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What the fall of Sears and GE teaches us about capitalism

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WASHINGTON - General Electric and Sears have fallen on hard times, and that tells us a lot about U.S. capitalism. Both were once great enterprises — symbols of American ingenuity and imagination. The temptation will be to blame their troubles on mismanagement. The real lesson is starker. It is that no business, no matter how historically innovative or powerful, is guaranteed immortality.

Here’s a summary of the companies’ troubles. Sears entered bankruptcy in October. It will either go out of business (its stores and merchandise will be sold, with the proceeds used to repay debts) or a much-smaller store chain will survive. Although GE doesn’t face bankruptcy, its profits have dropped sharply, and it is considering selling more of its business units.

Both firms helped weave America’s economic tapestry. The mail-order catalogues of Sears and its main rival, Montgomery Ward, created national markets for consumer goods, from clothes to tools. Sears issued its first multi-hundred-page catalogue in 1894. It was the Amazon of its time. By the new century, it was fulfilling 100,000 orders a day, reports economist Robert J. Gordon in his book “The Rise and Fall of American Growth.”

GE — Thomas A. Edison was one founder — promoted electrification, which reached 96 percent of urban dwellings by 1940. As........

© The Japan Times