Good question. It does, but public goods always have this problem. We currently address the problem by granting temporary monopolies on intellectual property so

Good question. It does, but public goods always have this problem. We currently address the problem by granting temporary monopolies on intellectual property so prices can be established for it. This is replacing one market failure with another. Think about it this way: when humans invent new ways to live healthier lives, we limit the access to these inventions for at least 20 years. Isn't that crazy? Everyone could be living with the benefits of those ideas twenty years earlier, but in order to incentivize the creation of those ideas, we explicitly delay progress. Instead, we could just pay for intellectual property as a society. This introduces a new problem of deciding the price to pay, which is what merit capitalism solves. An individual picks her own price, then decides how much others have to pay to remain part of her society of people she rewards. That is, if you don't pay her minimum contribution, then she won't do work for you or sell you products, nor will she work for people whose justification for their reward is that they've rewarded you in the past. Your rewards are cut out of her economy, which makes rewarding you less valuable for every other human. There's one less place for other humans to go to get rewarded for rewarding you. Does this lead to the optimal price of public goods? There's no proof that it does, but I don't think such a proof is possible. Intellectual property leads to the price that monopoly power achieves, which clearly isn't an optimal price. In merit capitalism, society will iterate until their prices achieve a level of progress they collectively find desirable.