>Laissez-faire economic systems are in no way capable of keeping themselves stable.
This is the point - Laissez-faire economic systems function well on their own, it just happens that humans prefer systems that are "stable". Hence, regulators try to limit the volatility of markets meet their stability preferences. Whether this is ultimately beneficial is an ongoing debate.
I would point out that in many cases enforcing artificial stability on markets can have negative outcomes. Recently, the +/-10% limits on daily stock price movements in China created situations where many stocks increased by 10% every day for over 100 days [0]. Such illusions of stability likely played a role in the recent bubble/crash in China. It could be said that attempts to regulate 'stability' into markets merely leads to a masking of tail risk, which can be very dangerous.
This is the point - Laissez-faire economic systems function well on their own, it just happens that humans prefer systems that are "stable". Hence, regulators try to limit the volatility of markets meet their stability preferences. Whether this is ultimately beneficial is an ongoing debate.
I would point out that in many cases enforcing artificial stability on markets can have negative outcomes. Recently, the +/-10% limits on daily stock price movements in China created situations where many stocks increased by 10% every day for over 100 days [0]. Such illusions of stability likely played a role in the recent bubble/crash in China. It could be said that attempts to regulate 'stability' into markets merely leads to a masking of tail risk, which can be very dangerous.
[0] https://news.ycombinator.com/item?id=9471858