[khedoros]

It's based on the idea that capitalism works because it harnesses greedy self-interest, while a pure communist state would fail because there's no direct connection between doing extra work and getting extra benefit.

Capitalist farmer grows 10% more food; they make higher income from the sale of their crops. Communist farmer grows 10% more food; the farmer doesn't see extra benefit. Why bother to do the extra work?

The ideal person might answer "For the greater benefit of my fellow countrymen". A realistic person might answer "Come to think of it, I wonder how little work I can do before I actually see concrete negative consequences".

[st3v3r]

Problem is, those arguments always assume the people are doing things fairly. In many instances, instead of extra work, it's cutting corners.

[alphapapa]

No, it doesn't assume that. Competition incentivizes independent agents to compete, and customers evaluate who offers the best goods and services, serving their own self-interests.