Indeed, incentive structures work on the base automatic self-interest. Even you recognize the community corrective process though:
If a flag is rejected by the community, the flagger has potential to lose money.
The community can evaluate and review individual cases. The community is the one that is involved in deciding what is the problem and how to resolve it when it occurs. To get an overall compliance on the best course of actions, rewards and punishments can be used. This is a basic mode if living where not much thinking is required beyond the small circle of interest in self or the family to promote optimized survival even at the behest of others in some cases.
Enlarging the circle of identification to encompass others, and valuing them more than not, allows for a shift from a more ego-centric self-view and worldview to encompass a self+other view of how we are to behave. Recognizing that our success in cooperative survivability requires a concern for others as well, not simply ourselves or immediate family/friends.
Self-interest is always there, but it recognizes self+other interest. For example the concentration of power that people have addressed before that I think you do support. On a social media platform, this has been demonstrated to fail. Only focusing on self-interest to create something, without a larger-scope of viewing self+other together to create something, will limit the ability to realize the success of something. Not everyone can get along, that's why you speak and influence those who can be and not work on arguing with a wall that doesn't want to budge, and eventually more people are influenced and get the information presented to forma consensus. Spending time to get those who don't want to listen to listen and learn, is a waste of time. The community eventually gets movement into one direction as more information is spread about it. But... people need to understand this process and work to make it happen. It takes time. Effort.
Eventually codes of conduct, rules, are established based on everyone understanding what is better for all as a way of living/acting, not simply based on their own self-interest alone as what is required to get them to want to do something. A larger perspective apart from personal self-interest alone is required. If someone is primarily thinking about making their pocket bigger, or enlarging their investment, while they don't consider the larger picture of self+other, then the proper solution and path to take is often missed from that lack of vision.
We start with self-interest incentives, and work towards a greater understanding of how things function and the possibilities of where we can willfully go without the primary focus on self interest, but not ignoring self-interest either.