ABSTRACT
The central importance of loss is the one thing that sets modern industrial economy apart from pre-industrial economics. It expresses the two basic innovations: The economic unit of an industrial economy is not an individual but an enterprise, which means an organization of a great many people and a heavy fixed investment of capital. "Loss", to use the standard definition, is a decrease in the ability to produce economically useful goods; it is a shrinkage of productive potential. The risk of future loss endangers the ability for future economic performance. The avoidance of loss is the enterprise's first social duty. An industrial system has two kinds of costs: current costs–the "costs of doing business"; and future costs–the "costs of staying in business". The cost concept of the accountant is confined mainly to the visible and tangible costs of the present, the costs of resources such as material and labor actually used up in the productive process.
