This is true -- but the example as given assumes no centrally managed economy. It's just a case of everyone independently deciding to maximize paperclips.

We have moved away from a complex allocation system to a simple one. It doesn't matter if you use money -- the relevant aspect of the situation is cooperation.

Of course, I may be reading to much into "everyone decides". But I'm assuming if they all 'decide' to do something because they have a gun to their head, then the downside is obvious.