The situation you described has all the crappiness of a corporate hierarchy, but none of the promises of meritocracy ("work hard and advance"). From the programmer’s perspective, he’s stuck both in rank and in skill.
Contrast this with the FOSS model, which creates the feeling that he’s working on something, versus working for someone. He can work on whatever project he’s interested in, or create a new one if it has enough traction. Since he’s not going into management, that leaves him with advancing in either depth or breadth. He can advance in depth by choosing to work on something that challenges his skill level. Or he can advance in depth by working on new technology or in a new area (e.g. frontend vs. backend).
Just to play Devils Advocate here, but what happens if everybody wants to work on the same project? And this same developer doesn't have enough traction for other projects he would like to start?