Boy that is one of the most inaccurate definition of capitalism I have ever heard. By your definition there would not be any quality product left in US or in any free market. As others state, this is human behavior. Most people does not care about the quality of the trivial items, so they prefer cheap but functioning goods. For niche consumers, prices will be high and production will be less. There are however things block actual capitalism to function well, such as protectionist policies that prevents you importing superb Japanese staples and pens cheaply.