Privateering and the Private Production of Naval Power
By Gary M. Anderson and Adam Gifford, Jr.
Cato Journal, Vol. 11, No. 1 (Spring/Summer 1991)
Introduction: Privatization and the “contracting-out” of services traditionally provided by means of governmental monopoly continue to attract increasing interest from both politicians and scholars. Many studies have found that private provision of certain goods and services tends to be more efficient than comparable arrangements provided directly by the government.
One of the very few areas relatively untouched by the recent attempts atprivatization, or contracting-out, ofgovernmental services is the military. Although some economists have argued that the privatization ofmajor elements ofthe provision of national defense would be both feasible and efficient, in modern times military forces are essentially a pure governmental monopoly. Not only are private military forces illegal, but the military force maintained by the government is invariably wholly owned and operated by the government. National defense, like lighthouses, frequently serves as a stylized illustration ofthe need for governmental provision of“public goods” in economics textbooks.
However, just as in the case of lighthouses, the “monopolization” of military force production by the government is a fairly recent historical trend. During wartime, nations have long depended on hired private contractors for a portion oftheir military might.’ At sea, until the 19th century, a significant portion of the naval power of many countries was provided by privateers.
Privateers were privately owned and operated vessels that were granted licenses to seize the shipping assets belonging to the citizens of enemy states and to sell the “prizes” at auction. Privateers preyed on the seaborne communications of enemy nations. The granting of licenses to privateers to legally attack and seize enemy ships during wartime appears to have constituted an effective means of waging war and had many advantages from the standpoint of the licensing government. Privateering played a significant role in the history of naval warfare for many centuries. During some wars, licensed privateers provided the bulk of the naval power employed by one or all of the belligerent powers.
Our intention in the present paper is to examine interesting examples of the private production of military power and the complex system ofinternational law that emerged to regulate the practice. We will then proceed to consider possible explanations for the eventual demise of a seemingly efficient military institution.
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