Steem is a decentralized self governing system.

In theory it is, yes. But there was ninja minining, and there is a concentration of 93 % of all Steem in about 100 accounts (or something like that). :)
But yes, the ideal of a decentralised system/community is quite fascinating.

Other people are going to act in ways that differ from your personal value system of what is right and wrong ...

To flag in an automated way without even knowing the content of the flagged posts or bother the replies of the 'victim' has nothing to do with 'values' anyway. It's a completely mechanic process.
And yes ...

Self governing does not mean complete anarchy - but it does mean that users / the community are responsible for dealing with their issues with each other.

... for me what happens here is partly pure anarchy respectively "Wild West". Transferred into real life it would mean somebody can kill you in case he doesn't like your face or your way of life, just because he has the power to do it. If you complain people will advice you to smply buy a bigger gun (more SP) to defend yourself.

This kind of anarachy, where people like @haejin or @sweetsssj exploited the reward pool and whales harassed users with different opinions (or just for fun), led to many frustrated people who left STEEM, a very low STEEM price and next to a collapse of the community. You should be aware of that, even if there is some hope again now.

There is no central party to step in and tell anyone they are right or wrong.

Parties like @steemcleaners with very much STEEM power should use it wisely, carefully and put communication (also directly under the posts) above punishment, whenever possible.
Again, the community is very fragile, and the ones with power should act responsible.
Your ideal of decentralization (I am well aware of how you imagine it to work in theory) will only lead anywhere, if in practice the system is able to attract and retain enough satisfied users instead to frustrate them.