Does it make sense to think of governments and markets as separate things?

Pretty much any argument relating to politics or economics comes back to this question of governments vs. markets, or state-owned vs. privately held. The problem is, this makes it sound like modern governments and market economies are two distinct things, when actually, history shows that their development was pretty intertwined. 

What makes a country a country? According to political scientists, basically just two things: it's got a defined geographical area, and one government within it, which holds authority over the state (unless it's signed some sort of international agreement that binds it to other laws as well).  That’s the distinction between what we call governments, and other organizations, like the Roman Catholic Church, for example, which is huge and has quite a bit of political power, but isn’t confined to a single geographical area.

And what about markets? Take Europe as an example. By the mid-1600s, Europe went from a society of lords and peasants (feudalism), to territorial states with market economies (mercantilism). But markets themselves have existed since long before then – any central place for people to come together and exchange goods is a market, and people have been doing that since pretty much the beginning of human history.

But what governments began doing after mercantilism was providing infrastructure for markets to do their own thing - public roads, spaces, education - and a justice system that would protect people’s rights in case of any conflicts. That meant that, for example, the government wouldn’t have to care which peasant will grow what crop, because they could take care of that themselves; but the peasant knows that if their former lord marches over to take their land, the government is there to defend their rights. So states and markets are totally intertwined.

How much the government should do to regulate markets is one of the most contested questions in economics and politics. But we need to understand that this habit of talking about government intervention into markets doesn’t really make sense.  They have to overlap with each other, whether they like it or not.