Bah, this is a message from leader to followers on how Valve's initiative is a mixed blessing for their mission. If you don't ascribe to the same belief system, then there's little point in discussing the message itself.
That said, if we are going to talk about the free software mandate itself instead of Valve's role in it... I see issues, even for something as fundamental as a software developer's survival.
Software developers need to be paid somehow; we shouldn't need to spend our lives with two jobs (software development and subsistence farming ). There are a lot of cases where you can create a business model that does not require selling individual copies. If you can generate revenue from support contracts, bundled hardware, or bundled art (as in the case of a video game), then things are great. Why not open up the source code and encourage creativity from your users (voiding warranty where buggy software may cause explosions, haha)?
However, that does not work for everything. Sometimes your software is your entire competitive advantage, the reason people are buying your bundle of stuff and not someone else's; sometimes there's nothing to sell except the software. I don't see how going open source can make any sense here. If the software requires any significant investment of research and development time, how do you compensate your developers so they can maintain some standard of living?
I realize RMS is not opposed to selling copies of the software, but without preventing other distribution channels, you are unlikely to see much revenue from your own. You necessarily must charge more to cover NRE, while anyone else could supply it for free. Unless there's something I'm missing here, I don't see how a complete system of free software can work in a capitalist society.