Needless to say, the masses were not happy with the way things were shaking out under this new system. Sure there were lots of new products and most were pretty affordable, but watching your child hobble around after getting maimed by machinery puts a cheap breadbox into perspective. Reacting to this pressure, industrialists in the United States in particular attempted to calm the market by banning labor unions, setting maximum wages, regulating imports and merging into mega-conglomerates.
That last move sort of backfired on them, however, because competition is the key to thriving capitalism. Plus, laborers organized into unions anyway, and after enduring beatings, imprisonments and shootings, workers were finally able to push for shorter working days and higher wages, along with improved working conditions. The government eventually started stepping in by creating anti-trust and child labor laws.
Many countries took it a great deal farther than the United States. The Scandinavian nations are a good example: They were among the many nations that nationalized industries left and right, and imposed high taxes and instituted several social programs to increase an equal distribution of wealth.
So, in regard to the question of whether the free market system has prevailed, the answer right now is: only partially, at least for the moment. But in the future, who knows? Even as the United States moves toward universal health care, for the economies of Europe, the pendulum is swinging back toward capitalism as many socialist operations have been ramped down or repealed.
After World War I, for instance, the government in Great Britain nationalized industries like coal, electricity and steel, while at the same time instituting a national health care program. But after this led to rampant inflation, an ever-expanding deficit and high unemployment rates, many industries ended up denationalized, labor unions exerted less influence, and the government reduced spending on social programs like health care and education. But how far they and other nations' governments will eventually scale back is anybody's guess.