The Guardian view on the state and the market: the end of ‘hands-off’ economics | Editorial

The financial crisis exposed how public guarantees underpinned private profits in banking. Now the BHS saga reveals how the rewards for owning businesses of other sorts are also unmatched by payment of a proper price for failure

The penalty for running a bad business is supposed to be failure. A free market system relies on the incentive of reward earned through enterprise, but it must also contain risk. The theory holds that evolution is at work, as good business thrives by innovation and competition, while the weak fall away. Meanwhile, democratic governments provide social guarantees so that this natural selection does not inflict cruelty on the citizens who depend on the economy for their livelihoods. That is why the ruin of BHS is a story of political failure as well as a product of commercial mismanagement.

The collapse of the famous high street chain, leaving 11,000 jobs in jeopardy and a staff pension fund with a 571m deficit, has been widely reported as a case study of corporate greed. There have been calls for Sir Philip Green, who owned the company for 15 years, to be stripped of his knighthood. Sir Philip, his wife and Dominic Chappell, who heads Retail Acquisitions - the consortium that later bought BHS - look set to be summoned by parliament's business and work and pensions committees, as part of twin inquiries into the affairs of what is now a hollowed-out shell of a company in administrators' hands. If these probes go ahead, they might shed some light on the mechanisms by which the value that there once was in BHS was apparently turned to cash and siphoned off. That is if Sir Philip and others deign to attend the committees. They might, like Mike Ashley - the founder of Sports Direct, who now offers himself as an unlikely saviour of the BHS workforce - defy a summons to appear. MPs want to speak to Mr Ashley about low pay and alleged worker exploitation. He dismisses them as "a joke".