I never said that the "invisible hand" would fail to function, I said that it would function inefficiently. Since efficiency is the major factor in deciding whether an economic strategy "works", I noted that it would be out-performed by a system that can account for externalities. The free market could be patched to optimize things that contain externalities by applying tariffs and subsidies.

Given that I know of no system to properly account for externalities, I noted that as a failing of the free market but did not suggest any alternative -- especially since my country already has this patch applied to some of the biggest and most obvious externalities, yet also shows signs of promoting the wrong things (eg corn based ethanol).