Point is that "hit with a stick" happens to also centralize power, albeit dynamically, at scale.
If you're really looking for a counterexample to centralized institutions, a better metaphor is probably "ecosystem." No centralized authority tells the lions to be kings and queens of the savannah, their status as apex predators comes dynamically from some transform {biosphere} -> {biosphere} finding a natural fixed point which has stability simply from the abstract mathematics of fixed points. A similar dynamic stability exists in the US in the balance of power between Republicans and Democrats, no central authority says that there have to be only two parties, but rather the rules of the game state "we divide everything into districts and every race is run as winner-take-all" which naturally induces this 50/50 two-party split that will destroy the country eventually
Also why do people have to live in societies of millions of individuals? Perhaps smaller units would be better. To some degree that is already what happens, as for example villages can decide some things for themselves. The question is just who should get to decide what.
If this is possible, then it is equally possible to just hit anyone you please with stick so that they are forced to do what you want.
Which means, the most violent eager person gets to rule. Which is what people who prefer court system don't want.
This is exactly how things would go, which is why in human history warlords have never been a thing, and violent, oppressive men have never built empires.
and produce the court-based system we see today, with enforcement of the stick centralized to an authority that everyone agreed to (implicitly).
https://www.thesouthafrican.com/news/africas-top-10-dictator...
You need commanders for war.
Weaker humans usually sit through decimation until the guards come for them. Then they squeal for help. It is also rational. Consider that if you stand agaisnt the stronger enemy, the enemy might come back later with reinforcements and kill you.
Edit: I remembered what the Bible says happened to jews. The egyptians killed the jew children to keep the population in check, before exodus. And shortly after Jesus was born, Herod probably did the same.
But that's not a society any of us want to live in.
Typically people form groups that enforce certain rules. You can have bigger and smaller groups. Some big countries are very centralized, others less so - I think federalization in the US serves to counteract centralization? Ideally people have some degree of freedom to switch to groups whose rules align with their own preferences.
It is not an all or nothing, there can be degrees of centralization and decentralization.
Of course we can not escape the laws of nature in the end.