There have been some incredible OSS games. Take away IP concerns and they have more access to assets. Take away needing to work to live, and people passionate about gamedev would have no obstacles in creating video games with their time.

Capitalism makes some core assumptions that, right or wrong, generally do not apply in the dev world - assumptions of laziness and selfishness. Smith tried to build a framework around "people will never be altruistic or work because of their pride". It was intended both to standardize and limit those selfish behaviors (modern capitalists threw out the "limit" part). You can make your own conclusions about capitalism and most of the business world, but I don't know a developer who would rather sit and watch The Price is Right than be on their computer coding something other people would love.