A Free Market Requires Regulation

Free markets are very important. They allow people to create organizations to (hopefully) manage resources efficiently which can create wealth for the people involved who own the organization or work for the corporation for mutual gain. From this we get excellent products that range from the necessity (food) the extremely useful and powerful (the computer I am using) to downright mundane (the little Darth Vader "easter eggs" on my desk right now). But this consumption creates things that people want and/or need which improves our quality of life and when done correctly, this system is clearly the best, here are a few reasons why:

1. The Ease of Starting a Business Index and Human Development Index clearly correlate, and by having markets which people can easily enter and exit makes it so that people who have great ideas can capitalize the idea and it raises wealth for not just them but their employees, investors, and through taxes their entire country which invests in infrastructure which makes it so more people with great and useful ideas can improve their personal livelihoods, communities, countries, and our shared world. This is good news. This means that people who farm can capitalize on their farming which encourages an increase in food.
2. Maintaining reasonable tax rates means that people can afford things like food, clothing, transportation and other essentials, and they can have ways to get around, defense, firemen, policemen, which keep society running and when those public services among others leave anarchy ensues, which is bad for business and bad for people. The truth lies somewhere in the middle.
3. When someone has a remarkable idea, lets say Bill Gates and Steve Jobs pioneering the computer sector which has had a positive effect on every single sector of the economy and has led to events like the Arab Spring, a fair degree of capitalism allows these people to get something good out of their ideas which incentivizes great ideas beyond their intrinsic value to a personal gain for the people who improve our world.
4. Having low barriers to free trade allows creative companies to expand their useful services to people around the world without unnecessary impediments which helps consumers, employees, and owners of businesses.
5. Easy access to credit allows small business owners to invest in themselves, provide great services, and improves the economy as a whole.
6. Hiring people needs to be easy, because that is how companies are able to grow and people who just want to live can get the money they need to survive and hopefully prosper.

However, it is very easy for the good things of capitalism to become too much, and that is why there need to be reasonable regulations to prevent abuses of the system.

1. If no one has education, people won't have the tools they need to get started with forming their own businesses or getting their high paying jobs which holds back an entire economy. It is no mistake that the countries that lead the world in distribution of income provide the least expensive and best education in the world, and countries that adopt such policies see huge economic growth (such as China in many parts of their country).
2. If there are no public services because the emphasis is completely on having low taxes society runs into the situation that is seen in a lot of undeveloped parts of the world, where there is no stability and if you start your company your chance of being stolen from and having no way of protecting your assets hurts ordinary people and the economy.
3. If there are tariffs and downright barriers to trade that are extremely high than there is no incentive to export. The incentive for people to compete and improve products is lessened and everyone suffers. That was one thing that happened during Herbert Hoover's administration here and around the world which I suspect was a major factor in the huge decrease in global economic output during the early 1930s.
4. If free trade is completely unmanaged you run into the situation of a concentrated amount of wealth which in history is a bad thing for stability whether it is the Russian Revolution, Fall of Communism, or Arab Spring. There need to be some regulations so people can organize unions and get paid what they are worth. It is a delicate balancing act, that when the sweet spot is hit can provide massive benefits.
5. If predatory lenders are able to lend to whoever they want and run out of money they can cause a negative impact to the economy beyond the people involved in the company and their lenders. When corporate fraud is allowed to persist for years on end, it will collapse eventually and the people who invested in the company and worked for the company will be hurt, which can be millions of people if a large company fails. It is less expensive and more sustainable to have reasonable regulations in place that prevents the situation from developing in the first place.
6. In places where people are not allowed to organize earnings are lower, unemployment is higher (on average), and people are worse off. "Right to Work" laws are hypocritical because they prevent people from getting wages higher which drives consumer spending. The difference between slavery and some wages some businesses give becomes small in many situations like the factories on the border in Mexico. This is both an economic and a moral issue. I have a small business and if I don't get people to buy my services nothing else matters, I will be broke. People need to be able to organize which creates the long-term demand for an economy which creates larger incentives for people to start their own businesses when they know people will be able to buy their products, larger businesses can sell more high-value goods, and increases the value of the economy.
7. When companies are able to buy out competitors easily and control entire markets it creates massive problems for everyone who doesn't lead the company. Today we have this problem in America when companies buy each other out which hurts competition which means that when one company fails, it has a huge market share, as was seen with banks in this famous graphic. In the movie business, six studios control 79.4% of the American and Canadian market share, which can't be good for creating new movies that question a number of issues that their owners wouldn't want to be talked about, like countless excellent documentary films.
8. What we saw today was where Disney decided to close Lucasarts, despite it being one of the most popular game studios seeing all of my friends, and firing 150 people on the spot which is cold and will mean they will make absolutely nothing out of those games. Though they are thinking of contracting out to other studios, Disney would make more money by just keeping the games developed in Lucasarts which mean they get to keep 100% of the profit, which they don't want for some reason. A smaller company would never consider going out of business for such a reason, but would take their company and figure out how to make their company more profitable instead of just killing it.

The economy is a delicate organism, and it needs reasonable laws that are out of the way when not needed, and has good laws that creates a system where fraud and recessions can be avoided or at least minimized. To have an unrestrained free market creates a situation where recessions will happen, as we saw in 1929 and 2008, which is bad for everyone from the unemployed man on the street to the richest man in the world. To have an economy like existed in the Soviet Union or exists today in North Korea is just as bad in the short and long term as a system where people are able to be extorted in the name of profit for no pay as happened in the American South in the name of slavery.