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While I fall somewhere in the "state capacity libertarianism" and "liberaltarian" spectrum, I would say my main objection to naive libertarianism is the problem of petty tyrants.
I think there's a sense in which libertarians mostly ignore the ways that a local bully with a lot of property and social influence can make a person's life a living hell. If we live in a Dickensian libertarian utopia, what exactly stops bosses from treating their employees like crap? If the bankers refuse to give you credit because of some immutable trait of yours, how are you supposed to build wealth? If everyone in town refuses to hire someone who looks or talks like you, how are you supposed to make a living?
At best, I think the libertarian just hopes that society ends up supporting a diverse enough set of viewpoints that somewhere there will be a boss that isn't crappy, somewhere there will be a bank willing to take on more perceived risk, and somewhere there will be a person willing to follow the financial incentives and hire you.
But I think similar to the old financial dictum that "The market can remain irrational longer than you can remain solvent", there's a societal corollary that "Petty tyrants can make your life hell longer than you can remain solvent." Sure, the bigotry or social censure of a petty tyrant and their supporters ends up "irrational" from an economic perspective, but that can still create situations like those that necessitated black motorists creating the Green Book to help them find gas stations, restaurants and stores that were willing to serve their kind.
If the libertarian response to a black motorist who wants to use the government to make more spaces open for them is just, "Don't worry, it is in their financial interest to serve you, in the long run they'll be out-competed by the gas stations, restaurants and hotels that do serve black people", then a part of me feels like the response is incomplete.
A similar situation emerges with the treatment of untouchables in India. Even without law, people of higher casts often don't want to be in the same room or even have the shadow of an untouchable touch them. How were the untouchables supposed to end that situation in a libertarian utopia? In the real world, a lot of the way it happened is the Indian government using men with guns to integrate untouchables in schools, the same way it happened in the United States.
I'm curious if a more traditional libertarian can point to success stories of an oppressed underclass becoming a normal, accepted part of society without government intervention to force the petty tyrants to comply. I'm a little unclear on how a libertarian watchman state where all of the government enforcers are racist/sectarian/whatever, ever stops being bigoted. If you belong to a class of people whose de facto status is that you can be lynched or murdered and the local government will look the other way, is it not sometimes worth it to have a larger government that sends in men with guns to stop the local government from letting people get away with murder?
See the first part of https://slatestarcodex.com/2018/02/21/current-affairs-some-puzzles-for-libertarians-treated-as-writing-prompts-for-short-stories/
I don't even necessarily disagree that this might be a good use of government, but this is essentially not an argument for democracy, but an argument for imperialism. Backwards communities need better morals enforced on them by guys with guns from more enlightened ones.
Oh, I'm aware that what I want is essentially imperialism.
I've struggled with how to think about this.
I think that America's individualism and liberalism are highly unnatural and bad fits for human nature. That's why we had to have the wealthiest and most technologically advanced nation in human history, brainwash most of the nation for 13 years via school and media, cultivate a culture of ripping families apart through an expectation of moving out of your parents' house, and impose a taboo on cousin marriage to make it all work.
This is my difficulty. Once we've done all that. Once we've inculcated individualism and little L "liberalism" in the population, then it seems like you can have a form of federalism (AKA imperialism) that is compatible with a form of libertarianism (AKA doing what you want outside of what you're being forced to do via imperialism.)
But I do understand that the basic counter argument is that maybe we shouldn't strip people of the non-liberal parts of their cultures. Maybe we shouldn't impose an incest taboo, encourage the degraded form of the extended family we call "the nuclear family", and do all the other things that make the form of life we have in America possible.
I genuinely don't have a good answer for this. Individualism and little-L liberalism are the only way of life I know. I'm the child of two parents who both moved to different states than my grandparents, and I now live in a different city than my parents.
I've never known a collectivist society. I've never known a tightly knit small town community. I'm mostly happy, and a foolish part of me honestly believes we're a few reforms away from making this bizarre system of ours work with the 2 million year old hardware humankind is running on. But maybe the neo-reactionary and post-liberal right are correct, and it was all a doomed experiment from the start.
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How is this problem solved through democracy?
After my reading on Renaissance humanism, I don't really think of the thing that makes our society work (to the extent that it does) as a "democracy", but as an attempt at an Aristotlean "politeia" or constitutional republic.
Many parts of this are tangled up in a system that also sells itself on everyone having a voice (the modern meaning of "democracy"), but I think the lynchpins that make things work are the fact that we brainwash most of the populace for 13 years via public schools and the media, and that we received the individualist-trending practices of Christian Europe (nuclear family, incest taboo, etc.)
It also doesn't hurt that we're the wealthiest, most technologically advanced and highest state capacity nation in history. Even if parts of your system rely on sanding off the rough edges of human nature, where you fail to do that, it is a nice consolation prize to have a system where almost no one is starving, dying of thirst, etc. People don't want to rebel against rulers that keep them materially comfortable, even if they can feel the friction of the society rubbing against their human instincts.
Okay... whatever our current system is, how would it solve the issue of everyone, from top to bottom, bring racist?
I mean, I think we've already created a society where humans aren't "from top to bottom" racist.
Humans will always be tribal, but I think that different circumstances can turn the dial of how much that tribalism affects their behavior in practice. Having a food-rich, water-rich society is a great starting point for interracial harmony. Adding men with guns forcing people not to act racist, and a set of societal institutions that are designed to brainwash people to be even less racist, and I think you've got the "best" possible form of sanding that bit of human nature off.
You can't change human tribalism, but you can make it less salient depending on how you constitute society.
So why is the inability to solve bigotry running from top to bottom of the entire society a point against libertarianism, but not against the system you support?
Because, I don't think most traditional libertarians support the "men with guns forcing people not to act racist" part of the equation, and I think that is a central part of how the idealized form of modern American politics actually works in practice.
I still call myself a "state capacity libertarian" or "liberaltarian" because I want the lightest touch version of this in practice. I'm fuzzy on it, but I think I'd limit it to, say, public schools, employment, banking, and housing. Men with guns can force people to not discriminate in those domains, and then we can leave the people free to discriminate everywhere else in society.
I'm pretty sure that the forced integration of hospitals, hotels, gas stations and public schools that happened at gunpoint in the United States is the only realistic way that could have happened. I'm open to being proven wrong on this point. I would love to be pointed to real world historical examples of oppressed, othered minorities being successfully integrated into wider society without the state forcing the issue.
Also, I think the problem of petty tyrants is not limited to racism. It is just one of the easiest to describe examples. I think even something as simple as, "I'm the black sheep of my family, and the pariah of this small town" can be a case where petty tyranny makes living a happy, fulfilling life difficult. The anonymity of a corporation like McDonald's or Walmart makes us "exile-proof." Even if I reach my lowest point, if I become the most socially hated and cancelled person, the wonderful thing about Capitalist Liberalism is that it shapes us into interchangeable cogs, and I can still get a job at McDonald's or Walmart, and become a part of the background radiation of other people's lives.
But in your system, if society is racist top to bottom, how are you getting "men with guns forcing people not to act racist" rather than "men with guns forcing people to act racist"?
I suppose humans are more fundamentally hierarchical than they are tribalist/racist.
As long as the person or people on the top stand to benefit from greater numbers of workers, and they don't personally suffer negative effects from things like immigration and ethnic diversity it is in their interest to encourage it. They command the people below them, who are also made better off in a number of ways from the increased number of workers, and on down through the system.
In this way, you only need a system where diverse races are in the rational self-interest of a smaller group of people at the top, and then they can use men with guns to force a culture that is conducive to their rational self-interest, which works because the hierarchy-minded people below them don't rebel enough to make that entirely untenable. There are going to be limits pushing against these things in various directions, and there's probably a Goldilock's zone where all of these varying aspects of human nature (rational self interest, hierarchy and tribalism) are balanced against each other and you have a relatively functional society. Outside of that Goldilock's zone, either people's tribalism overwhelms their hierarchical social instincts, or it starts to be in the rational self interest of the ruler to care only about the people tribally similar to themselves.
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I think the problem of petty tyrants crosses systems.
Breaking down life into multiple areas:
Family, Social, Market, and Government.
Of these areas I think petty tyrants are weakest and least effective when wielding the market against their victims. The word Tyrant literally comes from someones name in Greece who was wielding a government against people.
The other answer which I know people hate is that markets are going to reflect reality. And when reality is ugly markets will look ugly. But punching a mirror doesn't fix the ugly face staring back at you.
I don't think markets are the end all be all of all problems. There are certain classes of problems that they solve extremely well. And plenty of problems that they do very little about.
I do think governments are generally terrible at solving most problems, and often make things worse They can certainly supercharge petty tyrants.
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