It sounds like you've already made up your mind that it could only be that way, but see my response above if you are actually interested in some more considered discussion of the topic.

I'll just say that I have at least as much faith that people can voluntarily and peacefully reach a workable agreement without using a construct like "The State" as I am that they can do so by using such a construct. In either case, human nature is the ultimate limiting factor.. the State will never be more morally pure, or have more of conscience, etc., than the people who constitute it, IMO.

http://en.wikipedia.org/wiki/Anarcho-capitalism

http://www.mises.org

http://en.wikipedia.org/wiki/Murray_Rothbard

http://www.lewrockwell.com/

http://www.ozarkia.net/bill/anarchism/faq.html

http://www.anti-state.com/

However, I don't feel it does a very good job. It basically devolves into private security provided a la mafia protection money or what's been seen in Sao Paolo / Rio de Janeiro with the cops enforcing payments from the populace for keeping the riff-raff out, while running their own schemes. Likewise, I can very much see the whole law system being subverted to benefit those providing the most cases (thus helping the bottom line) or benefiting a certain plaintiff over another, like with the eastern district of Texas handling so many patent cases.

Overall, the response seems incredibly wishy-washy with little thought paid to the ways the system can be significantly subverted.