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I know you did not want to read a long essay, so stopped when the post was much smaller. But as I was rereading your post to make sure I addressed your points, it more than doubled in size.
 Originally Posted by MadMojoMonkey
I'd really appreciate it if you walk through this more slowly.
So the first step is saying, "People are rational actors," where rational is a fluffy filler word which bears no meaning in the sentence. If any meaning can be attributed to the word "rational" it seems to be in the legal sense of "responsible for their," as far as I can tell.
While this is a squishy starting point, I don't disagree with the sentiment that "People do stuff and they are responsible / accountable for their own choices."
What's the next step? If it goes straight to "people know what is best for themselves," then you lost me already. There needs to be some real clarity on these terms. How many times have you been stuck in a rut and a friend says something that you immediately think is obvious and good advice? Until that moment, you did not know what was "best for yourself." You may not have even wanted to talk to that friend.
The act of being rational is the act of acting on preference; irrational would be acting against preference or randomly acting on or against preference. It is not that people know what is best for them (in the reasoned abstract sense), but that people know what they prefer (in a here and now valuation sense)*. Economics doesn't attempt to model the former but does attempt to model the latter. This is probably because modeling abstractions and thoughts and even preferences is about as impossibly hard as it gets. What economists do instead is say they can model preference indirectly by modeling consumer behavior.
*Even a state of confusion on preference is still a preference, since at that moment, the person prefers none of the options, or rather, the option of not having chosen yet.
This isn't even getting to the point of people who are being taken advantage of by other people due to the free market influences. There is money to be made off of exploiting children to the point of unquestionable abuse. The free market gives this value, and leaves absolutely no incentive to regulate it in a manner which is both meaningful and possible. People who perpetuate the abuse will continue to do so as long as there is money to be made... which it always will, even if only in black markets (the most free of markets, I'd assume).
What do you have to say for this brutal nature of human desire and selfishness to create a value on the creation of human suffering? How can the free markets ever possibly curtail this?
This is a fantastic question. Seriously. It's the kind that I need to be able to answer. Before we get to that, I should point out that black markets are not free markets; they're the antithesis of free markets. They exist because of regulations, for regulations are what push the sectors out of normal markets and into "black" markets. Even still, most black market transactions are beneficial for all parties. They include things like construction projects that skirt useless regulations. I know a ton of people who operate with elements of the black market in construction, and they do it because the zoning and building regulations in Washington state are insane. They're "you can only have this small number of sheds on your vast plot of land because some suit-and-ties at the capitol who have never even set foot in the woods or on a farm say so" level insane.
Regarding abuse within black markets, the demand for abused goods and services (like sex slaves) exists because consumers can't get what they want in normal markets. It isn't that there is value in selling a suffering, abused sex slave, but that there is value in selling sex, and the only way to get it because of bad laws is through suffering, abused slaves.
When it comes to the very small but still existent proportion of people who desire to consume the abuse of people (like psychopaths, murderers, rapists), they can be dealt with effectively through other means that don't involve integrating them with normal people looking for something like just sex like the laws that create black markets do.
As for something like "forced" labor, it isn't actually forced. The examples in emerging economies are of people (sometimes children) choosing to improve the amount of pleasure in their lives by working and developing more wealth than they otherwise could. This is happening in real time by the millions. The narrative of abusive factories in China is wrong.
As for something like actual slave labor based on something like color, it is non-competitive and couldn't exist today simply because the products of the labor would be too expensive. The incentives for slaves to work is to not be punished. This results in really low levels of productivity. Contrast to how China sweat shop laborers are very productive; it's because their incentive is to improve their wealth and net pleasures. American slavery was beginning to struggle before the Civil War and I think that if the war had never happened, all slaves would still have eventually been emancipated since enterprise was gradually making products cheaper than plantations could.
It is basic human nature that people tend to choose to not suffer. Because the value of something is dependent on its consumption, when people have choice, they tend to choose things that provide pleasure and eschew things that provide suffering. This reduces the value of practices that cause suffering and increases the value of practices that cause pleasure. Adam Smith's most famous observation details this: "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." He's saying that because people choose pleasure over suffering, producers have to provide pleasure enough that consumers will choose their services. Those that cannot, or those that dish out suffering explicitly, do not receive the consumptive choice of others, and they lose economic power that includes their own ability to consume. This is suffering to them, so their goals end up aligning with the so-called goals of society, where pleasures and positives are constructed and suffering and negatives are eschewed.
On a philosophical note, the way free markets curtail abuses is the same way governments, communities, and individuals do; it's just a more effective way on the macro level than governments. What stops people from being abused when that person is abused? That person not wanting to be abused and other people not wanting that person from being abused. This value is not exclusively incorporated at the level of government; it remains in free markets. There is not a magic reason for how the morals held by people in societies can only be distributed from a capitol building and bureaucracies, and one can see how it is easier for individuals' morals to remain relevant when they aren't distributed from a capitol building or bureaucracies.
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