Bitcoin's value comes from its function and trust. If it becomes expensive to use Bitcoins, the game is over.
The market doesn't work like that. The free market involves parties reaching an equilibrium. "too expensive, therefore collapse" is not a realistic scenario depicting an open market adjusting to costs.
We know that the equilibrium when not restricted by block size is minimal fees per transaction (even free transactions) because that is the reality now.
An imposed sub optimal block size does not create a free market, it restricts one.