Well you say the solution is Capitalism but a government paying you a stipend is the exact opposite of free market capitalism. And so is any investor protection mechanism/regulation.
The system you're describing could exist under any economic model. I don't see how capitalism is relevant here.
I'm one of the people that uses the GPL because copyright exists. Without copyright, companies lose the incentive to close their source, because the binaries aren't restrictable anyway so they can't profit off that. It just means they shoot themselves in the foot by not showing the source to others for auditing purposes. It would also mean decompiling binaries would be perfectly legal, and distributing the results of that would be legal too.
I'd rather live in a world where nobody can tell you how to distribute information than one where I can try (and personally wouldn't be able to fight jack in court enforcing it without the FSF's help) to force openness on others for the sake of freedom while international companies profiteer off artificial scarcity.
It's still going to be a fight, but it will be fought outside of the court rooms without support of the law. To me that sounds like a step backwards, because even more than today that's a fight where a resource heavy megacorp will have an upper hand.
I don't like the idea of someone that creates something great without compensation, put it out for free, only to have the work taken by some large corporation that manages to profit from the work due to large marketing budgets, sales channels and existing customers, while the author remains uncompensated. So it's not an incentive to open source and share personal projects either.
You can easily decompile it, and without copyright nobody can tell you want you are allowed to do with it.
> only to have the work taken by some large corporation that manages to profit from the work due to large marketing budgets, sales channels and existing customers, while the author remains uncompensated
How would you profit from the work if you can't "sell" the work? At best they could seek funding to create derivatives of the work. But this does point out a major reason copyright is broken now - in how many other disciplines do you expect compensation for finite effort for infinite time? It should be that your finite work is compensated for finite money during a fixed time period (in my examples, the development of the work).
I'd like to think you could extend plagiarism in the absence of copyright to cover all ideas - ie, you can freely modify, reproduce, or redistribute a work, as long as you aren't falsely claiming it as your own, and upon inquiry you truthfully say where it came from. That is peripheral to actual interactions with information, it is about how you present yourself in relation to them.
Easy to decompile, is not the same as easy to deobfuscate, understand and create deriviative work from. The entire point of GPL or any license is to tell what's allowed to do, that means you can share source code, and have legal means backing you up.
> How would you profit from the work if you can't "sell" the work?
You are the one who say that you can not sell the work. Of course you can, but it may not be relevant to the question of profits here since we are talking about source code, it may be incorporated in an existing system or service or even in a hardware product just to give some examples.
> in how many other disciplines do you expect compensation for finite effort for infinite time?
It's not infinite, it is restricted to a finite time. You do not get compensation unless you sell a product, selling that product it self takes work and investments. The amount you get paid, and if there are any reoccuring payments depends on the terms you are able to negotiate with who ever it is you sell to. It has nothing to do with copyright.
Capitalism. Pay for scarce goods and services on an open market. Since movies / music / etc are digital, and that is a number, and numbers are information, you don't restrict information. Instead, you let the free market handle it - in the absence of copyright, people still want movies, and music, and new creative feats. And those creators want to live off of creating their works.
Hint: keyword is creating.
So as a creator you come before the masses and say "I want to make X, but I need to eat to do so, and you want X, so let us have a mutually beneficial voluntary exchange and I'll make it".
The only other thing you need is some kind of restitution system (I think) to artificially increase confidence in creators, or you end up with a reputation based insular ecosystem of the first few to meet the demand finding all the investment. It could be through investor like protection for failed projects, or it could be some program where the state provides you some stipend to attempt creative endeavors and they can deal with the arbitrage over failed works.
Regardless of how you go about it, the concept is the same - stop the doublethink. Information isn't scarce. In the past, making it more scarce had value because it was still somewhat scarce. Today, information is no longer scarce. I have the means to transmit lifetimes worth of information in months / weeks / days / hours / minutes / seconds depending on your connection speeds. And I think there is something fundamentally different between the inception of copyright (make scarce information slightly more scarce to promote its creation because its creators have to endure the upfront costs of infrastructure to account for the medium scarcity of the end product) and modern information (which isn't scarce, has no investment costs besides the scarce resources that go into creating an original instance of it, and has no deployment expenses).
This doesn't happen today because the short term demand for information creation is satiated by media purchase, because funding new open media would be a long term purchase. So when people have to choose between new media now or new media later, they bend over for copyright. If their choice was free media now and paying for the media they want to see made later, there wouldn't be a choice, and all that capital would (mostly)flow to content creators.
: yes, it is likely in the absence of an artificial market propped up by copyright that, due to subliminal mental effects of marketing and appeal, and the fact hairless monkeys don't make entirely rational purchasing decisions, some of those funds would be redirected towards other immediate scarce goods and services rather than potential future information creation. That only reflects how bad our current system is, though - it means people overspend on media because of the existence of copyright, not through rational process, but because they are manipulated into redistributing their funds through manipulation.
If you want an example of this system, look at the gooseberry movie project. Exactly how the future should be.
http://gooseberry.blender.org/