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A capitalist system is based on a decision that the distribution of goods and services is best decided by open markets, competition, and private or corporate ownership of the means of production.¹ In the real world these markets often function under imposed restraints, usually in place to maintain competition but occasionally to allow scarce, life-sustaining resources to reach all members of a society. This competition restricts profits and allows a high level of efficiency. The opposite would be state-controlled allocation, in which decisions are made from the top down. Such a system creates multiple problems, as illustrated by Herzlinger.

[E]ntrepreneurs with new ideas would have to convince the government to sponsor them, because existing providers would lack the incentive to do so. Perhaps for this reason there are more than 1,500 free-standing ambulatory surgery centers in the U.S. and only a few in all of Canada.²

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