When do state governments sponsor criminal behavior? History provides many examples where states have not suppressed but supported activities that are otherwise considered criminal such as extortion, production of illegal commodities, smuggling or even outright terrorism. Yet evidence strongly suggests that the costs involved are dramatic: countries have lower economic growth and a high potential for political conflict. Despite its economic and political importance, the lack of reliable microdata has so far inhibited systematic research on this puzzle. This comparative-historical study collects and analyzes unique quantitative evidence on the political economy of eighteenth-century British and French privateering: state-licensed sea piracy to raid commerce ships belonging to rival countries. The project identifies (1) the conditions under which states promote the otherwise criminal activity of sea piracy, and (2) explores how it shaped economic and political performance. The theoretical contribution is that privateering will be studied as a case of selective property rights. Privateering is an institutional arrangement that enforces property rights of domestic merchants but denies foreign merchants the same rights. Although property rights are a key institution for social and economic exchange, they have received scant attention in sociology. If they do attend to them, social scientists typically recognize property rights as a public, not a selective good: it is either available to everyone or completely absent. Since Sociology does not have a theory of selective property rights this research uses game-theoretic tools to develop a model of selective institutions that demonstrates how legalizing sea piracy as privateering provided a political instrument that worked much like patron-client networks in binding elites to the interests of state governments. For merchant elites, privateering offered at once lucrative business opportunities, chances for achieving influential political careers, and compensation for trade losses during war. For state-building rulers, authorizing merchant elites as privateers provided additional sources of revenue, a supplement to the navy at little cost, and, in true mercantilist fashion, undermined the trade of rival states. To explore these relationships, the project collects new data on the incidence, organization and profitability of privateering voyages in Britain and France between 1700 and 1815.
BROADER IMPACT: Empirical results from this research will have important implications for policy decisions concerning contemporary forms of state-sponsored violence. The study will offer new and consequential insights for institution-building and state-making in developing and transition countries, especially to what extent the selective enforcement of property rights thwarts economic growth and political stability.
