People are already expected to practice self restraint and they do not. I can not understand how libertarians think society will function well with so little structure and so much opportunity for private enterprises to exploit the populous.
Let's take this one step at a time:
#1- your unequivocally wrong.
cronyism - favoritism shown to friends and associates (as by appointing them to positions without regard for their qualifications)
discrimination, favoritism, favouritism - unfair treatment of a person or group on the basis of prejudice
What prevents anyone from doing that in a "free market"? You haven't shown me anything that says that can't/won't/doesn't happen.
Also...there's no such thing as a "free market" in the first place. Where do corporations get their charters from? Where do they get the land to operate? How do they know where their land ends and another's begins? Sounds like Government is involved with that. Ever heard of a contractor? A Government hired agency to do specific functions.
All this is just an aside, we are talking about cronyism and nothing stops a politician from showing favoritism to anyone he chooses, whether its giving him a contract to build something, a tax break or a grant. And in extreme cases what prevents someone who works for a company from just running for office themselves? Nothing....lol.
We just had a former CEO as President and VP, who would stop that? Well Government regulation can prevent it by creating a law that bans it but then again...your against regulations...so its all moot.
#2- that's not Socialism lol.
Socialism is about societal ownership of production, what wikipedia is discussing is a mixed economy. Notice it says "co-operative" and also Government doesn't own the means of production private industries do...so by your own definitions you once again just said this is capitalism.
What does Government produce? They don't even run prisons or schools anymore in some places all that stuff is contracted out to cronies. America's economy is mostly private industry and there's no two ways about it. So even if you want to use GM as an example its still a private corporation and then even if you wanted to count GM...that doesn't speak for Chrysler or Ford the entire industry is still private.
Crony capitalism not just cronyism. All crony capitalism is cronyism but not the other way around.
Crony capitalism in the US only occurs on the scale it does because the government allows it to occur, straight up. The government makes and enforces the laws and has all the guns. Google "monopoly of force" when you get a chance. The CEO of Wal mart doesn't have an army. He's not writing legislature. He might have lobbyists, but he can't force policy through. There's nothing stopping cronyism from occuring in a more socialist economy anyway.
The free market can and does exist without government. All the free market is, is a market without any government input. In high school I was one of many people who used to cut hair. Sometimes at their house sometimes at school, sometimes at my house. That's a simple example of a free market. Contrast that to opening a barber shop where in order to do so you need a barber license, owners license and business license. Things like this drive up prices and in order to offset this barbers have to charge more for haircuts.
Meanwhile who suffers? The people, while most of the money is being gobbled up in bureucracy to pay off things like politicians salaries (who add nothing to the economy, btw). And people aren't even necessarily getting the best quality haircuts because more competent barbers with less capital may be priced out of the market.
See in markets there are already natural factors to determine who succeeds and who fails. For example in high school if I gave out bogus cuts word would spread and my patronage would suffer. So in order to maximize success I had to make sure I was a quality barber. That's [free market] capitalism. You're allowed to succeed or fail on your own merits.
I'm saying that to say cronyism can't happen in a free market because the government doesn't get involved in it period. Just like the government didn't get involved in our "barber market" in high school. Limit the power of the government and the people will be better off for it.
Property rights is a whole other can of worms, I'll save for another post.