This happens at the micro level (one employee is swapped for another who is better) and at the macro level (banks/tesla) and at the country level (socialism is replaced by more efficient and humane capitalism as in ussr/GDR).
The problem is when the bad employee cannot be removed, the bank is bailed out or the people are unable to get themselves a new form of government.
The key to efficient reallocation is not letting too much power concentrate in one location. And I think that is the thing at risk the most right now. Governments have become too powerful and are preventing the necessary creative destruction, like an operating system refusing to run the garbage collector and preventing new programs from running.