Is an economy based on piracy possible?

Question

What would be needed for a piracy-based economy? One based mainly on raiding ships?

I don't know if there are any real-life models of this that were successful, though I know that piracy existed (and still does) as an outlawed way of generating money. But actual countries at least disapprove. This country's governing body does not, and it benefits the economy. I like the idea, but it doesn't seem tenable to have an entire country whose economy is largely based on theft.

My guess is that you'd need lots of other surrounding countries that are rich in trade.

I know that the Vikings come the closest to this, but they mainly raided villages.

I also know that if there is sea trade, there will be bounties from other countries on pirates.

Details for the world:

• Tech level about late Renaissance
• low magic

Is it possible to have an island chain country with an economy largely dependant on piracy? What are the conditions needed in order for this to work well in a world?

Answer 1

you may wish to look into the "Barbary Coast" which was a collection of pirate city-states that operated from the 1500's until the 1800's. They raided the Mediterranean during this time. These city states were so powerful that deals had to be made with groups like France, and Britain just to avoid Piracy in the Atlantic.

When the US stopped being a British colony, the Barbary Coast began harassing American vessels. It got to the point where Two vessels were captured and held for ransom. This was the primary reason for the first 6 American frigates being built by Thomas Jefferson during his time as a minister to France during George Washington's presidency. It ended with American Marine's capturing one of the Barbary Cities.

I suggest looking into how these cities operate as they were primarily piracy states funded through bribes, piracy, and the slave trade while being ruled by the Ottoman Empire.

EDIT:

It was pointed out that I did not make a full explanation for their Industry. I will do that now. The Barbary Pirates were investments for many goverments and merchants in this location of the world and most acted as privateers without letters of Marque. This was made possible under Ottoman rule for the primary purpose of slavery.

For those who may not know, in the Quran it states a Muslim cannot own another Muslim. This makes Christian Slaves very valuable. It is estimated that somewhere between 1 to 1.25 million Christian Europeans were sold into slavery in the Barbary Coast during this time. The slaving locations for these pirates went as far north as Iceland.

Many European nations did as much as they could to prevent being raided. This included ransoms and tribute, where it was said 20% of US government annual revenues were spent to pay Barbary Pirates prior to the wars (we have no concrete numbers from other countries).

Notice that I have not made mention of any other industries. That is because these cities had very little control over their own territories. in Algeria, one of the capitals of Barbary Piracy, over 69% of the land disobeyed Ottoman rule. They refused to pay taxes, ignored rule of law, and were not held by central power. These people added little to no economic activity for the Ottomans to consider.

The governments were themselves encouraging this slave trade. The Barbary Coast was ruled by the janissaries. They were an independent military arm for the Ottoman Empire. They slowly came to finance the majority of the Barbary Pirates.

Answer 2

Most of the nations of the time utilized pirates in one form or another.

England called them privateers and made itself rich off plunder brought in by Sir Francis Drake and others, but essentially they were just pirates. On smaller scales there were pirate cities and islands in the Indian ocean.

Vikings were essentially pirates and their kingdoms were to a large extent built on plunder and later conquest. The Danegeld was payment by the English to the Danes and was basically just a stand over tactic by a large belligerent group of pirates.

It was also a vicious cycle, the payoff strengthened the economy of the Danes and made them stronger both in England and Denmark.

I'm focusing on England's many piratical episodes, but almost any coastal outfit with a belligerent and sea mobile population based at least part of their economy on piracy. In Europe, the Saxons, Danes, Norse, Swedes, Angles, and Jutes spring to mind. Coastal India, Indonesia, Japan, Korea, and parts of Africa like the Barbary coast also had large pirate groups sanctioned by government and contributed a lot to the economy.

Here is a link to Francis Drake's remarkable career and another to Sea Dogs; Elizabethan pirates who along with other pirates made England under Elizabeth debt free and were an enormous boost to their power.

Elizabeth had several rationalizations for giving pirates safe harbour in England, but the real reasons were economic and some pirates were even knighted.

The supremacy of the English wasn't the quality of the ships, it was the training and discipline of the crews and the ruthless ambition and competence of the captains. Vikings had superior ships and could at first attack unprotected places with relative ease. Later they attacked in force, protected or not, but in pitch battles they lost as often as not. So either of these could be used for your purposes.

Koxinga in the China sea had his own island going and was a political force to be reckoned with after establishing his own kingdom; his economy was partly trade, partly piracy, and considering he didn't produce any goods himself, it's not hard to guess where his trade goods originated from.

Answer 3

No. Piracy as a way of life can work within the context of a rich trading network, you basically disrupt trade in order to steal stuff.

Economies however are based on specialisation and cooperation between people, people get good at doing a thing, and sell what they do in order to buy from the people who are good at doing other things. This way bakers have shod horses, and blacksmiths have bread to eat.

If everyone steals and no-one produces then there is going to be nothing to steal. In the real world only 15% or so percent of business ever bothers to export at all, because to do so you must by definition be world class. So, an economy of thieves (which is what pirates are) would have 85% of the population's effort spent on stealing from each other - but complicated by no-one ever owning anything to steal - with only the world class and ship owning 15% (though probably far less) of thieves stealing from outside.

Vikings weren't a people, viking was a job. Dark ages Scandinavians were predominantly farmers. But some very small few of them used to go out raiding and stealing - those who did were vikings and may become personally wealthy - or dead. Privateers were not a method of developing an economy but a tool of war - issue permission to privately owned ships to prey on the ships of your enemies and keep what they steal.

No functioning resilient economy is ever based on one thing, even if that thing isn't thievery. But especially not if that one thing is thievery.

Answer 4

There a numbers of ways you could do this but I'll look at a couple here.

The primary industry

Probably the most sustainable way to use piracy in an economy.

Consider fishermen. They go out to sea, they come back with trade goods, namely fish.

Consider pirates. They go out to sea, they come back with trade goods, gold, manufactured goods, raw materials, a ship or two, a few slaves perhaps.

Not exactly basing the economy on piracy, but rather treating it as another of your primary industries. A group of "workers" go out with the tools of their trade and come back with the results of their work. While you're not basing your economy off them, they are a part of the economy. How large a part is entirely dependent on how much seagoing trade your near neighbours have and the relative sizes of your economies.

You can have a relatively large, healthy economy otherwise with an extra chunk on the side. Any economic model has to include the black economy, these days we talk about the money coming from drugs, theft and prostitution as the black economy, but once that would have included piracy.

The parasitic economy

This is probably more what you had in mind, but if you consider the relative sizes of parasites and their hosts it says a lot about how large the relative economies are going to be. The purely parasitic economy has a major problem, that being the balance of flow of goods. If all you're getting is gold, your economy will have massive inflation and starvation, if all you're getting is fish, then you're going to have no internal trade and scurvy.

You still need to make sure your economy, while possibly having a large percentage of income from piracy, also has some balance of activity such as farming, fishing and trade. Even so your economy is probably going to be a mess of periodic and unpredictable oversupply of goods.

You can run your economy off the internal trade of the great empires, but you can never be more than a flea on their backs.

Answer 5

Your understanding of Vikings is a bit askew. They weren't a culture or a people. Viking is a job title it means "raider". The majority of Scandinavians were actually just peasants or other common jobs at the time, there were no "Viking communities" same way there were no "Viking settlers". The majority of the success the Scandinavians had was from trade so they weren't nearly as close to the pirate based economy you're imagining. The main problem you'd face as a community of mostly pirates is that you need to be surrounded by trade of all types of goods in huge amounts. The dent you'd have to make through your piracy would then have to be an acceptable loss to those you were robbing so you'd be stuck as a fairly small community. Also you'd have to be pretty poor as any group who are regularly robbed are going to defend themselves violently so pirating would be very dangerous, people would have to be desparate enogh to take that risk.

Answer 6

While not a full "pirate economy", a letter of marque and reprisal was official government permission for a private citizen to perform piracy against a particular enemy nation. It created a government sanctioned mercenary navy seizing the enemy's ships and cargo for profit.

With a letter of marque, a captain and their crew were not pirates to be dealt with without mercy, but "privateers". A captured pirate would face death, but a captured privateer would be treated like a fellow captain doing their duty in wartime. But a letter of marque was not a blank cheque, it spelled out the nations and circumstances the privateer would be allowed to prey upon.

Other nations honored letters of marque because they wanted their own privateers treated well and to be able to attack their enemy without fear of being executed for piracy (dying in battle was fine). Not unlike treaties about the conduct of warfare and protecting the treatment of prisoners.

Their captured ships, the "prizes", were not simply sold. They had to be first condemned by a Maritime Court. They made sure it was all legal and that everyone got their cut (no kill stealing). The owners of the captured vessel could make their case that it was wrongfully seized. Once this was done, the captured vessel and its cargo was auctioned and the proceeds went to pay the privateer(s).

Prize money was not limited to privateers, many navies also gave prize money to their own sailors. The Royal Navy in particular could be heavily motivated by prize money, as famously illustrated in the Aubrey-Maturin historical fiction series aka "Master and Commander".

The prize money was portioned out into shares, often 1/8ths, and portioned to the captain, their officers, and their crew. In the Royal Navy, the captain had to share with their flag officer. Thus an admiral had financial motivation to encourage their captains to vigorously attack the enemy.

Prize Money Distribution in the UK until 1808

• 3/8 for the captain (37.5%)
• 1/8 for their commissioned officers (~2.5% per person)
• 1/8 for their warrant officers (~0.7% per person)
• 1/8 for their petty officers (~0.2% per person)
• 2/8 for the remainder of the crew (~0.1% per person)

Source: Patrick O'Brian's Navy, p134

Royal Navy captains got 2/8ths, the extra 1/8th went to their flag officers. Any Marines on board would be paid from the 2/8ths for the crew.

Capturing a vessel worth £1000, a very tidy sum, would give the captain £375 (£250 for an RN captain), and your average crewman would get £1.

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Again, this wasn't a full pirate economy, but you can see how this could work piracy, legal piracy, into a larger economy. The capture of goods and ships could bolster an otherwise flagging wartime economy, particularly the capture of hard currency like gold and silver. The captured ships could be sold, or pressed into service as supplementary naval and merchant vessels bolstering a probably overworked wartime shipbuilding industry. And it expands their ability to make war by giving financial motivation to private citizens to take up arms against the enemy and attack their shipping.

Answer 7

One possibility is an aggressive form of a gift economy.

In gift economies, people don't buy/sell/exchange but instead give each other gifts. However, everyone is expected to give at least as much as they get in gifts. That way you can have division of labor: different people make different things and give them to each other.

In a theft economy, people steal from each other. However, the more you steal, the more people will steal from you. You can thus have division of labor, you produce valuable products that everybody wants to steal, thus allowing you to steal a lot of products from other people.

Answer 8

Piracy Based Economy speaks to an economy where the basic means of performing a transaction is piracy. Every trader is, therefore, a pirate, and everyone who is economically active is a trader, and therefore again, a pirate. In this economy, piracy is not a bad thing, it's simply the way things are done.

The piracy would probably be a means of negotiation or barter, except that instead of setting prices and haggling, one party attacks the other. Since trading invariably involves an exchange of goods, and since everyone is a pirate, trading in a piracy based economy involves two pirates performing piracy on one another at the same time. Its just the way things are done. A good deal is when you pirate more than you lose, or pirate what you want or need while suffering losses that are smaller, or on goods you do not want or need.

The act of piracy is also less deadly and destructive than we would imagine, just in the same way that the cost of trading (interest, fees, taxes, cost of business) cannot exceed certain thresholds otherwise one or more parties will cease trading, piracy by all as a means of living implies that it is sustainable.

Finally, pirates cannot just pillage (trade), someone somewhere needs to produce. In the same way that traders cannot exist without having an excess of goods to trade, piracy cannot exist if it is the basis of an economy without having an excess of goods to survive pillaging and to pillage.

Imagine the world is a set of islands, and some islands have kinds of food and fruit growing naturally, and others have others. No beings can survive on one type of food only, and since piracy is the default means of trade, strategies evolve to take. For example, two smaller islands get together to raid the island of a third. A larger island becomes weaker when it is away on raids, allowing a smaller force to get away with some theft. Smaller forces band together to pillage larger forces and larger forces split to attack multiple smaller forces. Co-operating forces will pillage from one another while co-operating and larger forces may do the same on their own forces as they return with goods pillages from others.

The native Americans were pirates. The native Africans were pirates. The native Asians were pirates. All ancient people, before the advent and understanding of money and trading, were pirates. Colonial forces pirated from one another, just as less developed forces pirated from one another and from colonial forces.

Recognizing only major European and Colonial powers as pirates is a major accomplishment, being that it is narcissistic, bigotted and racist - all at the same time! There was ever only one noble savage, and it was us.

Answer 9

As one answer pointed out, it's worth distinguishing between piracy as a source of external valuables, and piracy as a core part of the internal economy (within the country. External has been well discussed above, but internal is a bit assumed to be impractical. So I'm revisiting that aspect.

What is the essence of piracy? It is surely, making a living by taking from others as one wishes, without fair recompense, or without legal standing.

In other words, its close cousins to a huge amount that can and does go on in real economies. People get valuables taken from them in ways they feel unjust (but lack any legal route to recompense), only its not usually called piracy once it becomes organised and routine within an economy. And that's what would probably happen - some ground rules would develop about who one may take from (by custom or "as laid down"), and pretty soon it's everyday. Only instead of piracy it's called taxes. Or donations. Or protection or baksheesh or.....

Answer 10

It depends on the definition of "piracy". Vikings raids weren't exactly "piracy", but neither were wars of conquest. They just pillaged one village or a monastery, then run away with what they had got.

As a general rule, piracy may be very lucrative to a pirate, but it's unlikely to have a noticeable impact in the riches of a whole country. In fact, most of pirates were dirt-poor and lived short, harsh lives. We all know the stories of legendary pirates, but they were an exception to the general rule - in most cases they were privateers: they had military experience, governmental support and were wealth enough to maintain a ship and crew (or even a small fleet) on its own means until they found a prize.

What is worst: piracy, like espionage, must be not too successful to be successful. If your piracy is too profitable there will be a reaction by the nations you're stealing from, and it won't be pretty.

What you can have, however, is a sort of embargo. Put your nation in control of a strait with a lot of traffic and demand a cut from every merchant passing by. You have a fleet patrolling the waters to make sure no one escapes without paying the crossing fee. To prevent the other countries destroying you, you must have a country which is hard to attack by land, and a navy which is more powerful than any other country, even more than some of them combined. Make it an island nation in the middle of an ocean. Most of the ships would be willing to stop there for trade and resupplying, but the ones trying to pull out a direct trans-oceanic way are chased.

Answer 11

It seems to me that it would be very difficult to sufficiently raid other countries and maintain a long-term economy. The aggregate loses to surrounding countries due to raiding would have to sum to a reasonable GDP/cap (not really a GDP but the point is clear) for that nation (I'm making an assumption that the nations are relatively similar in size, resources, and population). If they raided for less than an average GDP then there would be incentives for the nation not to raid. Likewise, the they would have to be provided a risk premium over average GDP to offset the income instability. Imagine the effects of a couple percentage point change in growth now. I think we can assume that a pirate nation would see pretty heavy swings up and down, which would make consistent capital investment difficult. Most importantly, as the pirate-nation bottlenecks sea trade, they increase the cost of trade, making it less profitable, and decreasing total trade. At the very least, firms will invest to discover ways to avoid that nation, whether through protection spells or new routes that avoid it. Furthermore, there are items that may not be traded and therefore cannot be pirated but are difficult to produce in the domestic market (if we are even allowing domestic production in the pirate nation). They would not be able to trade for them because it is safe to assume that there trade relations with other nations would be nonexistent. So unless the pirating nation relied on active raids like the viking, I believe that the international community would adapt and the pirating nation would struggle to succeed.

I believe that there are conditions by which such a nation could exist. 1) The pirating nation occupies a critical area for international trade, making it difficult for other nations to avoid its waters. 2) Vast differences in resource endowments of other nations makes international trade critical while land barriers dramatically increase the cost of land-based trade. 3) A historic level of poverty in the pirate nation could allow them to accept a pretty low standard of living with a large amount of variation and low levels of capital investment (castles, roads, public services and such).

Answer 12

I'm not as informed as other people here, so my answer will be much shorter.

Simply put, yes.

Think about it like this, a long time ago in your world's timeline, piracy was major problem for all merchants. to counteract this, weapon-smiths, ship designers and toolmakers begin making anti-piracy equipment to sell to merchants as they travel. These will prosper as the demand is high. however, a few savvy companies will see how this benefits them,and realise that without piracy, this boom in their industry will be lost. so a few of them will create equipment not necessarily marketed as pirate-friendly, but ideal to pirates. These will also do well, which will create a sort of cold war between pirates and merchants, with each constantly one upping the other. As these such items are in demand, inventions and advancements in technology will mostly follow a course to improve this equipment. Eventually, the piracy vs anti-piracy economy will become the main driving force in bringing money to countries. Another thing that you could factor in would be privateering, which is piracy performed by a country's navy.

As I said, I'm no economist, i just think that's how this would work.

Answer 13

Here's how I think it would have to work:

1) Your primary income is from a protection racket. Basically, what you do is attack enough people to make your threat clear, then go around and collect money from them so you leave them alone. This is a more sustainable, lower-risk way to make money from piracy.

2) In addition to this, you would exploit rivalries between nations. You would collect a bounty from nation X for messing with nation Y, basically acting as privateers/mercenaries.

All of the above would still probably not be enough to be the majority of economic activity. It could, however, be an important part of a larger economy and the primary source of state revenue.

Answer 14

There is a reason why the "Pirates of the Caribbean" are from Caribbean. There was a lot of small islands where pirates could live in a fairly nice weather, with a lot of routes going through Cuba and Haiti. Also slave ships supplied people who wanted to fight against French or English. It was called Republic of Pirates.

Remember that pirates were one of he first "modern" societies that used democracy and equality

There is also a story about how French pirates in the Indian Ocean established a free country for them and slaves.