A. Is the core of the core of our current version of capitalism and free markets system, ie the core of the finacial markets, free? No!
(This piece was inspired by the subprime and credit crises as well as the blueprint of proposals by the US Treasury Secretary Henry Poulson on March 31, 2008)
Is it regulated? Yes.
Thus is the solution
liberalisation, eg why should central banks set interest rates and not supply and demand?
Is the concept of "market stability regulation" consistent with capitalism and/or free markets?
(John McCain's POV on the subprime and credit crisis may sound a tad harsh, but are they? What the moderate Republican and presidential hopeful merely said was that he did not see why the government should bail out persons or corporations (eg banks)! After hearing all those complicated (and quite interventionist, albeit potentially less or better "regulatory") proposals by Henry Poulson on March 31, 2008, , one may re-think one's impression that McCain's view is harsh)
Maybe John McCain was partly right: In a truly well functioning or proper capitalist and free market system/world, no bank or other market "actor" should be too big to fail and the market should "survive"/absorb, via its free functioning mechanisms, any failure. That no failure would be deemed as "systemic" or of systemic importance.
But is the current capitalist and free markets system a genuine one?
It seems not!
Watching a Democrat legislator on TV claim that the "no regulation is the best type of regulation" philosophy is not valid and that w/o regulation the "system" often goes haywire! But does a truly freely functioning system ever go haywire?
IMO, there are some things in life that it makes sense not to fully leave to the market mechanisms. Eg social security (medical and hospital coverage) education and a small number of others (eg Foreign Policy and Security and Police and related). These cover basic human and "community"/collective needs.
As far as I know, Economics does not discriminate between needs or wants. Psychology does. Maybe the two need to start a "relationship". Some things must be guaranteed by any "State" (in the Platonic sense of the term). Health (access to medication and hospitalisation) is IMO one of them, the key one, IMO. But many, most of the rest, must not.
States have adult citizens. And while adults are not Mr. Spok type uber rationalists, unlike what Economics tend to think, they are not minors or "sheep" either. And Socialism tends to, implicitly treat them as such.
Realistic capitalism and free marketism, IMO, should treat them as adults but also as humans, thus guarantee a few things but leave the rest up to them.
Many people think that post-USSR, capitalism and free marketism "rule". That is simply not true. The system is somewhat capitalistic and somewhat free market based. Interventionism rules supreme. Many reasons why it does!