"Man must be at the center of the economy and the economy must not be measured only by the maximization of profit but according to the common good," the pontiff told reporters aboard his plane as he traveled to Madrid for the Catholic Church's World Youth Day.
The weeklong Catholic event is taking place against the backdrop of the European debt crisis, which has hit Spain hard.
Benedict's plane touched down in Madrid shortly before noon (1000 GMT) to a crowd of hundreds of young pilgrims cheering and waving mainly Spanish flags.
Pope Benedict was met off his plane by King Juan Carlos Queen Sofia. Socialist Prime Minister Jose Luis Rodriguez Zapatero and conservative opposition leader Marian Rajoy, the man forecast to take power in November elections, were also present.
Many Spaniards have balked at the cost of the visit at a time of economic difficulty for many. Spain has a nearly 21 percent jobless rate.
Hours before the pontiff's arrival, riot police and protesters opposed to his stay clashed in downtown Madrid. Police said eight demonstrators were arrested and 11 people were injured in the disturbances Wednesday night in the city's Puerta del Sol plaza.
On Tuesday, police arrested a chemistry student working as a volunteer for the pope's visit on suspicion he was planning a gas attack on protesters opposed to the pontiff's visit, officials said. The 24-year-old Mexican student, identified by the Mexican Embassy in Madrid as Jose Perez Bautista from Puebla state, was expected to appear in a Madrid court Thursday.
Organizers expect a million or more young people from 193 countries to attend the festival.
The main events are a prayer vigil with the 84-year-old Pope and outdoor sleepover for pilgrims Saturday night at a sprawling air base, and Mass there the next morning.
The pope's attendance shows how much a priority he places on this economically troubled country, which has departed sharply from its Catholic traditions and embraced hedonism and secularism. In the economic bust, he may be hoping to lure back some of his straying flock.
This will be the third time the pontiff has visited Spain since his papacy began in 2005.
The visit also comes as Spain gets ready for early elections in the fall. While the church officially keeps out of politics, it will be sure to be watching closely because the outcome could affect Spain's direction on hot-button ethical issues.
The election will pit the ruling Socialists, who irked the Vatican with social reforms including gay marriage and a law allowing 16-year-olds to get abortions without parental consent, against conservatives who tend to back church thinking on such issues and are heavily favored to win.
In Spain the church faces a congregation for whom being Catholic is more a birthmark than a way of life. A poll released in July says that while 72 percent of Spaniards identify themselves as Catholic, 60 percent say they "almost never" go to Mass and only 13 percent every Sunday.
Except for a trip Friday to a historic monastery in El Escorial, 50 kilometers (30 miles) northwest of Madrid, the Pope will spend the whole visit in Madrid, meeting with young people, hearing confession from some of them, riding through the city in his pope-mobile and greeting young nuns, seminarians and university professors, among other activities.