pg weighed in a while ago on this in his essay "Why To Not Not Start A Startup" (March 2007, http://paulgraham.com/notnot.html). See point 8:

"A lot of people look at the ever-increasing number of startups and think "this can't continue." Implicit in their thinking is a fallacy: that there is some limit on the number of startups there could be. But this is false. No one claims there's any limit on the number of people who can work for salary at 1000-person companies. Why should there be any limit on the number who can work for equity at 5-person companies? [3]

Nearly everyone who works is satisfying some kind of need. Breaking up companies into smaller units doesn't make those needs go away."

[more in the essay]