Have you ever seen one that worked at a larger scale than that? Bigger systems require more layers of organization: there are more places for disagreements to crop up, and resolving them is a bigger and harder problem. Disagreements about the fundamental defining purposes of an institution multiply, and these conflicts need to be resolved somehow. Everyone needs these definitions to be mostly compatible for institutions to function, and this just isn't feasible without some structure at larger size. At the size of a single family, it can work pretty well – doesn’t usually, but I know some families that are shockingly egalitarian. There also exist small companies, university academic departments, primary schools, research labs, etc. which are culturally uniform and cohesive enough for this to work. Even at the size of a city, I think it’s mostly impossible: the best we can hope for is widely supported representatives who operate transparently and are accountable for their actions.

Iceland is a pretty unique case: everyone there is pretty much everyone else’s cousin, and they’re on an island. They look the same, have roughly the same beliefs, etc. etc. And I’m still far from convinced that medieval Iceland was really so utopic.

I'm thinking of Sparta though, which was by many accounts pretty culturally uniform and egalitarian/meritocratic, at least for citizens.

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I think the best analysis I know is still Tocqueville’s Democracy in America. I also recommend The Federalist Papers, particularly Nos. 10 and 51, for a pragmatic solution to these kinds of problems, based on the decades of first-hand experience some smart blokes like Madison and Jefferson had trying to run fledgling democratic states. (And Machiavelli’s Discourses on Livy is probably worth a read too.)

For a more literary exploration, read some Balzac novels: early 19th century France was the beginning of the cross-over from aristocracy to bourgeoisie, and rapidly growing cities quickly accumulated bureaucracies.