Great post. It follows somewhat my own evolution in economic thinking, though I didn’t come by way of Ayn Rand. I read more of the Austrian economic thinkers like Mises and Hayek, and though I never took as an extreme position as Rand, government was certainly the thing that sapped the vital energy of a market that, if left to its own devices, would (mostly) spontaneously organize.

Of course, were that the case, Somalia, with an absence of government, would be an economic paradise.

What libertarians and “objectivists” do is the functional equivalent of fixating on a car engine. A car engine is a wonderful and amazing thing, and without it, a car is not really a car. It is useless, however, if sitting on blocks in the garage.

Cars - like economies - need structure, and that structure is a fundamental part of Capitalism. People like Hernando de Soto focus on that structure, which was the insight that modified my view of capitalism.

I often ask libertarians whether it is important for every child born into a country to learn to read and write. I use that, because illiterate workers are generally not considered helpful in the creation of a vibrant knowledge economy or democracy.

If they are willing to concede that the state should be involved in making a more educated workforce (which doesn’t necessitate a government education monopoly), then they are closer to understanding the important structural role of a government health care baseline.

People like Joseph Stieglitz have opened my eyes more to the information disequilibrium problem (which you noted in your post). That’s a pretty important point. Capitalism works, according to Mises, because it relies on people with the best information - individuals - to make key choices. If those individuals DON’T have information, or if it is incorrect, than those choices don’t yield positive outcomes however “free” individuals are to make the wrong choice.

Economics should always be judged based on whether it generates a useful outcome. I get the impression that a lot of libertarians (and tea partiers) fixate on attributes of a working system without understanding the structure within which they operate.