Inspired by this question, wherein the cultural effects of having the lowest possible privacy are discussed to lead into a more honest but less stable world, I'd like to ask if this solution that I offer would suffice, and what might be the problems with applying this solution.
Here we can see a world where everyone can basically watch each other, with bleeding edge surveillance technology. In a hopeful scenario, these incredible technologies are used to watch each other's backs, by providing perfect information to the market and industry titans so that they can give their consumers better satisfaction and clearer restrictions. A world where the dishonest ones are more vulnerable than the honest ones.
However, the topic of protecting "alone time", intellectual properties, and civic regulations are also addressed in one of the answers there. Introverts will go insane just by knowing that somebody could be watching, everyone can be a criminal any second, even by accident. All in all, society as we know it wouldn't last if everyone has easy access to everyone. No top-level regulation whatsoever, since your thoughts and internal body structures are unaffected.
Suppose the thoughts and internal body structures are affected such that anyone can see what's happening within every cell in every inch of your body. Subsequently, every firing of your every neuron are knowable. To achieve this, the constitution of the government requests for all members of its nation to have mandatory nanite implants that will modify the persons physiology to incorporate personal and governmental access to such nanites. These nanites will allow a person to be able to know about any another person, provided he/she submits a request and have it approved by both the other person and the government.
Imagine government-owned social media, where every post corresponds to everything that ever happens to every person, be it that they grew 0.03 millimeters of fingernails, or that they blinked once at a certain millisecond of a certain date while watching a certain movie at a certain cinema.
Now, only the government has full access to these posts, and the government isn't run by humans but by a cyberjudicial intelligence system distributed across every nanite in every body of every member of the society. This means that the control of the government is at least directly proportional to the size of the population.
Then, why accept it?
Aside from monitoring and interpreting, these nanites are also automated to correct the tiniest of cellular mistakes, making every member virtually, biologically, fault-free and immune to almost all natural forms of cancer and infections. This also means that anyone who accepts full government surveillance is granted eternal biological life.
Personal access to these nanites are also granted to every member. Everyone can effectively do anything with their own bodies and minds, so long as the government allows it, and knows about it.
Tailor-made virtual and augmented realities are also provided by the nanite government. You can even upload your entire momentary self to the nanite government network so as to directly influence the growth of its decision trees, effectively influencing the actual decisions of the government to tip into your favor.
Wrongdoers and people who have the means to provide material satisfactions of others and yet deliberately and irrationally deny it to them are not punished, but are instead mentally micro-managed to make them have have second thoughts about their decision to deny material satisfaction. The guilt itself is their punishment, and the submission to this guilt-feeling is their most convenient repentance. The only other option is to convince the rest of the majority of the population that the denial of service is more beneficial to everyone.
From all I have said, it seems the lives of the entire populace are documented if not outright controlled. The government has perfect information. All corollary management aspects that come with it, such as perfect economy, perfect match-making, perfect crowd control, perfect crime prevention, perfect living condition, might as well be included. It all boils down to decision trees that take into account everything about every member of the society. In a way, murder is not illegal so long as the murdered person has been documented to have suicidal attempts in the past. I'm saying even the darkest desires of the most terrible people are justifiable in terms of the availability of the objects of their desires. Some people can be harmed on purpose, if that’s part of what those people want. All that a person has to do, is pray and ask the government to fulfill his/her desire, and the entire society will be given incentives to fulfill it.
Problems with non-members
The problem starts when non-members are involved. Subsystems must be put in place by the members themselves and it becomes everyone's responsibility to act whatever they think is accordingly, so long as the government knows about it. This means that more specific and familiar forms of governance may still be necessary to exist when dealing with those who are not directly governed by the nanite network.
An internal cellular nanite network (iCNN) fully records, partially interprets, and minimally affects every event that occurs within an individual. Every individual's iCNN is connected, augmenting their social capabilities and improving the totality of their social structures. The real question here is, what aspects of everyday life will not improve, when individual desire satisfaction is maximized by sacrificing personal privacy?