Surprisingly, I'd disagree with your last paragraph on the grounds that, while standardization would make most products cheaper, it works against improvement, which tends to be motivated by competition. Lack of choice is usually accompanied by lack of innovation.

At least, for products which still have room for improvement. One of the strikingly nonlinear regions of free-market/capitalism "space" is the realm where manufacturing costs approach zero or there's no room for further improvement in a product. Take baking soda--it embodies both omega points. Nothing is more standardized than the chemical composition of sodium bicarbonate, nor is it possible to make a better sodium bicarbonate. In a 79-cent box of baking soda, the actual cost of the chemical is too small to sensibly account, and the price of the item is composed of a couple of cents' worth of transportation and a couple of cents' worth of printed cardboard, and something on the order of 25 cents spent on advertising so that I'll always recognize the orange box as the product of Armand Hammer's company. None of the major cost components adds value to the product from my point of view, but yet it's an inescapable overhead burden on commerce in a system predicated on competition as the sole determinant of price. For some products, competition is the only cost of doing business, and so choice is not only irrelevant, it's counterproductive as we end up paying for choices we don't need.

As the various futurists promoting open-source, robotics, nanotech, or some other technology chasing infinity love to point out, free market capitalism is based on the assumption of scarcity, and the system doesn't know how to deal with the edge cases of abundance. In fact, by its nature it resists economic improvement beyond a certain point, the point where low cost begins to interfere with profit and "corrective" forces kick in as businesses look for artificial ways to support prices. Exhibit A: The self-styled "recording" industry desperately fighting technological innovation that reduces the cost of delivering their product to near-zero and destroys a profit structure based on the assumption that bandwidth is scarce and music delivery requires expensive physical media like CDs and tapes. They're dead meat, but they're determined to make the rest of us pay through the nose to get rid of the corpse.

FMC has been powefully effective at grinding away inefficiency, but it's now starting to look like it's been so effective at reducing most costs that what's revealed is the overhead burden of the system itself. In other words, free-market capitalism is in the process of becoming its own worst enemy, an impediment to further progress until we can figure out a system that works better in this region of economic space.