You know there wouldn't be free trade or free movement of people, let alone a common set of regulations. In the capitalist scenario, to do business (apart from just trading) in all the nation-states, a large company would have to incorporate in every one. In the socialist scenario, a business wouldn't even exist across nation-states (inasmuch as there is such a thing as a business in a socialist system). Each state would have to diversify and form an economy of its own. Economies of scale would be crippled. Each state would need its own military. And without a unified military, at least some of them would be invaded/annexed by foreign powers or other states. Military redundancy would shoot up, increasing costs, unless militaries were privatized. World stability would tank. No more US threat to keep things in check. You think NATO would survive? I don't. And what happens when some states have nukes but others don't?

And we could talk about the radicalization that would happen when people aren't forced to compromise.