I hadn't thought about the surveillance angle, just the part about getting people who were content to live with each other to hate and fear each other.
The part of the real world divisions that Sturgeon doesn't address is that actual violence can be used as a wedge to separate groups-- he's wrote a story about baseless suspicion.
Unfortunately, I can't find my copy and the version at google books is missing some pages. The story starts on page 311.
The audio version is quite good, but it's both abridged and substantially modified-- and not marked as such.
I'm taking the liberty of spoiling a story which is 60 years old and is not especially about its plot.
It's told from the point of view of the purser on a spaceship. The subculture on the spaceship has gotten weirdly suspicious-- for example, when the cook is working, there's always a crew member watching him so that the cook can't be suspected of poisoning anyone.
It turns out that Mr. Costello (a passenger) has been spreading suspicion and suggesting changes of custom. He's also got a miniature portable recorder, and a nasty habit of getting people to say things which might incriminate themselves or others if taken out of context.
He gets the captain court-martialed in the audio version, but in the original, the skipper resigned.
At his destination, a planet who's primary export is fur which is acquired by trappers who go out for months, he builds suspicion of anyone who's by themselves, even briefly. (People move into warehouses (or else) and just use their homes for storage.)
There's a divergence between the original and the audio version. In the audio, Costello tries to get the purser to commit murder (by poison, which is a nice reference to the bit about watching the cook), the purser doesn't do it, and calls in the authorities.
I don't remember how that part was handled in the original, but it's still one of the few sf stories* where the problem is solved by authority stepping in and doing the right thing.
In the original, Costello is in an idyllic mental institution, more or less, and trying to sow division among alien ant colonies. The purser is somewhat repulsed, but mostly angry that he'll never again have such a high-status person be his friend. In the audio version, Costello has served a prison sentence, and is trying the same trick with earth ants-- and the purser has a clear understanding that Costello is bad news.
*Dark Lord of Derkholm by Diana Wynne Jones, When We Were Real by William Barton</i>
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