Austrian economists consider destructive forces not as a source of failure, but a regenerative event.
They see periodic, recessive pressures for business as necessary “corrections,” following periods of prosperity and expan-sion.
According to this view, when an unprofitable venture is liquidated, it frees capital for new ventures.
This way, the periods of destruction purge unsuccessful enterprises as resources are transferred by market forces from less productive to more productive uses.
As such, market destruction and performance downturns are a natural mechanism of undoing the misallocation of resources inherited from the “boom” phase.