Contrary to popular belief, we are not omnipresent nor omniscient. We cannot see every single new nation, every forum post, every flag, every RMB post. We have places for reporting things so that we can address it.
During the 2012 US presidential election season it was noted that "reporting bias" was a real problem. Simply put, being that the userbase tends to lean more to the left, conservative trolls were being reported and thus smacked at a higher rate than their liberal counterparts. In some cases, it was actually intentional mods-as-weapons with players of one political bent intentionally reporting only their political opponents for misbehavior and willfully not reporting their allies. In most cases though, it was simply users not seeing "their" side as engaging in rulebreaking while the "other" side doing the same behavior was. In part to counteract this, the "lock 'n trawl" approach was more aggressively deployed, mainly in NSG, to combat this reporting bias, even out enforcement, and also discourage the malicious politically-motivated reporting. It's become somewhat common practice these days to check at least a couple of pages to either side of a reported post even when not doing a full lock and trawl, precisely to catch out the unreported bad behavior. As this presidential election cycle proceeds, you'll probably see more trawls, either of a few pages to either side of a report, or more aggressive full-thread (or in super massive threads, 20-30 page) trawls for this very reason. It takes longer (much, MUCH longer) than just looking at a reported post and thwacking, but it also helps account for the reporting bias and better catch out bad behavior on both sides of a debate; my recent trawl of the Brexit thread is a great example, since aside from the posts reported in Moderation, several other users got smacked on both the pro-Leave and the pro-Remain sides.
In theory, one can argue any ideology no matter how repugnant or repulsive. In practice, speaking from past experience of more than a decade and three US presidential elections as a mod, the more extreme the ideology, the harder it is to actually argue without breaking the rules. There are many reasons from this, ranging from the ideology itself (good luck finding a rule-abiding way to argue that all of X group should be killed off en masse!), to the variety of people the ideology tends to attract. The harder an argument is to support, the more likely someone is to resort to attacking their opponent instead; when confronted and really pressed to support their positions, they often find a lack of material to back up their claims, and instead resort to sweeping attacks on the opposition.
As politics, especially US politics have gotten increasingly polarized, some of that also reflects in the userbase. For instance this season, we have actual candidates whose behavior on the campaign trail would get them warned/banned/DEATed/DOSed in short order were they to post here; in turn, that brings out increasingly poor behavior from regular folks who see that and think "Well, it's okay for a candidate to say things like X on national television and say Y things about their critics, surely it's okay for me too!" ... and it's not. We have literally had people file appeals based on nothing more than the fact that "it's okay to say that on the evening news, why can't I say that on NS?" It's incredibly frustrating, because for discussion to thrive, it can't just be an echo chamber; opposition is a necessary component to debate.
And as an aside regarding the novel Jennifer Government, I do believe the message to take away from it wasn't "Capitalism is the devil," it was more "Completely unchecked capitalism is the devil."
Much like the daily issues in NS where everything is cranked up to 11, the novel's setting pretty much hinges on the idea of capitalism cranked to an absurd extreme. 
