Here's the curious thing about applying principles to practice: nothing's ever what you expected. Econ 101, which is probably the course you want to take to learn about free markets, even says this. The presumption that markets are fantastic is based on a number of assumptions or mathematical models. Take the idea of "perfect competition", for instance. In order to achieve this, you need (1) perfect information between buyers and sellers; (2) many small buyers who individually do not affect market prices; (3) many small sellers who individually do not affect market prices; (4) easy entry to market.
The thing is, this almost never happens in reality. I actually can't think of a single example of a market that matches this description. The closest thing that I can think of is the "Ribfest" that comes to town every few months. There are several sellers of ribs and related food, many buyers, and it seems that none of them has a stranglehold on the price. But I'm not entirely sure how high the barriers to entry are, and there's a little bit of information asymmetry. The sauce is pretty consistent across sellers, but there's usually one with really good sauce.
But outside of Ribfest, you're going to have more information asymmetry, you're going to have buyers who can affect market prices, you're going to have sellers who affect market prices, and you're going to have barriers to entry. These are situations in which the government needs to intervene and make the market more free. As an example, take the wireless spectrum in Canada (where I live). There are three wireless giants (there was hope that Verizon would come in, but they didn't) and a lot of smaller companies. Each has to bid on a part of the wireless spectrum so they can use it for their services, and obviously the highest bid wins. Without the government setting aside certain blocks for the smaller companies, there would be no smaller companies, because they would be forced out by lack of resources to outbid the larger companies, and the "Big Three" would have total market dominance (as opposed to the "almost total" market dominance in the status quo). I wouldn't call that a free market, because transactions within it are dictated by three large firms.
Another instance of applying theory to practice is in political philosophy. To label someone as a "liberal" and then to disparage them because they don't like individual responsibility is to (1) strawman them; (2) ignore the diversity under the liberal umbrella. (The same sort of problem also applies to any other political ideologies). Liberalism is all about the individual and the limited state. But not all liberals are the same. Hobbes, Kant, and Mill all have different philosophies and ideas, but they're all liberals. And you'll even find disagreements among individuals who are not so famous as the three philosophers above. There are debates at party conventions, and there are disagreements between similarly positioned groups. So stating that "liberals" are all the same is an intellectually dishonest argument.
Now, perhaps someone will respond by saying that the liberals in their country are precisely as I have just described. My answer is thus: you have sample bias and incomplete information. Do you know their every whim and motivation? Do you know the origins of their political positions? Are you confident that each and every one of the people you have met can adequately represent the views of an ideology that has some measure of popular support across the country? You face the problem of induction.
Using labels such as "liberal", "conservative", and "socialist" are helpful to get a general sense of the political leanings of any given individual or group, but they're extremely unhelpful (and indeed counterproductive) for anything beyond that. Calling someone a bleeding-heart, spineless liberal or a heartless conservative corporate crony is not a pleasant way to hold a discussion on the merits of redistribution or on the macro-economy. On the whole, I think we should avoid grouping other people together so as to insult them.
Now, as I understand it, the issue at hand is on the role of government redistribution in society. Rather than the binary proposed in the OP, I like to think of this as a spectrum. There are, of course, extremes to the spectrum, but I suspect a great number of people fall somewhere in the middle. Some redistribution is all right for most; after all, people need to eat to live. The great debate lies in precisely where on the spectrum we should be.
I see on one side the idea that redistribution is taking the hard work of the more well-off individuals and giving it to the less well-off, thus encouraging a particular way of life. Implicit in this argument are two ideas: first, that an individual's income is the result of solely that individual's work (i. e. the principle of self-possession); second, that the less well-off are where they are because they have refused to work as hard as the rest of society (in particular, this manifests in the "if I can do it, why can't they?" argument). I reject both of these assumptions.
The principle of self-possession can be used to counter any argument for redistributive taxes because it states that regardless of outcome, what's mine is mine, and no one else has the right to it. (There is a bit more to this, but for the purposes of this post, I shall leave it at that). The problem is that income is not solely the product of an individual's work. Let's say you study really hard and become a successful lawyer. You didn't get there on your own. You were educated by the state (public or private school, because private schools are still regulated and sometimes funded by the government) and protected from harm by the state (police, military, etc.), and you enjoyed a great many other benefits that I will not list here. Your notion of self and the ideas of what you wanted to be were nurtured and developed by you and your community in an environment made possible by the state. So, while you did work hard to get called to the bar, you didn't get there on your own. We compensate for this through an income tax that lets you keep the majority of your income, but takes away some of it to help someone else achieve the same thing you did. The fruits of your labour do not only belong to you--just mostly; there is no such thing as an atomised individual. So you can't just assert that your income is your right to disqualify the possibility of taxation.
"If I can do it, why can't they?" is an appealing argument, but it doesn't quite stand up to scrutiny. damian, I'm glad you can make it under your conditions. But I suspect that your particular situation is not applicable to everyone. I'd rather not use your situation to attack, so I'm going to use another example: someone who has worked two jobs to put themselves through university. It is admirable that they have done so, and it is a testament to their individual perseverence and dedication. But they are only in a position to take on two jobs and study at once because of the conditions under which they grew up. Maybe they were lucky enough to get good job experience in high school. Maybe their parents could spend time with them to develop a certain work ethic. There are certain necessary preconditions for that person to be able to take on two jobs and study at once, and these preconditions are not available to everyone. Not everyone is exactly the same, nor should they be.
I'd also like to respond to another idea that springs from the above two ideas. Should life for those less fortunate be a never-ending cycle of work and studiousness? Life is about more than just working a job. Who would any of us be without our leisure activities? I have the pleasure of posting long-winded messages on this forum because I don't have to spend all my time working and studying. There's a reason we call out "TGIF" every week, and there's a reason we look forward to being done for the day. TV is awesome. Playing Diplomacy is fun. Activities outside of the world of work are great. So why should anyone be denied these things simply because they are not rich?
As some of you may have noticed in this post or in a previous post of mine, I have a conception of humanity that differs sharply from others'. I see that when human beings are born, they do not have an idea of "hard work" or an idea of "laziness". They don't have a clue who they are or what they'd like to do. All of these things are developed in an environment that includes other people and a distribution of resources that is random at best. Everything builds upon that circumstance, and not everyone gets the same circumstance. Outcomes are not always good. But no one is worth less or more by virtue of these circumstances or outcomes, and the road to "prosperity", whatever that may be, is not attained by assuming that they are.