The free market does not work in many circumstances because there are acts from which an individual my profit which violate other principles of a society such as liberty. Therefore the free market must be allowed within certain limits.
Just as freedom is not the solution to creating the kind of society we want to live in, but liberty is, so the free market is also not a general solution to all problems.
During the Thatcher years the free market was seen as the solution to all ills. In fact it was the solution to many but not all.
First let me clarify that although the West has endlessly talked about a free market in world trade and insisted that protectionist strategies should be removed it has still maintained its own protectionism when it came to the free movement of labour controlling severely the kinds of work available to foreign nationals who face severe discrimination in terms of their conditions for entry and the kind of work they are allowed to do. Free markets do exist but within boundaries. As far as I am aware there is a free market within the US and the EU are slowly getting there but still uphold discriminatory laws for people of new member states.
The primary reason for upholding these barriers to the free market in labour has been to hold the price of labour in the west higher than that in the east by a substantial margin.
The cost of doing this is that large scale production has moved to where the labour is cheaper and the West faces a mounting debt to the East and a serious loss of skills in its population.
The UK attempts to remedy this unemployment by raising the school leaving age and encouraging almost 50% of its population to study at University while adapting the education system to allow those with little capability for academic work to survive this painful process. The result is a population without practical skills but a great deal of "training" sometimes in areas where they have little aptitude and often in areas where there is little chance of a job. What a waste of the practical capability of our population.
While the apples rot on the ground in Britain we import cheaper apples from abroad from countries with populations that are hungry, and while our people's capability for practical work is wasted we import the products of people who work in harsh conditions for long hours.
This is the result of our current market. If the market were free and labour could move without barriers and without nationalism (i.e. discrimination based on the nation to which a person is seen as belonging.) Then no doubt we would see a deterioration in the conditions of work and pay within the west and a corresponding rise in the East, but to what extent isn't clear. However we would see the benefits of keeping production capability within our shores.