But in reality if you admit you made a mistake, some people would use that as a weapon against you, and everyone else would decide not to get involved in defending your flaws because it's too much trouble.

Or instead you can double down and some people will get annoyed, but you haven't created a vulnerability and you get to keep soldiering on.

I really wish we lived in the first scenario, but honestly most people aren't actually willing to behave in that way. So by default we end up with the second scenario.

It's almost as if this self-correcting dynamic had something to do with efficient resource allocation and general prosperity; but what do I know, I'm but a simple backyard furnace operator.

Is this something that magically doesn't happen in top down managed economies?

Care to point us to an non-capitalistic economy where this type of irrational behaviour doesn't happen?

your issue should be with corporate hiring practices, not the economic system they exist in.