Some of the resources used for manufacturing cameras that used film had to be redirected toward producing digital cameras. Nor was this a matter of anyone's fault. No matter how fine the typewriters made by Smith Corona were or how skilled and conscientious its employees, typewriters were no longer what the public wanted after they had the option to achieve the same end result — and more — with computers. Some excellent cameras that used film were discontinued when new digital cameras were created.

During all eras, scarcity implies that resources must be taken from some in order to go to others, if new products and new methods of production are to raise living standards. It is hard to know how industry in general could have gotten the millions of workers that they added during the twentieth century, whose output contributed to a dramatically rising standard of living for the public at large, without the much-lamented decline in the number of farms and farm workers that took place during that same century. Few individuals or businesses are going to want to give up what they have been used to doing, especially if they have been successful at it, for the greater good of society as a whole. But, in one way or another — under any economic or political system — they are going to have to be forced to relinquish resources and change what they themselves are doing, if rising standards of living are to be achieved and sustained.

The financial pressures of the free market are just one of the ways in which this can be done. Kings or commissars could instead simply order individuals and enterprises to change from doing A to doing B. No doubt other ways of pursuing the same goals are possible, with varying degrees of effectiveness and efficiency. What is crucial, however, is that it must be done. Put differently, the fact that some people, regions, or industries are being “left behind” or are not getting their “fair share” of the general prosperity is not necessarily a problem with a political solution, as abundant as such proposed solutions may be, especially during election years.

However more pleasant and uncomplicated life might be if all sectors of the economy grew simultaneously at the same lockstep pace, that has never been the reality in any changing economy. When and where new technologies and new methods of organizing or financing production will appear cannot be planned or predicted. To know what the new discoveries were going to be would be to make the discoveries before the discoveries were made.It is a contradiction in terms.

What can be done is to recognize that economic changes have been going on for centuries and that there is no sign that this will stop — or that the adjustments necessitated by such changes will stop. Neither enterprises nor individuals can spend all their current income, as if there are no unforeseeable contingencies to prepare for. Yet many observers continue to lament that even people who are financially prepared are forced to make adjustments, as a New York Times economic reporter lamented in a book about job losses with the grim title, The Disposable American. Among others, it described an executive whose job at a major corporation was eliminated in a reorganization of the company, and who consequently had to sell “two of the three horses” she owned and also sell “$16,500 worth of Procter stock, cutting into savings to support herself while she hunted for work.”

Though this executive had more than a million dollars in savings and owned a seventeen-acre estate, it was presented as some tragic failure of society that she had to make adjustments to the ever-changing economy which had produced such prosperity in the first place.

Add comment

Security code

Copyright © 2019 | "The Theory of the Business"