"Advertising in general, or at least the way it is currently done, is something that I believe a more enlightened society would view as either a great evil or at least a corrupting influence."

More enlightened society does view it as a corrupting influence, 'evil' being a term that's generally avoided in said society. If you look at trends in comtemporary philosophy/cultural theory you'll find a number of critics of this, a part of what they label as 'the culture of capitalism' or 'late capitalism', from Theodor Adorno (stanford encyclopedia of philosophy entry) to Fredric Jameson.

Interestingly, society is neither enlightened nor interested in becoming enlightened (the criticism is there and instead of either reacting and modifying the system to fix the problems or replacing the system completely, whatever floats your boat, we are in denial about the existance of what's literally in our face every day), so this is what we're stuck with.

Not necessarily. Now I don't know anything about elephant axons, but, I'm a neuroscience student and I know something about neurons in general. The size of neurons and their axons and dendtrites determines the speed at which a signal can be transmitted through said axon/dendrite. At the same time though cells are small for a reason (to facilitate chemical transport through the membrane, surface area increases arithmetically as volume increases geometrically or something like that, large cells dying cause problems too with lots of waste contaminating an area, etc. so cells tend to be small as a sort of convenience). When there are evolutionary pressures to counter act the benefits of small cells you find large axons/dendrites and neurons. This is the case in giant squid axons (which are visible to the naked eye) for example. They're used to initiate the squid's escape response (a water based jet propulsion system). In light of this framework, I can't imagine any reason why an elephant would need larger axons than usual.

The laws of suppy and demand guarnatee that in a competitive market profits will always be reduced to zero as price is eroded to the level of cost of production. One party will develop a product and sell at some margin above cost, a second company will come in and sell for a bit less winning over the entire market and still sell at a slight margin above cost (though a smaller margin than the first company). The first company then responds and drops its prices and so on. Ultimately the price balances out at the cost of production. In OSS the cost of production is $0 because labor is volunteered labor, and there are no material costs, so ultimately the value of software is reduced to zero.

The way this is avoided in other industries is through innovation and patent rights. Actually there's considerable evidence that patent rights are responsible for developing our society into what it is today. The industrial revolution is attributed by some scholars to the establishment of modern style patent rights in Great Britain towards the end of the 16th century, and these same rights are what create an incentive for development in most industries today. So short of pattenting your software, yes, all you can do is inovate to stay ahead, and like everyone else here seems to be saying, that's nothing new.