> One, market transactions are voluntary, so they are generally speaking "positive-sum games".
Nope. Suppose a robber puts a gun to your head and demands your wallet. You give it to him because you value your life more than your wallet. According to naive market theory, this is a positive sum transaction with consent from both parties! Obviously you didn't consent to getting held up, but it wasn't a market transaction. Restricting your attention to market transactions is the ridiculous simplification that allows markets to trivially triumph in thought experiments.
Generally speaking, "create the sickness, sell the cure" is a perfectly good business model. We make the obvious ones illegal (pointing guns and demanding money), but more sophisticated versions riddle our economy. For instance, the Goldman Sachs Artificial Aluminum Shortage applies the same basic principle.
> markets tend to flatten [power] out in the long run.
Are you kidding me? This is almost objectively untrue (unless you cherry pick "long run" or invoke timescales over which attribution to democracy vs capitalism is impossible). Are you sure you didn't mean to make the "rising tide lifts all boats" argument instead? It's a base rate fallacy, but at least it sounds reasonable.
> Who is the market? It's everyone. Who is the government? A select few.
The market is "everyone" in name only, just like a democratic government. The reality is that the biggest players get to make the rules. Sometimes they do it via regulatory capture, which you can correctly blame on the government. Sometimes they do it by collusion, undercutting, or some other anti-competitive practice that must be attributed to market failure. Sometimes they do it by taking advantage of arbitrary existential facts (we have an excess of workers -> workers can, collectively, be paid less). Nobody consented to their need to eat, breathe, and house themselves, nobody consented to have a certain amount of competition, yet the market has historically had no problem exploiting these facts to extract obscene concessions from people, even when the fundamental resources were abundant. Whatever the market does represent, it's certainly not the free will of the people.
Look, I generally agree with you that markets are usually more flexible and better at self-regulating. I think that most sectors of the economy function better under market control than state control. But I also think there are glaring exceptions (healthcare) and that libertarians jump too quickly and eagerly to the point of view that deregulation is the answer, even in the presence of abundant historical or comparative evidence to the contrary. They like to pretend the free market's shit doesn't stink (it's a feature, not a bug that unskilled labor consistently gets the crap beaten out of it at the negotiation table due to the fact a single person creates marginally more labor supply than demand). They don't take responsibility for messes the market creates (they are convinced it's not the market's fault our healthcare is 2x as expensive as in single-payer countries), and instead of basing their decisions on comparing strengths and weaknesses of different systems (markets are good at X, bad at Y, governments are good at Y, bad at X) they trumpet facile arguments from the rooftops.