No, we do not know why Poundland is in financial difficulties. Further, the why is not important to this next point. The very point - the thing it does so well - of free market capitalism is to clear up messes like Poundland:
Protect Poundland from predatory capitalism, MPs tell government
That predatory capitalism is the solution here, not the problem.
MPs have called on the government to protect Poundland and other high street stores from “predatory capitalism” and asset-stripping.
Any aspect of life will be subject to failures. Some things work out and some don’t. The usual answer to such things as ambitions, love affairs and sporting attempts - to choose a near random trio - is to pick oneself up and try again. Exactly the same is true in matters economic. Some things work out, some don’t. The most important part of free market capitalism is the predatory viciousness with which it dismembers the mistakes, the failures, and allows the picking up and trying again that is so necessary.
To put this another way around: The country contains varied economic assets. Land, labour, capital are the usual classifications. We can add the fourth, entrepreneurialism, if we like. Some combinations of these three - or four - are worth more in that combination than the use of the assets in alternative uses. The combination adds more value than not having that combination, a profit is made, the society as a whole is richer. For that’s what getting richer means, more value being added. Given that failure is a fact of human existence - as anyone who’s ever tried to pick a partner for a love affair knows - we require a system that cleans up afterwards. That dismembers the value reducing, loss making, combinations of those economic assets and returns them into general circulation to be available for some next and possibly better combination. This is that predatory capitalism, that asset stripping. This combination of land, labour and capital isn’t working out. Pull it apart, dismember it, into its component parts and see who tries again and how with those basic building blocks.
We can even use that language of vultures feasting on carcasses if we like. Come up with other such analogies, maggots eating away at a corpse, predators chewing the guts out of hunted prey, bacteria feasting upon the fallen. But now think what the world would be like without those processes which return the end of life remains to the general circulation and availability for new. Think of the miles high pile of stinking corpses of those past failures, of all the resources necessary for life locked into those carcasses that cannot, now, be reused for new life.
Predators, perhaps scavengers, that eat the failures are an essential part of any system. Which is what predatory capitalism does. Does so well in fact. It’s the reason the system works so well. That failures are dismembered, recycled, and economic assets are returned to the general pool of availability so as to be used again in something more successful. More lively even.
Free market capitalism devours, rips apart, the failures inherent to the human experience then poops out the component economic resources making them available for the next attempt at doing something useful. This is the very joy of the system, the crucial reason it all works so well at making us richer over time.
Far from protecting the economy from predatory capitalism we need to expose all of it to the process, red in tooth and claw. As with any other corpse or carcass, a failed business attempt requires the vultures, the maggots and the worms to clean up the mess and make the resources available again. We also don’t have to like the scavengers, but we do need them.
Tim Worstall