The Internet came from the military originally, the Web came from CERN, many advances in programming languages (like automatic garbage collection) came from academia, and so on. Your claim about where most progress came from isn't obviously true.
And to the extent that it might be true, to what extent is that just structural? In a society with a focus on free markets, more will come from free markets, naturally.
> Internet came from the military originally, the Web came from CERN,
That’s certainly true, yet 90-99% (exact percentage is debatable) of progress came from non government funded organizations.
> extent is that just structural
Generally human behavior is driven by competition. That applies to individuals (e.g. scientists) even if they work in the public sector. Large government organizations or monopolies have no such incentives.