The Westphalian State

"If we lose the Westphalian state, does the fragmented governance that emerges approximate an anarcho-capitalist utopia? Or does it degenerate into anti-competitive guilds, small protectionist zones, and Mafia shakedown rackets?"

Such as Germany pre-1648 or your average homeowner's association or school board today? I think your average centrist liberal has about half a point there--on one hand, there are fewer oppressive local governments that harrass their subjects on a day to day basis. By contrast, in a Westphalian state, there's one large government that when it goes wrong, goes catastrophically wrong (Germany between the wars or U.S. federal policies toward poverty from 1965-95, let's say).

Not-the-Westphalian-state is a pretty huge category of social institutions.

AIUI, the point of the treaty of Westphalia was that the various European powers would stop trying to impose their preferred religions on the whole of Europe. Instead, they would stick to imposing their preferred religion on the people in their own borders. Obviously (to us anyway) the best solution would be that nobody would impose a religion on anybody.

In the feudal order that preceded the wars that lead to the treaty of Westphalia, everybody was theoretically subject to both the Holy Roman Emperor and the Pope. (Luke 22:38) In practice, both were too far removed to have much actual impact, and instead you tended to be subject to the guy with the closest castle. The guy with the castle could do more or less as he pleased, which was good for him, but not so good for the serfs. This freedom-for-the-guys-with-castles system was productive enough in terms of horses and steel that the West could conquer Jerusalem as an act of charity.

The question for the modern day is, would most people be like the castellans or like the serfs?

The pre westphalian system was not one system, but one hell of a lot of systems, most of them decentralized, feudalism with a strong aristocracy, some of them highly centralized, a king or bishop with a weak aristocracy. Feudalism at its best was anarcho capitalism for a rather small elite with the right to keep and bear arms and rather rough on everyone else, feudalism at its worst was a tollgate every mile or so charging fifty percent of everything the traveller possessed. Still, as the previous poster pointed out, cannot have been too bad when it was able to take on an Islamic empire operated by conscription and taxation, using volunteers funded by charitable donations.

"If we lose the Westphalian state, does the fragmented governance that emerges approximate an anarcho-capitalist utopia? Or does it degenerate into anti-competitive guilds, small protectionist zones, and Mafia shakedown rackets?"

If the W-state just disappeared today, people would build a new state. Probably it would be much smaller states at first, but in a short period they would grow into their previous size. Neither libertarian anarchism nor maffia-rule would emerge, since the vast majority wants democracy.

The real question is, under what conditions is it possible for the state to disintegrate and be replaced by anarcho-capitalist institution? Or, how many needs to be, or close to being, an anarcho-capitalist, for these people to secede from the state? Or, how much money and people (and guns?) is necessary to convince the parliament to let them secede? Perhaps if about 10% (or a very devoted 1%) of the population would "vote" for extraterritoriality it is enough?

And likewise, when is it not possible for the state to disintegrate and be replaced...? Or, when will state disintegration turn into mafia-rule, warring clans and what not? I believe that the more civilized the population, the less likely it is that this will happen.

Phillip Bobbitt proposes, in Shield of Achilles, that the nation state will be (is being) replaced by the "market state" where the monopoly on the state's use of power is set to diminish due to the increasingly global threats the world faces.