maybe its entirely possible that capitalism in its pure form (whatever that may be) may be too unstable to survive without any kind of regulatory framework* , so then we have a state to manage the system, and the players manipulate it to thier own ends... causing more and more regulatiry capture...

* note how "free" the market was before the great depression and the subsequent regulations that followed to stabilize things, then repeal of said regulations that lead to one financial collapse after another (savings and loan crisis, early 2000s financial troubles, 2008 financial crisis etc etc)

The great depression was caused by a sudden, significant contraction of the currency supply which occurred as a result of people realizing that banks did not hold enough currency to pay all depositors, this triggered panic and bank runs and then subsequent over-hoarding of currency by individuals.

The real problem was not a fixed currency supply, it was the sudden contraction in the currency supply which caused people to over-react and hold onto currency too tightly. It self-corrected eventually as the panic subsided and investments resumed.

If banks had enough deposits to pay all depositors, bank runs would not have mattered, there would not have been a panic and there would not have been a contraction in the currency supply and there would not have been an economic depression.

I don't know if pure capitalism can work without any regulation but manipulating the money supply is definitely not the solution.