Borders Bookstore Closes

The "failure of Borders is a glorious event," and today's closing of Borders Store No. 1 gives us reason to celebrate - it demonstrates that the market forces of: a) creative destruction, b) consumer sovereignty, and c) the profit-and-loss system, are all working perfectly. To quote Anthony Gregory, "If voluntary competition should one day bring Amazon.com down, in the midst of a competing commercial success today unimaginable but even more friendly to consumers than that wonderful online store, we will again have reason to celebrate."

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Recommended Reading: Embracing Creative Destruction

Creative destruction (Joseph Schumpeter's phrase) occurs when innovations — new technologies or business models — demolish the capital structures of well-established industries, industries that have lost the ability to satisfy the urgent wants of consumers.

This process can happen almost over night, such as when the vinyl record industry collapsed in the wake of digital music. Or, the process can slowly run its course, similar to the decades-long crumbling of a building's foundation. Here the process is akin to the way moss attaches to surface imperfections and degrades — over decades — the strength and resilience of concrete...

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