I've listened to pundits & economists reasoning and besides that, believe that the natural laws of economics (vis-a-vis capitalism) must be regulated to keep the system on some kind of even keel over time. The issue boils down to degree of economic stability (even keeled) v. degree of regulation.
I'm no longer so sure that this is the issue, however. Let me explain this.
I've peviously shown charts that show business cycle variation in broad market indexes over time since the 1950's through mid-1994. The business cycle peaks and valleys (valley's mark recessions... they invariably follow each peak in the cylce) are in the range from +/- 25-40% of the nominal long term trend... i.e. peaks are up to 40% above the long term trend, and valleys are up to 40% below the trend... swings of up to 80%.
These peak / valley swings occurred regularly in the period 1950's thru mid - 1994 with an average cycle time of 3.4 years. This period has been touted to be the best controlled period of economic stability ... at least in hindsight given the more recent bubble economic conditions (dot-com boom/bust and housing credit boom/bust). The period from '50's to '80's included the economic / wall street regulations that have been touted to be the reasons for economic period of relative stability --- the degregulation period started during Reagan's administration, albeit in smallish fashion (his first term started in Jan '81), but in earnest under Clinton's administration and Federal Reserve's laissez-faire promoted policy under Fed Chairman Greenspan.... culminating with the dot-com and housing bubbles
Hence, even with robust and well intentioned economic regulations the up to +/- 40% variation in broad equity markets were regular and periodic occurrances... job losing recessions, private enterprise profit losses and business failures, lower federal and state tax revenues were half the result... the later occurring other half being the inverse --- job gains, private enterprise profit and business's growth, and increasing federal and state tax revenues.
It is said that the business cycles are inherent in a capitalist economic system & the downsides are balanced with the upsides, with the net being an overall (over time) growth of the economy in real terms. This was true in post-war U.S. until the mid '80's... all the while U.S. economic growth growing at an increasing rate --- due almost exclusively to the fact that post-war U.S. was financing European and Japanese economic growth, was the worlds provider of goods and capital, with virtually zero competition economically. Basically then the U.S.'s economic growth period following WWII was due to the US having been spared the destruction of industry and infrustructure that the rest of western and eastern economic nations had experienced. It wasn't an advent of U.S.'s superiority in finance and business that grew it's economy, but simply the one-time opportunity created by the destruction of WWII. The US was simply able to take advantage of the situation and it did.
Since the mid-80's however, the U.S. economic growth rate has been in steady decline (basis = 10 year growth rates in real terms)... not even counting the current busts of recent years. The business / economic cycles variations from the long term trend from mid-'80's to mid '94 were no less nor more in variation that the period to mid '80's... still in the range +/- 40% of the long term trend.
So we have a near 50 year period of growth at an increasing rate followed by growth at a decreasing rate all of which contained booms and busts on a regular and systematic / cyclic basis that were up to +/- 40% of the long term trend in the broad equity markets. In other words, nothing really changed during that period --- other than the fact that sometime in the mid-80's the U.S. economic dominance began to diminish on a global relative basis as competition from Europe recovered and implemented it's pan-European economic policies, along with Japan's exploding post-war economy.
The question must be asked then as to why capitalist economy's are prone to suffer boom/bust cycles with or without regulations... the levels of boom to bust are indeed greater under lower levels of regulation --- based on overwhelming empirical evidence (pre Great Depression and post WWII since mid-'94 to present)?
There are some natural laws at work here... gov't policies not withstanding.
The dominant law is that of survival --- as manifested by the human's trait to obtain more ... assets & capital... in order to prevent or limit their loss on exposure to devastating events induced by greater competition, natural events (fires, tornado's, hurricanes, floods, earthquakes, etc), shortage of natural resources (termporary or prolonged), etc. One term used in the pajorative for the survival trait (in economic circles) is 'greed'. This human trait is the reason the Soveit Union ultimately failed. Economic regulation is an attempt to mitigate or control the negative economic (and societal) effects of the unabashed release of the human survival trait. One of the earliest regulations enacted was that of restricting the creation of monopolies... "fair trade'' laws.
Another of the dominant natural laws is human communication... as it relates to comunication of information. Even while the computer age has increased the availability of information on a far more timely and complete basis than ever before --- by orders of magnitude in fact, the ability of the human being to differentiate, select, integrate, and act on that information remains highly limited. This human trait limitation has two manifestations in economics --- interpretations, and lag time. No matter how complete the information available on a timely basis, not all the relevant information is available at the same time. This leads, even under the very best circumstances to differences in interpretations of the available information at a given point in time. From the time the information is available, it takes time to select that which is assumed to be most relevent, sift among that information, come to a series of possible outcomes given various other independant factors, and reach some conclusions (almost certainly more than one probable conclusion), and then ultimately decide (consensus or not) on a course of action(s).
Evidence of the regular & cyclic nature of the variations over time (before advent of wide-spread uses of computers or timely accessability of information, and since then) suggests that computer age information quantity, quality, and timelyness has not had any appreciable or apparent effect on either the periodic cycles or their magnitude --- hence the human trait (cognitive capacity) is the limiting condition. Were this not the case, then as communication technology improved (telegraph, telephone, tele-type, computers, wide-band capacities) one would have expected both better and faster decisions to reduce the frequency of occurrances and the magnitudes of the periodic business cycles. That hasn't been the case, however, so one must reject that faster and more information availability leads to appreciably better outcomes.
The other dominant limiting natural human trait is learning capability. One would think that learning capability also depends on the level of human intelligence, and I'm sure it does in the composite. But when it comes to economic considerations (and many others), the executive levels of company's and gov't policy makers, one can assume that those in the upper half of the intelligence distribution will be dominant --- not exclusively, but dominantly. It is however painfully obvious that learning capability is also dominated by that which occured in the near past, rather than assimilating the combined knowledge of both near and far past. The oft quoted phrase "Those who cannot remember the past are condemned to fulfill it" (Geoge Santayana in his Life of Reason, 1905/06) is apt. Whether simply because of unawareness of the far past condition(s), or because they are known but ignored, or because they are thought irrelevant to present circumstance is immaterial. The overall condition is a limitation of human capacity to learn from and apply the knowledge gained from the past to the present circumstance(s).
One can argue whether "learning" also requires the implementation of that which one has "learned" to prevent or repeat a desired effect in the present. I would simply say that a child that learns how to read but doesn't do so is tantamont to one that doesn't know how to read. One can also site a child that learns how to walk (from learning how to crawl) will almost invariably chose to continue to walk rather than crawl... and improve in that ability with practise --- hence "learning" in the context I'm using it requires manifesting action based on that which has been learned.
The manifestions of actions based on that which has been learned requires some incentive to do so... either postive or negative incentives suffice. If a repeated negative event occurs even with the knowledge of the past, then there must be some positive incentive to repeat the negative events... in other words, what may appear to be negative by those in observance may actually be positive outcomes by or for those manifesting the events. I therefore cannot say with absolute certainty that the negative events which occur with regularity are due in fact to the human limitation of learning capabiilty, but if not, then the negative events are in fact recurring because they have a positive incentive to be repeated by those that make the decisions which create the negative events. When this is the case, however, it would come under the human survival trait limiting condition (see above).
The final limiting natural law is the human characteristic as it relates to power. This may in fact be separate from the survival trait, since survival capability, even at very advanced levels does not require obtaining or retaining power. The human trait that provides an incentive to obtain power (and therefore control) appears to be inherent once a given level of power has been achieved (experienced). Naturally, as one achieves a level of power it increases the level of control in one form or another over others --- including those who unsuccessfully competed for the same power. It also naturally increases the need to achieve even more power in order to prevent others from ascending to some power over your own, so that the level and extent of control required in incentivized to increase.
Having achieved some level of power it is also inherent in human beings that the level achieved is not voluntarily shared or abdicated... that is to say, if a level of power is shared it is only because there is some net benefit achieved in doing so. It is almost never voluntarily abdicated. The benefit of having power is obvious --- there are fewer constraints on decisions made to further benefit and augment that power... even if greater dissent occurs, the level of power must be sufficient to mitigate or prevent the dissention from creating a loss of power (permantent loss --- temporary expediancies may force a temporary loss of power only to be regained by subsequent uses of the power that remains). In the colloqual, power means "having it your way" or being able to dictate terms of "compromise while still retaining power" (and therefore control). The quote "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men." (Lord Acton, 1887 in a letter to Bishop Mandell Creighton) is apt. By "great men" he was referring to those wielding power.
I cannot say that all humans have the trait that incentivizes obtaining or retaining power. I can say however that most human beings learn during their formative years that more power is an attribute they prefer over that of having less (or none). I say this because most human's voluntarily remove themselves from under the power of their parental home, realizing at some point that they prefer to exercise their own decisions freely and without constraits imposed by parental power. This position is augmented further during employment... perferring to be in charge of others rather than having others in charge.
And so power is one of those human traits that feeds on itself... more is better, and having more just reinforces it. There are downsides to achieving more and more power however ---- which is probably a limitation on some humans acquisition of greater and greater power. The downside is ultimately having to defend the level of power achieved from others that would take it from you. Those humans that are more adept at achieving and consolidating power will find it easier to defend than those less capable, therefore the human characteristic is to naturally elevate some to higher and higher levels of power. The overall inclination of human beings is therefore to achieve a higher and higher level of power and control up to the level at which they are no longer capable of or desire defending.
These natural human laws and traits are built in... they exist and persist in all cultures and times... they are not going away. The capitalist economic system, in it's purest laissez-faire form, exists because it promotes or serves to allow these traits to manifest. Economic regulations (and other laws in general, I might add) are created to mitigate the effects of the natural laws of human traits that would otherwise be manifested in their ultimate form as slave societies with pure dictatorships limiting freedom of learning, expression, occupations, & movement / travel. Our western representative democracies are an attempt (though somewhat feeble, but at least not without several merits) to mitigate the effects of these above natural laws of human traits on society as a whole.
As such, however, even these democracies are limited by design and subject to the direct effects of these human traits on society. They are still fully subject to the natural law effects of power & control, unfettered "greed", limits of human communication, and power of learning (as I described it above). Laws and enforcement thereof cannot remove these effects --- the best they can do is mitigate the negative aspects they incur on the general society... and as such, the mitigations taken are a matter of degree.
One can only strive for levels of mitigating conditions to increase over time.... rather than allowing them to revert to earlier levels of mitigation. This is not an easy task... since society in general and on average does not have the level of power and control, economic or otherwise, nor the composite of learning or knowledge of the post, and communications which would be required to counter the existing levels of power, economics, learning, or communications now in the hands of those that have attained (and control) it. How the status quo can or will change in any material fashion is therefore a serious question and issue.