Bankruptcy: News that Eastman Kodak may file for bankruptcy brought a flood of nostalgia for the venerable company. But Kodak's demise underscores the unique strength of our free-market economy — its constant renewal.
Sixty-two years after Kodak was founded, economist Joseph Schumpeter popularized the term "creative destruction" to describe a key function of free market economies.
"New consumers, goods, the new methods of production or transportation, the new markets, the new forms of industrial organization" were, he said, constantly creating new industries and new companies, while destroying old ones.
Now, 70 years after Schumpeter put his finger on this phenomenon, Kodak looks like it will finally surrender to it. At its peak, Kodak employed 145,000 people, dominated the film and photographic paper market, and was deeply embedded in the culture. People talked about "Kodak moments" and sang songs about its film.
But the rapid rise of digital photography destroyed Kodak's market. As a result, the once mighty blue chip company now employs just 19,000, and few growing up today have ever heard of it, much less used one of its products.
Kodak is hardly the first to suffer the consequences of Schumpeter's "perennial gale of creative destruction."
Edison's light bulb and the electric industry it spawned, for example, quickly and completely wiped out what had been a vast and lucrative gas lamp industry.
Kodak's (EK) Fall Offers A Lesson About The Benefits Of A Free Market - Investors.com