Allaah is Most Wise in the laws that He decrees for His slaves, but this wisdom is only apparent to those who seek it and believe that Allaah is All Wise, and looks at the interests that are served by the laws of Allaah which no man can see unless he ponders the matter, especially when there are those who attack those laws because they go against what they think are right and wise. 

With regard to your question about it being permissible for a master to be intimate with his slave woman, the answer is that that is because Allaah has permitted it. Allaah says (interpretation of the meaning): 

“And those who guard their chastity (i.e. private parts, from illegal sexual acts)

6. Except from their wives or (the slaves) that their right hands possess, for then, they are free from blame”

[al-Mu’minoon 23:6; al-Ma’aarij 70:30]

That is subject to the condition that he has acquired her in a proper manner, and that this slave woman has not been given by her master in marriage to another man to whom she is still married. The reason why this is permitted is that this slave woman belongs to him, either because he has paid money to buy her or he has fought for the sake of Allaah (and acquired her among the war booty). 

Shaykh al-Shanqeeti (may Allaah have mercy on him) said: The reason for which people may be taken as slaves is if they are kaafirs who are waging war against Allaah and His Messenger. If Allaah grants victory to the mujaahid Muslims, who are offering their souls, their wealth and all their resources and everything that Allaah has given them so that the word of Allaah might prevail over the kuffaar, then these kuffaar may become slaves, unless the imam chooses to let them go or to ransom them if that serves the interests of the Muslims. 

Adwa’ al-Bayaan, 3/387 

Shaykh al-Shanqeeti (may Allaah have mercy on him) said: 

If it is said: If the slave is a Muslim, how can he be kept as a slave if the reason for which people may be taken as slaves is if they are kaafirs who are waging war against Allaah and His Messenger? The answer is that the basic principle which is well known to the scholars and all wise people is that a right that is already established by shar’i means cannot be superceded by rights that are established later on. 

When the Muslims take prisoners of war, they are given the right to enslave them by the law of the Creator of all, and He is the All-Wise, All-Aware. If this right is established, then the slave becomes a Muslim after that, his right to be freed from slavery because of his Islam is superceded by the right of the mujaahid whose right to enslave him took effect before he was a Muslim. It is not just or fair to waive the former right because of a latter right, as is well known to all wise people. 

Yes, it is good for the owner to set him free if he becomes Muslim, and Islam enjoins that and encourages it, and opens the door to doing so in many ways – he is referring to the fact that Allaah has decreed that when expiation takes the form of freeing a slave, the slave in question should be a Muslim –  

Glory be to the All Wise, All Aware: “And the Word of your Lord has been fulfilled in truth and in justice. None can change His Words. And He is the All‑Hearer, the All‑Knower” [al-An’aam 6:115]. 

“In truth” means in what He has told us; “in justice” means in His rulings. 

Undoubtedly that justice includes owning slaves and other rulings that are mentioned in the Qur’aan. 

Adwa’ al-Bayaan, 3/389. 

With regard to Muslims owning slaves, he should be very careful to establish that those who are bought or sold now are indeed slaves, because Islam has limited the sources of slaves which were many before the coming of Muhammad (peace and blessings of Allaah be upon him), and has allowed only one source, which is kaafir prisoners of war, when the kuffaar are fighting the Muslims. There is no other way in which they may be enslaved except those who are captured as a result of fighting between kaffirs and Muslims, or their children.   See also questions no. 26067 and 12562 for more information. 

And Allaah knows best.