Alex
Arcane
Oh, ffs. Without game mechanics there would be only LARP.
I've seen very good P&P campaigns being played on freeform, that is, without formal game rules. Note that it isn't the same as having no rules, as there were specifics about how they did things. For example, what happens in the game fiction must respect the reality of the setting. Dragons were big and scary in their game, so you couldn't just walk to it and kill it with a sword, and expect to succeed.
However, freeform games can be pretty crappy if the players are not in the same wavelength. Also, this is completely unsuitable for CRPGs. The strength of freeform is in allowing people to make decisions about how the game goes without being hindered by systems that may not fit the current situation. In a CRPG, that will always be a problem, and doing away with formal rules is probably just and excuse to make the game like a linear adventure.