free market has always worked in the US because the US has had the resources to be self-suffficient AND export wheat etc. at the same time. And has always been very developed.
There has always been tax barriers, tariffs, control of flow of products, even before the government decided to fuck with it. These are factors which limit the completely free market, there are also other factors like imperfect information etc.
A problem with the "free market cure-all" is that the free market is good for all but not necesserily for one. Where the economic surplus increases the freer the market we have, the surplus for anonymous might not increase.
About simply leaving if you don't like the work, well it's easier said than done, what if there are no other places for you to go, and if you ahve a small governemnt, then you have the decision of staying at your job, or not having any money to feed yourself. But theoretically mayeb there is a job 10000 miles away, but you'd a) need to know about this, and b) be able to move your existing capital to that place, both things a problem
anyways, there are alot of implications with a completely free market, these all need to be accounted for and worked in to a government, as well as desires for political control (like the balance of power the british kept during their reign, how much would they be willing to sacrifice to keep each side in check so they would profit as much as possible, etc.) and many people may find some things unjust and want the government to deal with that. The reduction of the size and power of government is of course the most efficient thing, since you would have less public expenses, less taxes, less subsidies, thus a higher economic surplus.
But depending on culture, geopolitical position, history and such, people may want some things which can not be provided by the companies, they want the government to do it. And in a democrazy that will cause the size and power of the government to rise.
i'm personally for the free market, reduction of tariffs, tax barriers, subsidies and the like, but i don't believe a nightwatcher government is necesserily the answer for an as close-to-free-market situation and a fair society for all people.