Portal:Capitalism/Selected quote/39

“ For those producers who are too blind or too stubborn to change, continuing losses will force their business into bankruptcy, so that the waste of the resources available to the society will be stopped that way. That is why losses are just as important as profits, from the standpoint of the economy, even though losses are not nearly as popular with businesses.

In a price-coordinated economy, employees and creditors insist on being paid, regardless of whether the managers and owners have made mistakes. This meant that capitalist businesses can make only so many mistakes for so long before they have to either stop or get stopped-whether by an inability to get the labor and supplies they need or by bankruptcy. In a feudal economy or a socialist economy, leaders can continue to make the same mistakes indefinitely. The consequences are paid by others in the form of a standard living lower than it would be if there were greater efficiency in the use of scarce resources.

” — Thomas Sowell (1930)
Basic Economics , 2015