Once, there was a young man who wanted a sports car.
His parents objected. "Its engine is too powerful. It will make you a danger to others and to yourself."
But the young man was clever, and knew more than a little about cars. "Mother and father, you are correct that this car's powerful engine makes it a danger. Therefore, I promise to make that engine smaller!"
So his parents assented. They watched for days as the young man removed pieces from the engine, leaving a pile of metal in the garage. They were impressed when he showed that he had reduced the weight of the engine by a sizable amount. So they granted their blessing for him to reassemble the car and drive it.
The young man installed the shrunken engine back in the car, and promptly tore off at high speed, running down six pedestrians before wrapping his car around a telephone pole.
It turned out that his idea of making the engine "smaller" had been to remove every limiter, governor, and regulator, all to make it more powerful.
There's a sort of so-called "libertarian capitalist" or "anarcho-capitalist" political theory that you often hear that talks about "smaller government", or even about eliminating government all together.
But you'll note that they never talk about eliminating government-issued land deeds, or government-issued corporate charters, or government-issued copyrights and patents. They're quite happy to have government force around to evict tenants who fall behind on rent, or to quell unruly laborers. They are generally property-centric, and ignore the fact that, beyond the natural use of own's own home and tools and toys, property is a product of government.
Their idea of "smaller government" is to rip all the limiters and restrictions off of the engine of capitalism. And since these people have managed to confuse "capitalism" with "free markets", we must define capitalism: an economic system based on the private ownership of capital, in which a minority of state-backed "owners" control and reap the primary benefits a society's economic resources. It stands in contrast to socialism, in which economic resources are controlled by those who use them to do productive labor -- either by an elected government (state socialism) or more-or-less directly by the workers (libertarian socialism).
The capitalist/socialist axis is orthogonal to the planned economy/free market one -- one can have a capitalist planned economy (the U.S. during WWII) or a socialist free market (the mutualism of Proudhon, or the anarchism that existed in some areas during the Spanish Civil War).
In the U.S., the very idea of socialism has been quashed since the Red Scares of the early 1900s. The investment classes have managed to put the meme that "socialism = communism = Marxism = Stalinism" into most people's mind. So most of those on what passes for the American left remain capitalists, and just want to put more limiters on the capitalists' engine, so that they crush fewer pedestrians. A few regulations on big business, a few social programs as a safety net.
But "libertarian socialists" or "anarchists" say, "Let us not have such an engine at all." To continue the car metaphor, rather than cars with big engines running people over and polluting everyone's air, and all the government-built roads that are necessary for those cars, let's have a pedestrian-friendly town, with smaller, lower-powered green vehicles, maybe a cooperatively-run rail line.
A libertarian socialist economy would not have a handful of banks that were "too big to fail", but would have credit unions. It would not have huge corporations that needed to be bailed out lest their death throes wreak havoc, but would have many small companies, sole proprietorships, co-ops, collectives, and employee-owned companies, providing a rich and resilient industrial base.