It is certainly the case that when viewed in isolation the consequences of economic failure appear cruel, harsh, and unfair. No one can argue with credibility that all, or even a significant minority, of these victims of economic failure are getting what they deserve in any particular instance of adversity. But economic outcomes that in isolation seem unjustified may be the necessary consequence of a system that is generating an overall, long-run pattern of outcomes that is entirely justified. 1 Hazlitt's warning cannot be overemphasized when considering economic failure and the fairness of free market capitalism. Each market failure is an inseparable part of a wider web of interactions and outcomes that provides everyone the maximum opportunity for success in the world of scarcity.
Scarcity is an unfortunate fact of life, and it is easy to see scarcity itself as unfair.
But unless one is prepared to argue that making the best of an unfortunate situation is also unfair, there can be nothing unfair about free market capitalism. And because instances of failure are necessary companions to the general success of the free market process, it would require a sharp twist of logic to characterize as unfair the failures that arise from free market activity. Economic failure is inevitable if we are to have economic progress. The discovery of improved products, and better ways of producing existing products, necessarily means that many established products and technologies are valued less. Those who have committed their resources to these now obsolete products and technologies will suffer a decline in wealth as their investments turn sour and their skills become less employable.