I think I'm making exactly the point I just made in the comment that you responded to: that prior to the Peace of Westphalia, extranational forces played a part in local policy. Today, states and national borders dominate policy, but in pre-Westphalian society, borders were fluid, and the church often played as great a role as local governments. One day Aquitaine was English, the next French, &c.
Perhaps what Stross is intimating is that we'd be better off if Wales was Wales, Normandy Normany, &c, and that instead of the church, we devise some more sensible extranational force to implement the social contract across all those small nations.
Borders were not fluid and influenced by outside powers for real nations. Nobody moved China's or Rome's or Assyria's borders until they lost battles. Or Prussia's for that matter. Westphalia was an agreement within a closely related ethnic and cultural zone (the crusader pals) for superpowers to not to push around the weaker nations quite so much. It's a temporal european footnote that attached some semantics to the specifically european concept of "the state" (not "nation"). In the broader reality of human history, a nation is a related group of people who can drive people off their land and keep them out, or at least subjugate others to dhimmitude. If you can't do that you will inevitably be conquered. Consider texas for a recent example. No magical international bureaucracy can prevent that in the long run.
Perhaps what Stross is intimating is that we'd be better off if Wales was Wales, Normandy Normany, &c, and that instead of the church, we devise some more sensible extranational force to implement the social contract across all those small nations.