Allow underfunded underengineered free lancers to dump their stuff in orbit and soon space would become useless. You aren't thinking clearly. Your argument is nonsense. We already are in the situation that you describe, and space is far from useless. The only difference is that any "underfunded and underengineered" stuff that goes up now is from some third world government like India or China. Remember that space is a lot larger than earth. There is no one in overall charge of the Oceans, which are a lot smaller and only a two dimensional surface for 99.99% of the traffic on them, yet the oceans have not become "unusable".
Let space junk accumulate to where it is a real problem, and I predict some private space junk dealer will make a fortune. That mass cost a fortune to put in obit, and so it is potentially worth a lot up there.