A Stitch in Haste

Sony, which was Apple before Apple was Apple, is admitting defeat and radically downsizing its operations:

Electronics giant Sony has announced plans to cut 10,000 jobs worldwide as part of a restructuring programme. ... The company will also close or sell 11 of its 65 manufacturing plants.
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The company that invented the Walkman has been humbled in the portable music market by Apple's iPod, while it has also been caught out by the shift from traditional cathode-ray tube televisions to flat screens.

Critics of capitalism often focus on company size, arguing something like, "For capitalism to work, it requires competition, and mega-corporations like Microsoft, Wal-Mart and, um, Sony don't really compete, because they're practically monopolies."

Nonsense. Indeed the exact opposite proves to be true almost without exception: it takes remarkably few competitors to bring about competition. Sony has only a handful of competitors to the Walkman and old-fashioned television businesses. And those handful of competitors cleaned Sony's clock-radio.

Sony gave us great Walkmans and Discmans. But it didn't give us great iPods. And all its size and market power couldn't help it compete with a better product — a better product that only capitalism and the profit motive could give us.

In a centrally-planned economy, however, where economics and politics are intertwined, there would have been no incentive to invent, or perfect, the MP3 player. And even if it had been invented, the political power (not the economic power) of an entrenched producer like Sony would have been able to keep it off the market. Or perhaps the mere subjective whim of some bureaucrat would have been enough: "We have a perfectly good Walkman factory — why displace all those workers just to go from a dozen songs to 10,000?"

All variations of central planning presume static markets: that nothing ever changes and that entrepreneurship and risk taking are merely "exploitation."

And the format of that old song is incompatible with your iPod.