While I was doing some Halloween shopping, I came across the Tower Records liquadation sale. So I went in a purchsed some Judas Priest anthology. But of course, it got me to do some thinking, too.
Was Tower Records successful or not?
Lets look at the facts. This was founded in 1954 and ended in 2006. I was told by my mother that she purchased records there in high school. When you went in, you saw loads and loads of albums by bands, some famous, many obscure. When I was in high school, a lot of my money went there (for tapes!).
My guess is that this store succeeded because it became
the place to buy music. Before that time, you could get music from the local department store. However, department stores focus on items that are in bulk, not in obscuranta. So even if a small band got some play on the radio, it would be difficult to buy their record at the local Macy's. So you went there instead. In the meantime, while buying, say, a record from some obscure doo-wop group, you also purchased the latest Elvis album. And the company made a lot of money off of Elvis records. So while purchasing obscure artists in bulk, and saving some money that way, the company would make the bulk of it's revenues from the big artiststs, since those most interested in music, teenagers, would do most of their shopping there (since it is a pain to get to two stores in one day).
So what happened? Well, while people starting buying and pirating music off of the internet, it thought it would be a wise idea to engage in aggressive expansion. I.e., it was engaging in expansion while it's customer base was shrinking. And it didn't even realize it. Thus, it created a recipe for disaster. And it killed the business.
We now need to ask the following question: "Was Tower Records a success?" We need to define what makes a business a success.
One of my college accounting textbooks asked this same question: What makes a business successful? When do we determine whether or not a business was successful? Especially if it goes into liquidation?
We need to ask ourselves a fundamental question first - what is the reason for a business? In fact, what does a business do? And why does a person engage in business?
To survive, we need to get someone to give us goods and services. We can do this in three ways. We can stand on the street and demand people give us goods and services (i.e., beg). However, most people will ignore us, and a few will either engage us in philosophical arguments or kick our asses, because they automatically assume that we only aim to buy drugs and/or alcohol. And since we are not in a depression, those assumptions are right almost all of the time. The best name for those individuals is bums. Some individuals choose to give such individuals money. Those individuals are known either as "naive" or "suckers."
We needn't beg. Instead, we can fashion a weapon, and physically take goods (or coerce services) from other individuals. There are names for each party. The former individual is known as a thug (or criminal), and the latter is known properly as a victim. However, unless you are a government, you can only get away with this for a time (and if you are a government and take away too much, your days of getting away with this are ended in a thing called a "revolution"). Otherwise, the authorities will eventually catch up with you, and throw you in a steel cell, or hopefully, put a slug in your head.
The third option is to use your talents (or "skills") to fashion something you think others will want, and try to exchange this (or your talents) for something you will find useful. And more often than not, you will find someone who will want to exchange what you want, even if it's very wierd. This is known as a "market exchange." Now, there are those in society who think that someone is a victim in this equation. However, they are those who get the term victim mixed up in the second equation, and think the drunken bum is a "victim of society." In their Orwellian senses, they get everything backward. In the old days, such individuals would be thrown into the loony bin, but today, we realize that takes away their dignity. Instead, we put such individuals into jobs at English, sociological, or various ethnic studies departments of major universities, or we place them into journalist jobs, or onto the staffs of elected officials, or we turn them into Hollywood actors.
Now we need to speed things up a bit. Barter doesn't always work, so we need money. And, to make things that are actually useful, we need organization of large corporate entities to create complex products like automobiles or computers (try to build a Prius from scratch. Ha!).
So lets say Joe likes to tinker a bit. He goofs around, and invents this thing called a PC. Now, he needs money, because his mother has been yelling at him because he has been hogging their garage for the last eight years, because she cannot put her crappy AMC Gremlin in there. I.e., he needs to move our and get his own pad. And when is he getting married anyway? In any case, he goes out to the market place, and offers this thing called a "PC." A few people see the potential. And they buy it. Actually, a few billion people see the potential, and buy it. Of course, he did have enough sense to hire a businessman, who got the patents, patented the product, developed the plant, bought the coffee, etc. This businessman makes the product a success by opening this thing called a business, which we shall call "Joes' Magic Machines."
So, Joe gets a lot of money. And he buys his own pad, which turns out to be a house built on a California coasal island that rivals Versailles. However, he doesn't get married. That is because a bevy of bimbos are impressed with his money, and he soon gets a harem that is much larger than the highschool linebacker who tormented him daily can count up to. But we are jumping ahead a bit.
See what is happening here? Joe, in his infinite greed, had managed to make society a much better place with his new product. Your ordinary Joe gets immense benefit from being able to save from making trips to the local store, engaging in mass distribution of his inane ideas through blogs, looking at dirty things on various websites, send mass emailings to his various associates every days, shows his latest loonacies thru videoclips, print off 500 copies of a memo that he needs to prepare for a meeting, play videogames, and do other stuff.
Thus, even if Joe squanders all his company's resources through harems and neoclassical buildings, and he dies a begger on the streets, his company has been a huge success. Because life has improved dramatically due to his product. And there are lots and lots of companies who have provided huge benefits to our everyday existence. Either thru communication (the phone system or internet), or shopping (by providing lots of items under the same roof, all for one low price), or transport (by providing us with individual carriages that can whisk us to a different location at 70 mph), or food or clothing (by providing us with lots of high-quality, low-priced goods in this vital area) or housing (by giving us more improved shelters each year) of financial services (by providing a place to park your money while it earns even more money). Or whatever other area I am too lazy to mention.
The key as to whether a company is a success is whether it provided something that improved society for the average person. Thus, if Microsoft, Dell, Ford, Sears, Wal-Mart, WaMu, John Deere, Exxon, AT&T, General Foods, Dole, and Nintendo all go belly-up tomorrow, each company has been a giant success, because our lifestyles have benefits enourmously due to each of their efforts.
And it is businesses, not any other institutions, which give us the most benefit. Sure, the goverment did aid greatly in the development of the personal computer and the internet, but that is the side benefit that sometimes derive as a by-product of an institution that is fulfulling it's core mission. Sure, we cannot deny the fact the goverment actions have added to technologies that have improved our lives. But the government did not set out with these creating as that being their goal in mind (and in any case, such technologies were only initially available to a small scientific elite).
Now, lets go back to the Tower Records example. Despite it's failed status, was Tower Records a success? Well, it broadened the spectrum of music that was available to the average teenager, during the Rock era. It thus allowed for the widening of the cultural palette. In fact, the range of musical choices exploded once the market took the role of musical distribution that only the very high elite got to determine what got distributed. The fact that Tower Records helped to widen the cultural palette is enough to show that the business was a success.
Before I close, I want to add one more thing. Technocrats have too little philosophical exposure to help see the difference of the forest from the trees. While an accounting textbook asks whether or not a business was a success, all it sees and accounting profits - and it barely is able to enter into the real of economic profits, much less determine why people enter business in the first place. Having this fundamental understanding of the basics of business - people offering something to improve your life in exchange for items that make up their basic needs - will make people think twice before writing a whole new set of regulations on business entities (i.e., ask if they are truly necessary) and will make life a little easier not only for the creators, but for all of us.
