Yes, the free market is the only good economic system - but only if people are good

At NRO, John O'Sullivan responds point-by point to Pope Francis's recent address on money and people.  O'Sullivan's italicized paragraphs are interspersed with the Pope's.

You should read the whole thing to put the following quotes in context, but they stand alone quite nicely as explanations of why the free market is the only system that works for real human beings (I have occasionally emphasized certain points by putting them in boldface):

there is a glaring omission in this pope’s list — namely, that billions of workers, especially in the Third World, have actually emerged from poverty and entered the world labor market in the last 30 years. They are far more prosperous than at any time in history. World poverty may be more evident because of the advance of communications, but it is also less extensive, and markedly so. This is an astounding and welcome development. And it arises mainly from the reduction of barriers to trade and capital investment known as globalization. This produced great social advances until the financial crisis of 2007–08. The recession since then has aggravated the evils the pope describes, but it has been largely confined to the West. Asia, Africa, Oceania, and even parts of the pope’s native Latin America, notably Brazil, emerged quite quickly from it. 

[snip]

Capitalism is often accused of being a system of greed, and classical liberalism of being an ideology of greed, because they rest in part on self-chosen goals that may include greed and other human vices. Hence a free economy, if it is to work well, must work within a moral framework that includes but goes beyond liberal prohibitions on force and fraud. At the same time, anti-liberal social philosophies that promise to eradicate greed may make matters worse. People under Communism were far more acquisitive and materialistic than they and their progeny are today. Because material goods were so scarce, people were willing to sacrifice their integrity and morality for a pair of jeans or a silk tie. The end result was rampant materialism, a general social anomie, and the collapse of any system of morality. In the popular saying, you can’t judge a book by its cover, especially not a book on political theory.

[snip]

An economy — or at least a free-market economy — is neither a thing, nor a system, nor a person. It rather resembles an agora in which innumerable people pursue their different goals than a committee that sets out and pursues a common goal. Insofar as it is “faceless,” that is because there is no single person or group making decisions for all the participants. For the same reason, it is not a dictatorship — though if you have lost your job or seen your business go bust, it is tempting to believe that there must be some decision-makers somewhere who were consciously responsible for these disasters. But “the 1 percent” is a myth that tempts us to think in primitive terms.

[snip]

Bankers on Wall Street are not the only people responsible for the 2008 financial crisis. Many other people contributed to it, notably those in official regulatory agencies that pushed banks into giving mortgages to borrowers who couldn’t afford them. Those in international agencies who devised regulatory rules that perversely encouraged unproductive financial speculation were similarly placed. All these different people believed in (and represent) different economic and political ideologies. We could put some of their faces on the “system,” if we wished (and as we have done with “bankers”); but that would be misleading as to both their motives and degrees of responsibility.

[snip]

As for “the absolute autonomy of markets,” that is simply a myth. Banking in particular was a highly regulated industry before the crisis and it is more tightly regulated today. As we have already seen, perverse regulation rather than no regulation was among the causes of the crisis. Above all, the worst human suffering in the economic sphere inflicted since 2008 until today is that resulting from the creation of the euro, which was the work of “States . . . providing for the common good,” and which has become a new kind of tyranny (though not an invisible one). Finally, solidarity is indeed “the treasure of the poor” when it inspires policies to encourage self-reliance and rescue people from dependency. As the CAP example demonstrates, however, it is sometimes employed to justify dependency, waste, and excessive state power.

[snip]

The demand that God and humanity should be present in all our economic calculations is powerful and obviously correct (from a humanistic standpoint as well as a Christian one), and should be heeded by policymakers and the rest of us, not only financiers, economists, and politicians. We shouldn’t be slaves to our possessions or our passions, including power and ambition, and that is true under any religious or philosophical dispensation. My qualms here and throughout the address are twofold: First, the pope seems tempted here to believe that world markets are consciously manipulated by powerful people. But the fact that some of these powerful people lose money suggests that they are forecasting future trends rather than determining them. Most “speculations” are not purely speculative. They are attempts to ensure, for instance, that productive businesses enjoy financial stability in fulfilling contracts in foreign currencies.

Second, the pope hardly notices the revolution of charitable giving that has been surging since the 1980s. (At most one sentence is devoted, ambiguously, to it.) Yet foundations, NGOs, and charitable institutions of every kind have been multiplying in the advanced world and working to counteract social evils in poorer countries.  

[snip]

In his discussion of the world economy, he advanced an analysis marred by major omissions that, if addressed, would require him to qualify some of his sterner criticisms. But this was a short address, not an encyclical. His rhetoric was allusive, cryptic, and hard to follow at times, but that will presumably be corrected in more formal documents. Even so, the main burden of his argument was readily compatible with a broad free-market approach and with the economic arguments of those Adam Smith liberals who have taken on board the social arguments of Edmund Burke and the social encyclicals of the past century.