people who do it get paid a much larger share of the value their labor creates
That's the tricky part. Without a permanent dictatorship of the proletariat, you have the masses determine value. "The state will wither." is hand-wavy in the extreme. If the people determine value, that results in Glen Beck being worth hundreds of millions in value while school teachers get minimal just like today.
"A person is smart. People are dumb, panicky, dangerous animals and you know it."