Income differences tend to increase by mobility in space, skill and knowledge, but differences are not allowed to become arbitrarily large through control by progressive taxes, interest rates, limitations of work hours et cet intended to decrease difference. We understand that this control is necessary; a completely free capitalistic system collapses.
This is fully relevant - though sociology based - view, as the true reason of free market instability wasn't recognized yet. From AWT perspective this instability is of physical nature and it has the very same origin, like the instability of the whole Universe, which is collapsing gradually. This is because the free market with many subjects can be described as a multi-particle system with interactions, which leads to the periodic instabilities inside it by following humorous scheme:
Bursa instability can serve as an illustration of fundamental market problem by most pronounced way, being the most dense phase of market by the same way, like the behavior of collapsars illustrates the behavior of Universe. Free market is always operating with actual prices, so it cannot predict the future well and the information spreading inside of it is always limited, because the concurrent subjects aren't interested about free information exchange very much. Due the limited speed of information/energy spreading the free market is behaving like gradient-driven system (PD controller with time hysteresis), which is principally unstable. With respect to information spreading, the centrally planned market appears much more stable, being over-controlled at the price. This is because centrally planned market requires a boson condensate state of totalitarian society, which dissipates a lotta energy at low level of control. Therefore the optimal market strategy is somewhere between fully liberal and centrally controlled economy.
This is why, we cannot expect, free market will effectively control strategic decisions of society, like the prevention of fossil fuel depletion and/or global warming prevention, because it cannot evaluate risks and assets from long-term perspective, especially when these values cannot be calculated/converted into currency price at the moment of decision. After all, "free market" as such doesn't exist in society, at least from Wall Street Crash of 1929, which has lead into many forms of market regulation by governments and central banks.
By AWT the belief is in equillibrium with rational stance by the same way, like capitalism is in equillibrium with central government and like the longitudinal waves are in equillibrium with transversal waves inside of every multicomponent system/environment. One cannot exist without another. This concept is extended in more details here.