Commenter Vince asks: "Why would you invest in innovation in an ideal market, since anyone can copy your innovation (perfect information) and you would not profit from working out your ideas."
Why indeed? Why did Einstein develop the theory of Relativity or Feynman the theory of Quantum Electrodynamics? If it was to get stinkin' rich and be able to exploit the labor of others, they failed miserably.
Why do most employees of companies, not the shareholders and senior executives, actually create the innovations that make the shareholders and executives rich?
Why indeed does anyone but the tiny percentage of those in the capitalist ruling class do anything at all except mindlessly follow the orders of their lords and masters?
People are motivated by all sorts of things, and economic advantage is only one of those motivations. Economic advantage is a powerful motivation, and I don't think, as perhaps some other communists might think, that it needs to be completely eliminated, but neither should we assume it's the only, or even the most important, human motivation.
People will innovate because they want to become famous, because they themselves want to actualize that innovation, or just because innovation is wicked cool: many people have an incredible feeling when they create something new, even if it's something they themselves will never use.
Economic motivation works best, I think, to move people to capture the producer surplus or avoid a producer deficit. If, perhaps, there are more people whose "first choice" is to become a philosopher than there is a social need for philosophers, we want to convince the least efficient philosophers to give up their first choice for their second (or third, etc.) choice when the alternative has more social utility. We also want to convince at least some people who would be really efficient philosophers to become philosophers, even if their first choice isn't philosophy. Since the most efficient producers of any commodity gain an small but persistent economic advantage relative to the socially necessary abstract labor time of a commodity, economic advantage can serve as a motivation here.