most fearsome pirate that ever lived. According to this book, Blackbeard did such a good job of looking scary and promoting his reputation for bloodthirstiness, that he never actually had to kill a single person.

Yes, there is a lot of stuff about signalling in the book – also why they show the Jolly Roger to protect their investment, the ship. Pete really makes economics come alive, to explain things that we normally wouldn’t think of as subject to economic analysis. He’s amazingly talented and he really does make economics jump off the pages for people who read him.
Read about another book Boettke tagged at The Browser.

The Page 99 Test: Peter T. Leeson's The Invisible Hook: The Hidden Economics of Pirates.

--Marshal Zeringue