undermine the world building

It doesn't undermine it at all. It's hard to answer this question without spoiling the entire series but I can just say that there is no choice of government within the OP world that isn't a monarchy since the world is controlled by an empire which calls itself the "world government." That's to say, It's not a coincidence that Luffy and co. keep stumbling into monarchies and leave them as monarchies. There is a world police force called the marines that enforces this social order and each "kingdom" (which are really just colonies) has to pay a tribute to the world government to simply exist.

The WG doesn't recognize governments that are not monarchies or at the very least doesn't protect them. The majority of the world is dependent on the WG's military force of marines and intelligence agencies for protection from pirates. Those pirates were created from the conditions of enforced poverty and servitude that the WG set (the lumpenproletariat) while the working class inhabitants of the world have their labor value taken from them by the WG in the form of tributes. In exchange, the monarchs of these countries live lavish lives (nowhere near the level of the WG) and have slight autonomy in how their affairs are handled.

There exists a revolutionary army that wants to destroy the WG which would upend the entire social order that has been constant for centuries. Luffy is not part of that army since he's a pirate, therefore he doesn't do any organizing in these islands since that's not his goal/role.

EDIT: In an interesting sense, pirates must exist in order for the marines to justify their control. It's only when these pirates grow too powerful and amass territory that is independent of government control that they are considered threats which then justifies the hyper-militarization of the marines which continues the cycle until it reaches a breaking point and a revolution occurs like we have in the current narrative of OP.