Well, first let me predicate my response and say that I think a free market is highly desirable and that it is undesirable to manipulate markets rather than letting competition decide the details.

That said, IMHO, it's necessary to break up monopolies.

The problems are obvious with that though: people feel like they are being robbed of their earned property and will argue that the free market should sort things out and that it is indeed socialist to intervene at all (I mostly agree).

The sad fact, however, is that countries do exactly that (at least every one I can think of) through taxation and inflation (among other methods) to make holding uninvested wealth undesirable. In that sense, socialism is already employed to attempt to redistribute the benefits of progress.

I strongly dislike taxation though, so I want to approach the issues in terms of capitalism and the free market.

To do so, I think it is necessary to draw a line between young and mature markets. A young market is closer to a free market by virtue of it's low barriers to entry, high size/potential for profit, and lack of incumbent monopolies. Monopolies are a well-known and undesirable symptom of a market that has stopped changing and is not accessible to competition. I would also suggest that a heavy focus on financial derivatives over real wealth (real estate, manufacturing, durable goods, etc) would indicate an overly mature market - one that's difficult to add value to as a new entrant - and I think that's exactly what we can see today (and what's more, we bail them out to keep them going).

The first stages of market development are almost idyllic: new products and services are possible, and wealth can be created by adding value. In a mature market, value is difficult to create under the burden of monopolist control and market manipulation, often to the extreme of halting progress to maintain the incumbent's advantage (cornering a market, or inflicting technological restrictions like DRM, for example). By definition, the further growth of a anti-competitive monopoly is a detriment to the market, and therefore to society. There is no clear line, but sometimes we choose to intervene.

There are laws specifically targeting anti-competitive behavior, insider trading, etc, for example, in order to promote the early-growth period, but there are more things that could be done that are less reactionary and of broader benefit...

One that stands out to me is to eliminate copyright and patents, etc. I know to expect criticism on that regard in this forum, but those are exactly the sorts of monopolies that are blocking the redistribution of value and are being exploited by incumbent monopolies to the exclusion of individuals and developing business who might use them to create new value, solve real problems, and thus distribute the benefits of progress without resorting to "socialism." Instead we are extending copyright, and our society is becoming focused on protecting imaginary property, a situation that is analogous to letting Henry Ford have, and helping him maintain, a monopoly on the assembly line when the assembly line clearly benefited all modern businesses. It would be absurd to scale up enforcement of "assembly line infringement." The modern equivalent, easy copying and, dare I say, copyright infringement, clearly benefits everyone (distributing knowledge and tools), and also serves to redistribute wealth without taxation and government intervention (which has many other undesirable attributes). This is the fruit of a hundred years of effort, and what's more, it's proliferation fosters growth in conventional markets: for example, I am convinced that the early PC hardware industry boom benefited hugely from software and music proliferation (before the monopoly protectionism set in), creating wealth across the board, and the decline in hardware sale coincides with the modern crackdown on copyright infringement, destroying revenue.

The goal then, IMHO, is to stop protecting monopolies. Let technological, industrial, and other types of progress, be used as public resources freely and encourage every generation of growth to make the most of the resources available instead of encouraging monopolies that stop them at the gate.

Furthermore, by avoiding explicit intervention to begin with (by not protecting monopolies to begin with), we would avoid the trap of having to maintain the artificial balances that result that lead to cronyism, and minimize intervention.

Unfortunately, once an organization (government, NGO, etc) has an official reason to exist, paid positions, and a granted authority/monopoly, it is difficult to get it to relinquish it's role. In those cases, direct action may be required to escape gridlock, but the moral is still to avoid the trap in the first place.

As such, organizations need deliberate limitations to prevent monopoly abuse (and to prevent resorting to socialistic taxation).