Thomas E Woods Jr. presents his defense of the free market in chapter 1 of his book, The Church and the Market against three objections:
Objection # 1 - The emphasis of Austrian School on efficiency is morally questionable.
Objection # 2 - The Austrian concept of economic law is incompatible with Catholicism.
Objection # 3 - The autonomous nature of economics is contrary to Catholicism.
Before refuting all these objections, Woods introduces first two subjects: the biblical and historical support for the rationality of the economic methodology of the Austrian School and praxeology.
Concerning historical support for the Austrian methodology, Woods mentions the Church Fathers, Isaac Newton, Ludwig von Mises, Frederic Bastiat, and Carl Menger.
Regarding praxeology, Woods defines it as the "science of human action" (p. 16) where economics falls under this category. Moreover, praxeology is also the central methodology of the Austrian School. From this axiom of human action, Austrian economists "deduce an entire edifice of economic truth" (ibid.), which includes the goal of human action; the use of time, resources, and the human body; the concept of "ordinal ranking of ends" (p. 17); "the concepts of subjective value and the subjective nature of costs" (ibid.); "the law of diminishing marginal utility" (ibid.), and; the law of supply and demand.
The Efficiency Argument
For Woods, the efficiency argument is a baseless objection. This is because both Ludwig von Mises and Murray Rothbard do not see efficiency as central to the economic conception of the Austrian School. For Mises, central to his ideas is the insoluble problem of socialism due to the impossibility of economic calculation without the market price. Consequently, central planners are running blind in managing the socialist economy that will inevitably result to economic waste, poverty, and chaos.
Furthermore, another essential element in Mises' thought is the desctructive consequence of socialism beyond economic failure into "the social and moral foundations of society" (p. 24).
In the case of Murray Rothbard, the ethical question is central in his thought. In fact, he actually criticized efficiency as a myth.
The Economic Law Argument
The second objection is about the incompatibility of economic law with the Catholic faith. For Woods, the perceived incompatibility is non-existent for Aquinas himself teaches this concept of economic law. And besides, none of the laws of economics contradict Catholicism. Instead of criticizing the Austrian concept of economic law, Woods suggests that Catholics should learn from this school to have better and "informed economic decisions" (p. 29).
The Autonomy Argument
The third objection has something to do with the autonomy of economics from any academic disciplines particularly from natural science and theology. I find Woods' refutation of the third objection consistent with Catholicism's assumption. However, from the perspective of Classical Protestantism as seen in the writings of Herman Bavinck, Cornelius van Til, and Gary North, we can see several inconsistencies concerning the autonomous character of economics. These inconsistencies are related to the limitation of academic discipline, the descriptive character of economic analysis, the negation of the existence of Christian science of economics, and the relationship of faith and reason.
For a detailed refutation of all these objections, you can read the following articles:
Source: Woods, T. E. Jr. (2005). The Church and the Market: A Catholic Defense of the Free Economy. Lanham/Boulder/New York/Toronto/Oxford: Lexington Books.