A Celebration of Business Failure

I meant to blog this earlier but other news intervened. Anthony Gregory of the Independent Institute has posted an excellent piece on the collapse of Borders. [Link: ] (My thanks to Mark Perry at Carpe Diem for pointing this out.)

Capitalism sometimes seems to be all about the winners—Google, Apple, Amazon, Walmart. We sometimes forget that the death of businesses is just as important a part of capitalism as the birth and growth of businesses. Businesses that can’t efficiently satisfy consumer needs fail, and that capital gets reallocated elsewhere. It isn't always pretty, and there are casualties in the transition, but it’s business failure that allows for economic progress. The alternative is stagnation.

Gregory points out that,

for the consumers, the downfall of Borders is glorious, much as was its climb to success. In the rearrangement of resources to serve customers we see the beautiful actions of the market economy reconfiguring the world to provide the goods and services that are most wanted and needed in the most effective way. To ignore the upside to Borders’ downfall is as fallacious as to focus only on the downside of its upswing, as did most of the anti-corporate left in the last decade. But today we see that it was not government, nor socialist agitation, that brought the axe down on this big company. It was the matrix of demand provided by customers. It was the consumer base, acting in a manner much more democratic in the good sense of the word, and much more peaceful and socially productive, than anything we see in the political process. Thank goodness there is no doctrine of “too big to fail” in the book store industries. If the government bailed out Borders as it has so many financial institutions, surely the customers would suffer.

-Steve Bradford