There is a fundamental problem with the dominant (U.S variety) of Libertarianism, alternately referred to as "small government conservatism" or "right wing Libertarianism". The essential flaw is that it assumes that a smaller state will result in more freedoms for the individual. The assumption rests on the view that it is The State with it's machine gun totting commandos, drone aircraft, and ubiquitous methods of surveillance, both known to the surveilled and otherwise.
The theory argues that free citizens are capable of making their own decisions in a way that leaves the society better off. That the problems in the economy are primarily caused by state interference and collusion in the economy. The tend to assert that the free economy would operate to the benefit of the overwhelming majority if the government were to stay out of it; that many of our economic woes and inequality is caused by a corporatist policy between the government and supposedly private companies.
These libertarians tend to argue that the economy would self regulate through the simple mechanism of supply and demand and public choice. They further argue that this would result in more opportunity and would respect individual freedom.
Now, I agree with much of this. But, supposing the state...let's take an example. Let's say that the United States government were to be run by a small government libertarian. Let's say that they followed the constitution in it's original form, in a way that is reminiscent of the way governments ran a hundred years ago. Let's say that they were to cut defence spending, remove entire departments, like the department of agriculture; that the were to lower taxes for all, end all subsidies and begin removing 'victimless laws'. Let's say that they were to reduce police spending, and focus policing on better policies. And that they were to reduce public health care spending for all but the most vulnerable.
Now, perhaps this would leave the public in a position where they would be motivated to succeed by their own efforts. Perhaps it would allow new companies and new ideas to emerge. Perhaps it would result in better food safety and would allow prices to return to something more in keeping with true supply and demand.
But, are they seriously saying that nothing else would step in to fill the void of a reduced government? Therein lays the flaw in the argument. We have powerful, multinational corporations which are more than capable of fulfilling many of the actions that the state currently fulfills. And, in many parts of the United States, the removal of the state would probably prompt at least some of these companies to take on more of these duties. Google has gotten into the business of providing electricity, a role normally done by states. I'm not saying that this is a bad thing, I'm just saying that they already do some of the job of the state, and with a shrinking state, they would probably do more. Additionally, throughout the United States, there are many other organizations which already do some of the stuff which people normally associate with state action. Some of this is governmental agencies using Twitter and other forms of crowd-sourcing to provide disaster coordination. Again, not necessarily bad...in fact, this is the kind of private action I think we need more of.
Another example are the private schools, and private hospitals. I know the U.S is somewhat unique in this regard and that for them this is very normal, but again these are public goods. These are services required by the population as a whole. They go beyond the simple market mechanism that consumer goods go by. The same could be said for private prisons and social services provided by churches. All of these go into areas that are normally associated with governmental actions.
Now, in the case of a shrinking state in the United States, we could assume that these organizations would indeed take on more duties. It doesn't take much to imagine Google expanding it's electricity services, or it's telecom infrastructure. That is probably going to happen anyway. It wouldn't take much to imagine social organizations taking on more of a role in public health. It doesn't take much imagination to conceive that private agricultural business would take on more of a role in food inspection, distribution and technology.
Again, much of this is good. But, is it not conceivable that at least some of these organizations and companies would have motivations which are less concerned with the public good, and more concerned with private gain? Would it not be conceivable that a major corporation would take on actions and activities which provide a benefit for themselves, but overall have a spill-over affect with a public cost?
Now of course, few are talking about completely removing the regulatory powers of the state, but the fact that these organizations have a compelling incentive to maximum their profit and to socialize their cost creates a major problem for "right wing libertarianism". These organizations will try to fill gaps in areas of their expertise. And, I'd argue that very often they would behave in a manner which does harm the overall public good. They would engage in power maximization in order to achieve maximum profits for their shareholders.
The large, multinational company responsible only to it's board and shareholders would not, suddenly, become more altruistic just because the state has stopped subsidizing them. In fact, many of these corporations are not subsidized. They are constrained by state action. They would be unbound and they would attempt to monopolize, coerce and co-opt, just as they already do.
Now, I'm not saying that all corporations do this, but some do.
Is the lust for power, control, wealth and luxury only a feature of systemic forces in the modern nation state? Certainly not. If we look to the feudal period, before the creation of the modern nation state, we see the same motivations. If we look to small groups of people in a gardening club, we see those motivations. We've all met the social climber! He or she is not a product of the system, and he or she will always find structures to use for her or his advantage. This is not going to go away just because the state goes away.
So, the solution? Well, that is a matter not fully in my grasp, but it would most certainly require actions that go beyond simply limiting state power. It would require limits on private power as well.
Anarcho-syndicalists, left libertarians and "small state socialists" probably have it right that private companies pose just as much threat to liberty as big government.
The motivations that cause the state to intrude on civil liberties exist in all power structures. Would things still be better with a smaller state without limits on other structures? I highly doubt it. Is there an immediate solution? I doubt that even more. But, let's stop pretending that the only problem in modern life is big guvament.