The Toy Store vs. the State

July 15 was the final day for FAO Schwarz’s iconic flagship retail store, a New York City fixture since 1870. What, exactly, closed the toy box?

The immediate cause, increasing rent, was merely the last straw. The store’s approach was more and more out of step in an economy in which personalized service from warehouses is replacing brick-and-mortar retail — and digital content is replacing tangible goods. A luxury brand in a recession era, it struggled to compete with the more affordable prices of downscale mass-market retailers. It remained a popular tourist destination whose visitors rarely brought revenue.

Were the conditions it was so slow to adapt to inevitable? Is the price of a modern, productive economy that the most cherished of childhood things be put away as soon as market forces require?

At first glance, its history exemplifies how free enterprise means that the big fish eat the little fish. While FAO Schwarz always retained the name of the individual who founded it as a family business, it had long become just another asset. After financial difficulties culminating in bankruptcy in 2003, it was bought by investment management firm D. E. Shaw and sold to rival Toys R Us — which had itself already been bought out by a consortium of investment firms including Bain Capital.

The satirical depiction in Joe Dante’s Small Soldiers of a small toy company getting absorbed by the unsubtly named GloboTech Industries is not much of an exaggeration. But neither is its skewering of the obliviousness of GloboTech’s management: “Just as he’s done with his computer, electronics, telecommunications, munitions, chemical and food divisions, [our CEO] intends to bring his own personal touch to Heartland Play Systems.” Nor is its portrayal of GloboTech’s reliance on military-industrial subsidies. Government policies that stack the deck towards heavily capital-intensive, high-overhead behemoths allow them to win out over more agile and astute, smaller competitors. FAO Schwarz wouldn’t exist to begin with if its eponymous founder hadn’t noticed that toys intended merely to entice customers to his stationery store were outselling the stationery. That sort of on-the-ground entrepreneurial alertness to shifts in consumer preferences cannot be done from on high.

Bernie Sanders’ disparagement of “18 different pairs of sneakers when children are hungry in this country” exemplifies the assumption that consumer choice is in conflict with economic justice. But when Edward Bellamy foresaw superstores offering “bewildering variety” to the masses, the “vast hall full of light” in his 1887 novel Looking Backward was the result of cooperative economic effort in a future utopia. In 1894, Ernest B. Gaston argued that what would enable the prevalence of such cooperative stores was not Bellamy’s nationalization, but “cooperative individualism” under “equal opportunities to all and to the laborer the full product of his labor.” There’s still time to find out if Gaston was right.

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