You can have free markets without capitalism. Consider a system almost exactly like we have now, with independent companies competing for profits in free markets, but where those companies are worker-owned [0]. Such a system could have the benefits of capitalism with regards to innovation and resource allocation while reducing some of its negative effects (inequality, worker alienation, etc.)
No idea if it would work in practice, but we need to move beyond this mindset that there are only two possible options for how to structure an economy.