Do not call the US a capitalist or free market country.

A free market is capitalism – not a mixed economy. A mixed economy is a mixture of freedom and controls and “dominant classes” fight to gain influence over the controls and to limit the freedom of the market (since a free market is a challenge to their current power and influence). They want to use the apparatus of the state to disarm their competitors and put chains on the market. Sounds a lot less like capitalism, when you really look at it!

The USA was a lot closer to it in the latter half of the 19th century than we are now. The progressive movement started to kill it in the decade running up to WWI. We had no central bank, the government was very small and restricted itself to its enumerated powers as laid out in the constitution (for the most part). We had no income tax. We were on the gold standard and the government did not print money. We had no public education system, etc – yet from the end of the civil war through 1920s, we had become the world’s leading industrial power and the living standards of our citizens were raised quite dramatically.

Capitalism and industrialization INHERITED the problem of exploitation of workers and eventually abolished it! It did not create it. Do you think that workers were all happy in the pre-industrial time? Do you think there was no such thing as child labor or did you forget all about the exploitative nature of the feudalist and mercantilist models?

In terms of the robber barrons – re-check your history again – note what fields they appeared in first – the ones in which they were able to get government involvement through the abuse of the interstate commerce clause and the establishment of the ICC. Second, the “trust busting” started to occur only in areas in which government was beginning to get its feet (see railroads as a primary example). This was the beginning of the end. It was not a perfect system, but we had a lot more freedom back then as opposed to today.

Regarding education, if you set up a modern factory with the skills of that workforce, you would be extremely disappointed with the results. Once again, this was a problem that was inherited by the capitalist system and eliminated because of it. The need for more highly educated people spurred the investment (private) in schools. It was the CHRISTIAN progressives who petitioned for a nationwide public system because they believed that the private school education was too secular! There was great opposition to these factory jobs back then by the early socialists and Marxists because they believe that industrialization and capital investment cost jobs and led to unemployment – rather than realize that the machines were replacing the backbreaking labor with highly skilled and better paid (due to the higher productivity) jobs. Just believing their argument, we should have close to 100% unemployment by now!

Beginning in the 1920s we started to get full scale government intervention – as we had a central bank in the US for the first time diddling with the money supply (even in spite of the gold standard). The 30s were the result of welfare statists attempting to break the rules of reality (to spend without regard to the consequences and that belief that the cure for the accumulated war debt was to extend more credit!)… How Keynesian! The 30s were made worse by the confiscation of gold and the imposition of draconian price and wage controls by FDR. As it says in the Koran, only Allah can fix prices!
The 30s were the result of governments foolishly playing with toys they had never seen before and should never have taken out of the box.