Markets generally work brilliantly.
Except, of course, when they bring the economy almost to its knees and have to be bailed out by billions in state aid. Capitalism and the free market are the best engines we have to drive economic growth, but they do little or nothing to create or maintain an equitable or even stable society. State intervention can't simply be a matter of last resort when the markets fail (that's why we're in this mess) but should establish the social context in which capitalism operates. We can debate what that context should be (and I suspect that my views would be rather more interventionist than those of the delightfully-named Duke Fame) but I doubt that many of us would question its necessity. After all, even Alan Greenspan came to realise, finally, that we might have been better off with a little more financial regulation over the last decade or so.
As for misreading Keynes, well, yes, of course he believed that purposeful stimulus was better than the purposeless variety, but, if you're looking for one page in the 'General Theory' that 'that suggests we should spend money on unnecessary services that will not create future wealth or comparative advantage', what about its most famous passage? 'If the Treasury were to fill old bottles with bank-notes, bury them at suitable depths in disused coal-mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of repercussions, the real income of the community, and its capital wealth, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.'
(Although, in fairness, I accept that employing Peter Saville as your creative director is probably even less productive than digging holes and filling them in again. Hadn't anyone at Manchester City Council seen '24 Hour Party People'?)