You are incredibly naive about the role of financial incentive for success of products, services and inventions.
Open Source removes a considerable amount of options for financial gain, or even the ability to pay for research and development. For every "open source" success there are dozens, hundreds, thousands, millions of proprietary success stories.
The fact of the matter is; success needs financing.
Linux; arguably, the single greatest open-source success story, is nothing more than a Unix clone. A copy of proprietary innovation.
Open source removes only the financial sources that depend on defining a specific number as intellectual property. Suppose a company invented a car that costs $0 to build and runs on a special chemical compound. That company then decides to charge for the compound, but sell the cars for free. Will they still make money? Yes. Eventually they'll make enough money of offset the original investment, so they can start improving their car with more research.
Consider further if they released the specifications for the car into the public domain. A really good engineer would see the design, notice a flaw, and want to fix it. So they fix it and submit the fix to the original company. All the new cars are of a higher quality because of this fix that they didn't have to pay a dime for. The research and development was free for that.
Applying this to software, Redhat produces Redhat Enterprise Linux. Its a special blend of FLOSS and the proper know-how of putting it together right. When you buy a copy of RHEL, you are buying a support contract and paying for the work it took to stitch the pieces together. You're not paying for the software. If you want a free copy of RHEL, use CentOS. If you run into problems with that, your only option is the community who supports CentOS.
Success does need financing, but it doesn't have to come from the same place it has been for the last few years. Its called the product halo. Sure, there are mechanics who can fix their own cars for free, but for the people who don't want to or don't know how, they'll end up paying a professional to fix their free car.
I'm not sure why you point out Linux. It may be just a copy of proprietary innovation, but it is of a higher quality than Unix ever could have become. Open source results in higher quality software. Would you rather restrict your pool of innovation to a small select group of people you hired and have to pay every week, or expand it to the entire human race for free?