[zissou]

Don't get me wrong, as a general statement I support free markets. However, Keynes' thesis (which is misinterpreted 96% of the time I hear someone talking about it) was simply that sometimes there is an economic argument for government regulation. Keynes' simply pointed out that sometimes it takes a while for some markets to readjust back to equilibrium (i.e. the invisible hand is slow) -- sometimes the market price is sticky. In these cases, the government can implement policies that incentivize the actors to do more of something (by issuing a subsidy) or do less of something (issuing a tax) in order to push the market back to equilibrium. That's the economic argument of Keynes.

The other component here is the idea of a public good. A public good is something the private sector doesn't have an incentive to do on their own (b/c they can't make money off of it), but it is something that society would benefit from. The role of government is generally to provide these public goods, such as national defense and parks.

So, the world will never have completely free markets. Besides providing national defense, the government also provides services designed specifically to protect consumers from unfair business practices, like collusion, price fixing and other monopolistic behavior (although, I just want to point out that is NOT illegal to have a monopoly in the US -- it is however illegal to monopolize -- big difference).