Removing the NPC economy has several (possibly undesirable) effects:
1) You lose control of the economy. It is now subject to chaos and market forces.
As others have pointed out, it can be hard to balance such an economy or fix issues. Also, there are much research on the unpredictability of the economy, even by PhD economists. E.g. www.nytimes.com/2007/04/15/magazine/15wwlnidealab.t.html?pagewanted=all&_r=0
You don't lose control. You need to use different control mechanisms. You get all the tools of real governments, which in some cases are great at controlling markets. But you also get complete control over the world. Iron is too expensive? You can arbitrarily make more mines.
Solely operating on bartering is messy. There's a reason why the world doesn't work this way. Depending on the game, you could have lots of people who just aren't online at any given time. Some sort of 'NPC-run' shop which just services player transactions, while providing no materials would be extremely useful, I'd think, in keeping a large market going when you don't have tons of people online at any given moment.