Private law does/did work for nearly all definitions of 'workable'. Heck it was more scalable than the current system of law. In India private law is/was pretty common even until now.

https://en.wikipedia.org/wiki/Gram_panchayat , http://en.wikipedia.org/wiki/Panchayati_raj

The only real problem with this kind of a set up is, systems by and large become culture centric. And this leads to medieval mindsets. Stuff like banning couples from having falling in love or having a love marriage, or laws against polygamy, support for child marriage, unfair treatment to widows, honor killings ... stuff like that.

There are also some extreme cases: http://en.wikipedia.org/wiki/Khap

Where does this leave us? Despite all their flaws(basically their own definitions of morality and thereby their own laws based on that) these sort of systems are the easiest and cheapest way of resolving a dispute with a very high rate of acceptable justice. Which continues be the case in many places in India today.

Well, then maybe we could argue the same about religion: atheism and then pantheism didn't really work, so we invented organized religions with one major god. Relying on the wisdom of ancestors is a sure way to avoid growth and to not acquire knowledge, and it is precisely this trait in people through which they are usually manipulated.

Your analogy is backward; early civilizations were far more dominated by religious beliefs than we are today.

Religion didn't always exist. In fact, I would guess that it didn't for the majority of human history, although it's ultimately speculation on both of our parts.

Religion (by way of magical thinking) is one of the things that defines humanity. We have evidence of it even in Neanderthal sites, given that we find them in caves, with their feet pointed east more often than not, with flower pollen on them in places in caves where we don't otherwise find flower pollen.

Only recently have we been able to overcome it.

Well, I guess it depends on how broadly you want to define religion. A handful of traditional and possibly superstitious behaviors and cave paintings of the big, scary blob of fire in the sky could qualify, but I think we were talking about a much more complex set of beliefs and value systems involving omnipotent, omniscient being(s).

Were the seeds of religion sown in primitive peoples observations of and attempts to reckon with all the scary shit they would witness in the natural world? Absolutely. But any "definitive" statements on pre-historical belief systems are probably anthropological hearsay, possibly weighted by our current knowledge of and feelings towards religion. What was going on back then could have been just slightly more complex than a dog hiding under the bed when there's thunder.

And keep in mind, we're talking about a 200,000 year run up to recorded history. However, I'm sure there was a more complex oral tradition of storytelling and mythmaking that was starting to develop before the Sumerians took off.

You are making an assumtion that movement of society from atheism and pantheism towards religions was unworkable for the same reasons as polycentric law. It is equally possible that there were other reasons for religions to develop. Like power and all.

Weherein we have some evidence that such was not the case with moving towards public law.

Whether or not something is "workable" depends entirely on what it is you want it to do. The questions are which of our ancestors deemed polycentric law "unworkable", and why. The fact that something was done doesn't mean it was done for the right reason, or that it had, on the whole, beneficial effects.