You said no social system can exist without regulation. Surely this includes the regulators?
And, here’s an example of a market that exists without regulation (not saying that this is necessarily replicable, only that for your absolute statement to hold, you need to rebut this) -
I can give you yet another example: SCUBA gear. SCUBA is a dangerous activity. The government has virtually no oversight of the SCUBA industry, other than DOT certification for pressure vessels. The diving industry is heavily self-regulated, with organizations like NAUI and PADI maintaining strict requirements. Dive operators have their own certifying bodies and associations, and they keep their member operators in line because they recognize that a lapse in safety hurts everyone. The Diver’s Alert Network (DAN) acts as a statistics gathering service and information clearinghouse for safety concerns.
You’d think that diving would be ripe for exploitation by greedy capitalists putting divers at risk by cutting corners - especially since a lot of it takes place in 3rd world countries and far away from any kind of government oversight. But it’s not the case.
There have been movements by activists to have diving gear regulated by the FDA as medical devices. You can even see the rationale for it - unregulated dive operators can fill tanks of air, and you’re breathing the stuff. There are lots of ways for it to be contaminated. Why should an air tank in a hospital be regulated, but not a SCUBA tank? Dive regulators have oil in them that could be toxic, and this equipment is forcing gases into your lungs under pressure.
In fact, SCUBA equipment is incredibly safe. Major failures of gear resulting in injury or death are almost unheard of, despite the equipment being used in harsh environments with little margin for error.
The result of self-regulation means that the industry has undergone a tremendous amount of innovation. SCUBA gear is incredibly cheap for what it provides: You can buy an entire package of equipment for under $700. Recreational divers are now breathing advanced Nitrox air mixtures, and using sophisticated dive computers. They’re doing it safely, in an unregulated market.
How do you explain this, if markets aren’t capable of self-regulation?