Ralph7, you might want to get more up to date on your economic theory. It is assuredly not the case that economic theory has settled that a market economy (a pure capitalist model) is inherently superior to all other economic systems. Friedman was a brilliant guy, but not the last word on the subject by any means. Economists working with the analytical tools pioneered by Kenneth Arrow (Nobel 1972), John Harsanyi (Nobel 1994), and others have shown that neither an all-market system nor an all-planning system can optimize resource allocation. For optimal results, you need both markets (to provide their very useful signals to individual participants for scarcity constrained choices) and planning/regulation (to deal with the fact that markets require perfect information to optimize outcomes, when perfect information is in reality never available).

This work helps us understand why all current capitalist economies have very signficant governmental regulatory elements. It also helps us understand why markets can get so screwed up sometimes, as the U.S. credit markets have been from July last year and continuing. There has been a very significant lack of adequate information in the credit markets (as to what investment portfolios contain the toxic securitized mortgage instruments, in what amounts and with what risk quality); that information failure would most readily be remedied by a regulatory response mandating certain increased disclosures by market participants (It would really be nice to know with more precision what you are buying when you invest in bonds, or a bond fund.)

The great days of the U.S. economy after WWII were built in important part on the information-increasing regulations (transparency requirements) imposed by the securities acts legislated in the Roosevelt administration.

This is not to say that regulation cannot be overdone as well as underdone. The point precisely is that neither extreme (just let the markets do their work vs. rationally allocate everything according to plan or consensus) works best.