We tend to think of businesses as simply money-making enterprises, but that can be very misleading, in at least two ways. First of all, most businesses go out of business within a very few years after getting started, so it is likely that at least as many businesses are losing money as are making money. More important, from the standpoint of economics, is not what money the business owner hopes to make or whether he succeeds, but how all this affects the use of scarce resources which have alternative uses -- and therefore how it affects the economic well-being of millions of other people in the society at large.
The businesses we hear about, in the media and elsewhere, are usually those which have succeeded, and especially those which have succeeded on a grand scale -- General Motors, Microsoft, Kodak, Chase Manhattan Bank. In an earlier era, we would have heard about the A & P grocery chain, once the largest retail chain in any field, anywhere in the world, with sales greater than the combined sales of leading contemporary retail giants Sears, Penney, and Montgomery Ward.
The fact that A & P has shrunk to a fraction of its former size, and is now virtually unknown, suggests that industry and commerce are not static things, but dynamic processes, in which individual companies and whole industries rise and fall, as a result of relentless competition under changing conditions. Half the com