two points:

One) people don't live and interact in one dimension, so if there is a problem with scale-ability, it is here for sure. People can 90% agree that murder is wrong, but not minimum wage. Each axis issue or dimension of the society bifurcates it so 33 (2^33) important issues divide the world into kingdoms of one each. That is a simplification, and not actually true, but a very few more dimensions and it is probablistically true.

Two) The system is all intra with no consideration for inter. Take a group of pirates that belief cohere 90% internally that raping and pillaging others is a good thing. Each group, unaided by any systemic properties is in an essentially lawless state regarding how to deal with that. If that were rare, your system could prolly absorb that entropy, but some shade of that may well be > 50% of out group interactions.

Other things that should be represented in the system are economy of scale and the concept of 'critical mass'. 'Critical mass' references the non-linearity in most systems and represents a 'phase change' in behavior such as people grouping to move a tree - at some point adding another person will allow the tree to be lifted, adding a wholly new option for moving it.