I’m not sure why, but I see a common bias that hierarchies are more efficient than “flat” organizational structures. In fact, life isn’t nearly so simple; there are plenty of circumstances in which flat organizational structures have proven to be as or more effective that hierarchical organizational structures. For instance, check out this Yahoo article which discusses the success at Valve Games (makers of Portal), Gore-Tex, and several other extremely successful companies and which credit that success in large part to those structures.
Read between the lines there just a little bit, and you’ll see that what’s going on (among other things) is increased productivity through procedural justice. One of the advantages of flat org charts is that they give employees more of a say about how to spend their time. At Valve, employees decide what new games that they want to work on. If they have an idea, they don’t have to pass it by a boss; they just have to convince enough coworkers to start working on it that the game gets made. Yes, sometimes this means that people don’t spend every last minute working on the most efficient thing that they should be working on; but in the long run, employees will put in more hours, work harder, and work smarter on projects that they care about and for a company that they really believe in.
When people believe in the rules of the office, they become better workers–even if those office rules might look kind of absurd from the outside. And that same rule applies to democracy; when people believe in the rules of society, they become better citizens–even if those rules sometimes might seem kind of silly sometimes.