Historically, one of the most distinctive features of capitalist economies has been the practice of decentralizing authority over investments to substantial numbers of individuals who stand to make large personal gains if their decisions are right, who stand to lose heavily if their decisions are wrong, and who lack the economic or political power to prevent at least some others from proving them wrong. Indeed, this particular cluster of features is among the stronger candidates for the definition of capitalism. Its importance in Western growth turns on the point that the choice of capital investments includes the selection of the proposals for innovation that are to be funded. The diffusion of authority to select programs for capital expenditure and the diffusion of authority to select projects for innovation thus cover much the same ground.
-Nathan Rosenberg and L.E. Birdzell Jr (How the West Grew Rich)
