Allocation of resources in capitalism is not a system beyond saying "let the capitalists decide". And how do we let them decide? Because we preferentially allow them to collect profits (over labor and ideas), creating an incentive (though not necessarily a requirement) on their part to maximise profit. So, capitalists will want to see the ventures they invest in generate profit, and the most obvious way to do this is to have the venture make things or provide services that others want to pay for.
However, just as there's no ironclad rule that an enterprise in a capitalist system must seek to maximise profits, there's also no ironclad rule that the best or only way to see profits is to do things that other people want to pay for.
Increasingly, the financialization of the US (and other) economies means that substantial profits can be obtained by extracting value from transactions, rather than creating value to society.
Mariana Mazzucato has discussed this at length in her excellent book "The Value of Everything: Making & Taking in the Global Economy Economics"
The point is that capitalism only works well for allocating resources when it happens to follow the goal of producing value for others, and in that sense any economic system that somehow prioritized this would have the same benefits as capitalism. Note that it also needs to take externalities into account, otherwise the short term benefits of value production-driven economic activity become a long term net negative. Capitalism has not proven itself in this regard so far.
The thing that is different about capitalism is that beyond (generally) favoring value production, it also favors the owners of capital as the beneficiaries of generated profit. This in turn makes the owners of capital have deeply vested interests in ensuring that this asymmetrical distribution of profit does not change (they will almost certainly lose if it does). That is what defines capitalism, not free markets, not value creation, not entrepeneurial activity.