It seems clear to me that was is meant is a perfectly competitive market, because according to basic welfare economics, that is the set of conditions under whic

It seems clear to me that was is meant is a perfectly competitive market, because according to basic welfare economics, that is the set of conditions under which a free market will lead to socially optimal outcomes. Aside from very hardcore non-aggression principle absolutists and sheer nihilists who are just rich and don't give a shit if the rest of society suffers, that tends to be the argument for why a society should be more capitalistic and have liberal markets. The further we get from those conditions, the less the argument holds. And, of course, welfare economics itself is just a mathematical model. Whether it really holds true empirically is hard to tell given the impossibility of society-wide RCTs and enormous confounders when trying to compare across time and space.