Moldbug wants to engineer a reduction in violence because violence is wasteful. He is not against all competition or conflict. He considers them inevitable. To him violence is wasteful pretty much by definition because it happens due to uncertainly about who would win in an armed conflict. People generally don't fight hopeless fights, so reducing uncertainly reduces armed conflict.
A market in state shares would allow for liquidation of failed states without the usual violence. At the same time it would align the quality of the services provided by states with the self-interest of their owners, making such states less likely to fail in the first place. It's the Mandate of Heaven with(out) a human face (being stamped on).
I don't remember Moldbug saying this outright, but he does not seem to believe that war is eugenic, at least in the present. It would be better if people competed through other means, like, again, capitalism.