It's all the same, really.
If you have good people, you don't need managers, good people can manage themselves.
If you have good people as managers, other people won't mind working for them, because a good manager is a real contribution to the team.
If you have good people at the top level, they will bring good ideas into the company, have the resources and power to see them done, and benefit everyone.
And the reverse for bad people. In the end, it comes down to how good your people are.
That is CMM level 1. You don't want to run your organisation on that level. It's idealistic, and if it works, it works great, but it depends too much on individuals. When your company is not 20 people, but 2000, it becomes almost impossible to ensure that they are all heroes. That is when you need processes and organisational structures that, if they are made by good people(*), will act as training wheels for the less-good.
In IT we know this concept as an "expert system". Someone who is a really good manager works with someone who knows about processes and modelling to turn what he does best into a guideline for others who are not so good. The implicit knowledge gets turned into explicit knowledge. With that, you can go to CMM level 3. The higher levels are for a different discussion.
The point is: Managers are needed, because many people work better under management. Maybe nobody in the team wants to bother with resource allocation and procurement, or skill development and HR processes. Maybe nobody wants to bother with organisational tasks, or (something other posters commented) wants to make the hard decisions. There are many reasons. In the end it boils down to division of labor, which is a proven productivity enhancer.
(*) yes, you can't get rid of this dependency entirely, but you can reduce the number of good people you need. It is fairly easy to find 5 or 50 good people that set up the structure for everyone else. It is near impossible to find 500 or 5000 good people. Not because they don't exist. Because they already have jobs.