It is in many ways similar to the notorious JSON license by Crockford that says "The Software shall be used for Good, not Evil.". Except GPL is more explicit on what it considers good and evil.
An appropriate analogy would be question is a country free (as in respecting freedoms) if you are not allowed to murder people? Most people would say yes. And it could be even argued that it is more free than country that does allow murdering people, because the limitation on murdering empowers people to exercise their (other) freedoms more freely.
Note that I'm don't fully agree on RMS' stance on the matter here, but I think I understand it reasonably well.
“The Software shall be used for Good, not Evil.” This is a restriction on usage and thus conflicts with freedom 0. The restriction might be unenforcible, but we cannot presume that. Thus, the license is nonfree.
An appropriate analogy would be question is a country free (as in respecting freedoms) if you are not allowed to murder people? Most people would say yes. And it could be even argued that it is more free than country that does allow murdering people, because the limitation on murdering empowers people to exercise their (other) freedoms more freely.
Note that I'm don't fully agree on RMS' stance on the matter here, but I think I understand it reasonably well.