This. One of the greatest fallacies in recent economic thinking, which also played a hugely important part in how the Euro crisis was handled was the idea that states are virtually companies. Austerity measuers might make sense for companies, but not for nations or economies as a whole.
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But there's a huge range within capitalism
My ideal model would be a capitalist based economy accompanied by a strong welfare state and a lot of government activity. It's arguably still capitalism, but hugely different from what Hayek would have envisioned.