Keep in mind that copyright also enables free software. Without it, there would be no incentive to share source code since there would be no mechanism to stipulate that modified versions must be shared. That would significantly diminish the role of collaboration and significantly increase the role of opportunism. It is also worth noting that copyright increases the financial incentive to progress the state of the art.
The real problem with the current IP regime is its use to impose restrictions that go beyond reproduction.
Copyleft is generally regarded as a clever "fix" because of the brokenness of software copyright. Cory Doctorow even addresses this at the beginning of this article. He mentions that the GPL came out around the same time software copyright was first implemented. He distinguishes between copyleft (the "icing") and interoperability (the "cake") to point out how the new software copyrights took away interoperability. By the end of the article, he suggests we have no more cake and the icing may vanish soon.
Yes, you can use software copyright to prohibit object-only releases, but that doesn't necessarily mean that software copyright is helping. In fact, once software copyright became the norm, there was a huge disincentive to publish source. After all, why would you do that when you can withhold the source to prevent unauthorized modification of your work? Effectively, using a compiler is the software equivalent of encoding your movie with DRM.
Furthermore, copyright has to go beyond mere reproduction rights, because it's designed to cover creative works. The most lucrative part of copyright is not the monopoly over publication, but the monopoly over sequels. Disney is a multi-billion-dollar corporation not because it happens to own a bunch of old movies and comic books from the 60s, but because it has a monopoly over making sequels and remakes of that material. This is perfectly reasonable for creative works. However, it breaks down completely for software, because software is a mixed work of function and creativity that does not stand on it's own like a book or a movie can.
There's already precedent for how you handle these sorts of mixed function works: you give them a sui generis right. Around the same time software copyright was asserting itself, Intel and several other chip manufacturers lobbied Congress for copyright over IC designs. Congress instead decided to instead create an entirely separate monopoly regime for chips that only lasts 10 years and has explicit exceptions for reverse-engineering. That's what they should have done for software: give it 10 years of protection against duplication, require source code disclosure as a rights formality, and publish that source at the end of the protection term. It would work more like a patent, albeit without the terrible problems most software patents have.
> Without it, there would be no incentive to share source code
Without it, there would be no punishment for copying the source code, leaking implementation details, reverse engineering software and breaking copyright security mechanisms. People would be free to do these things without fear of retaliation or legal bullying by gigantic corporations with deep pockets and armies of lawyers.
The real problem with the current IP regime is its use to impose restrictions that go beyond reproduction.