Haha, I never saw it like that until you put it that way. In any case, I'll take your dictatorship over any other game company's "form of government". I sometimes wonder if your style would work on a much larger scale, but for the scale it is now, its perfect.
Fortunately, a given game tends to attract an audience with a similar vision to that of the creator, so it tends to work out pretty well. Usually the players and I are in pretty good agreement, overall, with where the game should go. One could argue that this is the only possible outcome, given that people who don't agree with the overall vision, in broad terms, would never have joined the community in the first place. Of course, that's probably flawed given the number of unanswered complaints on many game forums about very popular titles. Ah, well.
In the end, it's me in my office thinking up games I want to make, and working on them with a small staff. There is feedback between all of us on all aspects of the game, but I often defer to them on their areas of expertise, and I tend to keep the central vision for the design itself (the puzzle game aside). Then we start showing stuff to the alpha/beta testers, and/or the community, and adding in their collective and individual desires and comments and ideas, as well. It seems to work well. It's not as solitary as writing a novel that is all made by one person (although, he many editors contribute more than most non-writers imagine), but it's still an act of individual expression. I can look at a game and go "I made that," rather than "I oversaw the committee that made that."
It's an interesting thing to think about, and not something that historically I had thought a whole lot about directly. But, more recently, I have been. For a long, long time it was just me and a handful of testers. But once I started having customers, it was quickly obvious that they were also full of good ideas, and I was already well accustomed to listening to customers from my old day job. So this sort of system sort of came about organically, and I think it has been working well so far (for me, at least, it has been an unmitigated success).
I agree that this probably would not work on a larger scale in terms of company size, because if you have too many contributors it is hard to do that. Here, I can be King of Design and Programming, Phil can be King of Art, and Pablo can be King of Music and Sound, and we can all cross-share and that works out well. When you have 100 artists alone, that's a whole different sort of scenario. With a larger customer base I think this can probably still work, although the democracy has to turn more self-organizing and filter the discussion more for the developers to have any hope of parsing anything meaningful out of it. That's sort of what we're seeing now, a bit, as we go through this current transition.