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Don’t tell me failure is not an option. Failure is an important mechanism in our lives. It is a critical part of the learning process. Some of the most valuable lessons in life are learned by experiencing failure. Failure is an essential part of the market process, too. It weeds out inferior products and puts an end to inefficient suppliers. In our democracy, failing policies and failing leaders are subject to rejection by voters, who can turn to more promising candidates and platforms. In so many ways, failure makes progress possible.

July is the month many Americans celebrate freedom, and we ought include an appreciation for the freedom to fail. The possibility of failure was surely in the minds of the signers of the Declaration of Independence. They were very much aware that their bold revolt against a tyrannical king might end in failure, thus costing them their lives or fortunes. Only by severing political ties with this ruler could the Colonies secure their rights, one of which is so aptly cited as “the pursuit of happiness.” The paths to personal fulfillment must not be constrained by unjust laws or unnecessary government interference. Yet the implication is clear: The outcome of this pursuit is uncertain. Happiness is not guaranteed by the state.

In commerce, freedom to fail ensures a fair and open marketplace. A free market entails that winners and losers will be determined by exchanges between buyers and sellers. This system enables consumers to judge products for fitness of purpose and desirability. Ultimately failure drives product design and technology.

Paradoxically, the possibility of failure spurs cooperation in a competitive environment. It creates an urgent incentive for businesses to share knowledge and work collectively by leveraging every innovation, no matter how small or fleeting. Bit by bit, this unstructured process enables highly specialized suppliers to contribute to bringing wave after wave of the most complicated and remarkable products to entice consumers. No single mind or central planning agency could accomplish this feat.

On a personal level, freedom to fail ensures that we have the opportunity to approach life as an adventure. Adventure cannot exist without some risk and danger. Attempts to outlaw danger or risk are doubly damaging to other personal freedoms. These attempts either constrain behavior by limiting choices or unintentionally encourage recklessness by limiting negative results.

Being free to fail means that we are left unshielded from the consequences of our actions, and  thus compelled to make decisions cautiously and prudently. When the consequences of poor choices can be avoided or foisted on others, there is little need for personal moral responsibility. Vice loses its sting; virtue becomes pointless. Fairness has no meaning; justice becomes impossible.

Risking loss and having the chance to win go hand in hand. Sportsmen and entrepreneurs know this. Investors and gamblers do, too. It’s the soul of the free enterprise system. It’s the reason to enter any game. In a real sense, if we are not free to fail, then we are also not free to succeed.