If player 1 chooses to cooperate, player 2 should defect, and vice versa. However, if player 1 chooses to defect, player 2 should cooperate, and vice versa. So there's no dominant strategy.
In the dialectic between capitalists and workers, for capitalists, "Cooperate" means paying high wages; "Defect" means paying low wages; similarly, for workers, "Cooperate" means working hard, "Defect" means slacking off. If both defect, if capitalists pay low wages and workers slack off, then the workers will starve (because they don't have enough money to buy food), and civilization will collapse. Contrawise, if both cooperate, there is a higher overall payoff (4+4=8) than if one cooperates and the other defects (5+2=7). However, because the individual payoff is better, there is an incentive for one player to defect if the other cooperates. In essence, whoever gets to defect "first" (or most credibly) will win; there's no incentive (as there is in the Prisoner's Dilemma) for one player to defect if the other has already defected.
Thus we can create the political economy payoff matrix:
|Labor||High Wages||Low Wages|
Let me be blunt: workers are no more altruistic than capitalists. If high wages are more or less guaranteed, workers will consume more leisure — leisure is a normal good, n'est pas? Economically, the effect of laissez faire capitalism is to make sure the workers consume as little leisure as possible. And, economically, the effect of socialism (the first stage of communism, the dictatorship of the proletariat, as distinct from welfare-state capitalism) is that workers will consume more leisure: they will, as compared to capitalism, slack off.
(It may be more socially efficient under capitalism to have workers work harder than is strictly economically efficient; we don't want the workers to get the idea that they deserve leisure. And it is arguable that many of the problems of Communism of the Parties (USSR/PRC) was caused by their attempt (probably necessary to resist the capitalist West's unapologetic desire to annihilate communism and commit genocide against the USSR and PRC) to "square the circle" and try to get both hard work and high wages.)
The project of socialists and communists, therefore, should not be to argue that socialism and communism will get us to some sort of utopia where and the workers get paid well and everyone works as hard as they do under capitalism. That's an economic contradiction. Instead, we should valorize leisure.
One theme of capitalism is to valorize hard work. Most of our common phrases for hard work — initiative, can-do spirit, commitment — are positive. Most of our common phrases for leisure — slacking, laziness, goofing off — are negative. They may be vices we indulge ourselves in, but they are vices nonetheless. But why should this be so? Why should hard work be good for its own sake? Some goals require hard work instrumentally (I work harder as a student than I ever did as a middle-class professional, for a third the pay) but why should goals that require hard work be considered better just because they require hard work? Why is the Dude a bum just because he works only enough to live and indulge his relatively inexpensive passion for bowling? (The Big Lebowski works only because it subverts the preexisting trope of hard work and wealth good/laziness and poverty bad; the film would make no sense under communism. In contrast, Downton Abbey is sterile and boring because it fails to subvert the trope.)
Valorization of anything is only partly a project to convince people to value it. Valorization is more importantly a social construct to justify the punishment and coercion of those who do not valorize it. If hard work is a value, then those who do not work hard are "vicious"* and deserve to suffer. (Similarly, sobriety is a virtue; those who are not sober deserve to suffer just because they are not sober.) Hence the major argument and justification for capitalism's tendency to keep wages low is that low wages promote the virtue of hard work. If the working class received higher wages, they would not work as hard (at least not for long), and would therefore descend into the vice and decadence of lazy, unproductive activity. The capitalists are just virtuously trying to save the working class from their own vice! How can we not give such a project our most enthusiastic applause? And how can we not condemn (true) socialism as inherently and ineluctably vicious?
*virtue : virtuous :: vice : vicious
I say fuck hard work.
Not only should hard work not be a virtue, it should be something of a vice. If you want to indulge yourself in the vice of hard work, well, you're an adult and can do as you please, but don't act like you're any more proud of your hard work than you are of any of your other vices. We want a society where it's good that people have a lot of leisure.