"Does the criminal law do more good than harm?" is a straw-man question. To think that answering NO condemns our criminal law is a fallacy.
YES, I agree that we do more harm to the people we incapacitate than we prevent to their potential victims.
However, over-incarceration only indicates a hysteric willingness to punish (relatively) victimless crimes -- i.e. utilitarianism with the thumb on the scale of white-collar comfort. It CANNOT logically tell us that we have underutilized softer options with better utilitarian outcomes.
The criminal law does LOTS of harm, because it's the last tool we have. We reserve incarceration for cases that were least responsive to the rest of the system. It is the last and most drastic of a series of processes designed to effect the goals (esp. utilitarian) of a whole swath of crime-related law. This complex includes elementary schools, churches, special-ed programs, unemployment insurance, sex-ed classes, Sesame Street, civil courts as fora for disputes, and criminal sanctions. In a legal system seen functionally, all these have criminal implications. (I guess they're also all Criminal Law, since Sesame Street is on PBS.)
"Could we better distribute potential perpetrators among this system?" Perhaps we SHOULD shift harms dealt with ex-post by the criminal code into the preventive, social code. We have made huge advances in psychology and education.
But it may happen that the optimum distribution of cases within this complex does not optimize each individual system. That's Cohen's fallacy of distribution. The criminal justice system is SUPPOSED to look shitty, because it catches the failures from every other system in the complex.