Free shops and online equivalents like Freecycle work for people getting rid of stuff they don't want, but not for much beyond that. For people to create complex and valuable things, such as pencils, what institutions would you have instead of self-interest, security of property, contract law, and a medium of exchange?

That is not to say that those institutions are the only possible ones, but I don't know of any others that do the job. Communes don't scale, or last. Central direction only scales up into a disaster.