As a career project manager I can say with authority that workers are not capable of managing themselves. We all like to think that's not true, and we're all wrong. That's human nature in complex societies.

This middle-management downturn is only due to the downturn in the economy. The larger the organization, the more managers it needs, like a pyramid. Companies can't shed frontline workers, and they don't want to shed themselves - senior management / founders (which are often the real problem), so they cut out the middle. That's not structurally sound, but companies will suffer through until the economy picks up again, then re-hire everyone, being worse off than they started and ripe for acquisition. The new owners will then fire the middle-managers.