To recap: the three ways to earn currency are playing the game, playing the market, and playing the slots. (That last one is crafting, and yes, it really does resemble nothing so much as a slot machine. I have the 6S5Ls to prove it.)
How does this stack up against the idea of SFL?
1. playing the game - this is true, and you get drops and stuff, but are you keeping good items or no?
2. playing the market, what market?
3. playing the slots - also possible, but you're only making items for yourself here...
From here it comes to an obvious point: do you hoard good items, expecting to use them on future characters? (There's a sub-point. How good is "good"? For sure it isn't, relative to the majority of items on the market...but meh, moving on. I'll define that as good enough to use, for the moment.) Is there stash space to do so?
What about items you simply don't have? The nature of this game is that it depends a fair amount on items. This could be build enabler uniques, or it could simply be sufficient ES on gear to go CI, or it could be finding a suitable weapon. In the worst case, it's finding sufficient HP/resists on gear to continue without getting 1-shot by any and all elemental damage or just any damage in general.
Before you ask me what about crafting. Let me turn around and ask you, how many chaos does it take to get good enough rolls on armour to keep instead of vendoring? Be realistic here, you won't find more than ~3 regals before merciless, so that's out. I suggest that you'll end up rolling HP+resist using alterations, at least at first. There's the option of alching gear and using the alc recipe to recoup costs, of course. Be realistic here, how long until you run out of scraps and whetstones? No, you can't buy more, you're self-found.
But Kiri, these are all first character blues! Surely after getting one character to maps, he can hunt down gear for the rest?
Yeah, it gets easier as you get more items. This is true, it's always true. I'd say it's not necessarily all first character blues either, takes at least 3 or 4 characters before you have actually good level-appropriate gear at all levels.
But there is another point to consider. In an SFL, you're limited to what drops you find and what items you make. All well and good for rare armour. What if you want to make a facebreaker build? What if you've just gotten a Crown of Eyes and no Phoenix or Shav, what do you do with it? And what if you want to make a weapon (non spell) build? Any weapon goes for the first 30, even 45 levels, but you try making reasonable clear time with any randomly alched weapon in early merciless, instead of a decent %phys (possibly with a +phys roll, but I'm not that picky.) No, in SFL the builds you can make are limited by the gear you already have, because you can't guarantee getting pieces you need as you go along.
In a league with an economy, there are ways to get around it, and there are ways to earn currency even if it sometimes feels like that Shav is perpetually out of reach. Just keep saving and you'll get there eventually. What do you have in SFL? Just keep playing, and maybe one day you'll drop or chance one. I've played over half a year of almost-daily play, some of it high MF, a lot of it high maps, frequently 10 or 15 hours a day on weekends and free days. I've seen maybe 3 Ambu's Charge, Crusader Chainmail drop. Not all were mine. I've chanced exactly one unique in maybe 5ex worth of chances. When you look at it that way, that Infernal Mantle sure cost me a lot, didn't it? For a good number of build enablers, chancing and dropping are the exception, not the norm; it's not unreasonable to say that you only build what the RNG wants you to build, in SFL.
There is another point.
You want to play in an SFL league? You're gated by length of time played, luck of the draw, everything that has to do with items. The economy is there partly to reduce the extreme variability of item drops; it ensures that whatever you need, you'll probably be able to find it for a price you can reasonably pay. It was said once, somewhere, that if trading was made any easier then good items would have to be made even harder to get in order to keep the approximately same level of item gating. (There is logic in that, though I'd say go right ahead and I'll eat the RNG penalty if it means trading becomes less annoying and inconvenient.) The inverse applies too: if trading is harder or nonexistent, any content gated by items becomes suddenly much, much harder to reach. There are people playing self-found who have done maps up to 78, but I guarantee you the proportion of self-found people doing higher maps is very much smaller than their non-self-found counterparts. Particularly if you only consider people who've cleared merciless Piety at least once.
tl;dr build diversity issues, item gating
There's also player interaction issues, and I feel that a lot of people who are "in favour" of SFL are actually just very irritated by the current trading system, but who am I to tell them what they feel.
Why would you voluntarily lock yourself out of half the content?