When they explain their political philosopy, Libertarians advocate free markets. They also prescribe severely shrinking government, especially its regulatory powers, and oppose public control over natural monopolies and basic services otherwise not available to many, like education. If we look back to how government came to be, we can better understand how a large, densely populated society like ours will always be ruled, whether or not the forces doing the job are called a "government". This reality affects what happens to the economy and supports the idea that empowerment of the citizenry via an institution as close as possible to truly representative government leads to the best outcome for the largest number of us.
In my freshman year at college, I took a course in anthropology which included a bit on the evolution of government. It really helps to see what government and being governed is and can be, to look at how it came about.
The short version is: We are social creatures so we have always needed a way to function as a group. We governed ourselves long before there was formal government. In our initial hunter/gatherer nomadic state we lived in small fairly isolated groups of up to a dozen related nuclear families. Everyone had natural allies by virtue of being closely related to others in the group. Decisions were made by face-to-face discussion and power was always shifting as respect, friendship, deals, and marriage changed. There were spontaneous meetings to plan the next day's activities, figure out what to do about someone who had seriously misbehaved, and decide when to move the group to a new area. Some people generally had more influence than others , but everyone could speak if something mattered to them.
When we started simple agriculture and territory became important, groups became a bit larger and closer to other (rival) groups. Generally one man and as many allies as he needed to retain control and keep things fairly stable, become important at this level of population density. Still, women and less dominant men found ways of having a say, and were valued as family members and contributors to the group's survival. They played an important role in deciding succession in "chiefs". This is the second form of government. "Wars", more like skirmishes, were fought w/ other, nearby groups, but the aim was never to exterminate. The rival groups knew each other's family units as often women were exchanged--sometimes peaceably and sometime via war. Some regions had seasonal gatherings of several groups to feast, exchange a few goods, formalize marriages, and/or worship. The important factor is that governing was still mostly face-to-face, strongly limiting how much mistreatment and inequality the group would tolerate. The point of this, the previous, and all other governments, informal, semi-formal, or fully formalized, is to coordinate all the activities the group feels it needs to do that can't be done by an individual. In that sense, modern businesses "govern" in addition to the entity labeled "government".
Things changed when population densities increased yet further, and with the domestication of animals and more intensive agriculture, territory became primary. Soon the most dominant men were allying with the rulers of neighboring territories to create larger scale holdings, maintain the stability of their control, reduce the disruption to constructive activities of frequent war, and to solidify their claim to "owning" the land that others worked. They usually cited divine right. These new rulers were not closely related to those being ruled, and they had created powerful military and religious support structures made intentionally inaccessible to the majority. There were assassinations by other members of a ruling family, but it was next to impossible for the general citizenry to unseat those in charge. Rulers saw themselves as different and deserving of a much higher standard of living than most, justifying taking a large share of the fruits of the labors of all others.. For better or worse, they got to choose which endeavors the group should concentrate its resources on. Organizationally, they operated very similarly to the heads of today's mega-corporations. The ruled peasants, often at risk of death during hard times because of the enormous inequality, got the consolation prize of bragging about how great, mighty, and wealthy their ruler was. The rulers and other members of one coalition usually had no familiarity with the citizens of the other coalitions around them. For the first time, humans used their ability for abstract thinking to visualize each other group as a single unacceptable entity, as though it were one malevolent person. War became an effort to exterminate and people behaved more savagely toward other people than ever before.
Once that bell was rung, it couldn't be unrung. People couldn't just go back to only face-to-face government limited to small extended family units. The technology, specialization and concentration of resources that higher population densities require to survive demand more widespread coordination. And once a ruling clique has created the infrastructure to maintain power, it will not willingly relinquish it. It took the gradual creation, (in Europe it started with the Magna Carta) of an equally large, alternative governmental body that for some time grew in its accountability to those ruled, to put limits on arbitrary control by the ruling elite.
I often wonder what type of government Libertarians are describing when they say "government". Governments vary widely. The Libertarian concept sounds to me like a big domed building full of alien androids put in place to move people's money off planet under the guise of taxes. Naturally they want to give such an institution as little power as possible.
The founders in the U.S. combined a bit of Athenian democracy, more of Iroquois multi-level consensus and representative government, and the European Enlightenment's understanding of the importance of freedom of dissent, religion, expression, association, gov't transparency, widest possible control over the use of resources, and more, to invent a body they hoped would in a large-scale mimic as much as possible the style of organization people are instinctively drawn to--consensual, face to face, participatory decision-making, with restricted leaders who must continually prove their merit. They hoped representation would create a government that resembles us and speaks fairly accurately for us, thus empowering us. And it got quite a bit closer to that ideal than any previous attempt, in the process producing more widespread prosperity than ever before.
Thomas Jefferson worried that the lack of legal limits on the coexisting power of the large, autocratic companies like the British East India Tea Company might be a serious threat to the new model. Unfortunately, these fears proved accurate. Those people with the overwhelming dominance drive and various advantages that got them to the top of the world's largest corporations, exploited every loophole and used their wealth to destroy any barrier that we created to maintain our say in what happens to us and our larger society. The tipping point has come and our government is now merely a shell to hide the names of the corporate overlords making the decisions. These de facto rulers are moved only to widen the gap between themselves and everyone else by increasing their own control and disempowering and impoverishing everyone else. "Everyone else" includes the owners of small corporate businesses. Their own inclination in combination with the requirement to make only those corporate decisions which increase the returns to the investors of their particular corporation, mean that their choices don't even take into consideration the effect on general prosperity, even to the point that they interfere with our ability to deal constructively with earth's finite resources.
We cannot have free markets, period. Those who have the largest organizations and the most resources on day one of the new Libertarian system will use their wealth to monopolize resources and collude to prevent smaller businesses from growing and competing. There will be no countervailing force empowered to prevent this behavior and large enough to succeed. Saying that free markets can only exist by eliminating "regulations" is akin to saying that we can only have leprechauns if Ireland removes all the fences and hedges in the Irish countryside. No removal of restrictions will enable the existence of leprechauns, and the "free market" is just as much an imaginary entity as they are.
Then there is the effect on the economy of the Libertarian agenda. With more people than jobs, labor will not be able to put upward pressure on wages. Most wages will be lower than subsistence. Putting aside the social chaos that ensues when people are earning less than they need to live and have nothing to lose, the Libertarian prescription can't possibly bring in the prosperity they predict. Since so many people will have no disposable income, the demand side of the economy will crash and there will be a depression. If you think the economy is bad now, you can't imagine what it would look like without a minimum wage "regulation". Small businesses will be the first to collapse as their customers are forced to stop spending.
Governments differ. We once had a pretty good one, and we now have a fairly awful one. This decline has coincided with a reduction of regulations and the practical elimination of taxes on the largest conglomerate corporations. Libertarians say they want fairer taxation while maintaining and expanding traditional freedoms. But if the biggest corporations disagree, and would rather we didn't freely express alternatives to buying electricity from the power grid they own, for instance, or refuse to pay their fair share of taxes, or buy "elected" officials to act only in their narrow interest by heavily funding election campaigns, and we have shrunk and weakened our originally representative government by prohibiting it from regulating in the common good, or funding itself with reasonable taxation, what entity will be powerful enough or have the will to enforce our rights on a daily basis? We can only meet those ideals by restoring and buttressing the aspects of our government that make it speak for us-- those who do not control the resources of a GE--and give it enough enforcement capability to get the job done. It is abusing those powers it has now, not because it is too strong, but because it is too weak, and has thus morphed into an enforcer for the mega-corporate rulers. It is their massive foot you feel on your back, and their huge maws tearing away at the economy and aiming for the moment when everyone is desperate enough to work for less than it takes to live. That is why you find me on the pages of OEN exhorting people to actually join with others to create the social movement it will take to push back.
Anyone can reality check what type of government creates the most individual freedoms and general prosperity by looking around the world and going back a bit in time. If you exclude a couple of oil-based emirates where the work is done by imported, near-slave labor, you will find that the northern European social democracies of ten or twenty years ago win on both counts. Countries who have neutered their governments, as the Libertarians propose, do much worse. Yes, they have less formal "government", but the people are ruled, ie. "governed", much more harshly, directly by the neo-feudal masters of the mega-corporations.