|How the sausage is made|
Minarchism is a political philosophy advocating the reduction of government functions to a minimum scope, providing people with only bare-bones services such as law and security. It's considered a form of libertarianism, and since it finds some useful role for the state, it's incompatible with anarcho-capitalism (Unless, of course, you consider the Friedmanesque voucher a bridge between anarcho-capitalism and minarchism), another major form of libertarianism. Ayn Rand's views could be described as minarchist.
Minarchists advocate for a "night-watchman state" that is not responsible for the education, health care, employment or transportation of its citizens, neither makes it any use of natural resources in its territory. All of this is instead held privately or publicly, but is never susceptible to any interference of the state, its law or its representatives. Minarchy is, of course, different from anarchy, since the latter term means a complete absence of a government with all services, including even law and security, done or exercised by people themselves.
The following two sections describe how a person supporting and another opposing minarchism would argue.
Even the Austrian Economists do not advocate for this. The free market fails utterly when dealing with Public Goods, that is, goods that are non-rivalrous — my consumption of the good doesn't diminish your ability to consume it — and non-excludable — you can't stop me from consuming it. For example, there are only so many fish in a location, and Alice can't stop Bob from fishing there, so Alice and Bob catch too many fish and next year there are practically no fish left. Alice and Bob could make some sort of agreement, but nothing prevents Charlie, Denise and Emily from still fishing. So everyone is poorer than had there been some sort of limit on over-fishing.
Next comes Externalities, which are detriments (or benefits) that the producer of the good or service doesn't have to deal with. An example of this is pollution. If a firm can lower their average costs in order to make significantly more profit by dumping their waste in the local river, so long as the owners don't drink from said river, it will probably do so to maximise its profit margins. This generally harms the local population far more than the company gains from not properly disposing its waste, so overall it's a net loss for society. The third party effects arising from production of this good are greater than that of the private benefits incurred.
Things like education, safety regulations, roads, research subsidies, and so forth often add to the economy more than they cost. Welfare and subsidised housing are often far more effective at reducing crime — for cheaper — than extra police alone. What Minarchists have a hard time understanding is that their income depends on things like roads and communication systems being available, that having access to adequate healthcare increases worker productivity, and a whole slew of other things. Even if you built your business out of gumption and bootstraps alone, virtually all of your customers and employees relied on something provided via government, and without those customers you wouldn't have that business to be taxed in the first place. It's far better to pay 50% tax on $200,000 than pay 5% on $20,000.
Without international bodies imposing rules on corporations (such as the Institute of Electrical and Electronics Engineers) there also wouldn't be any universal standards and regulations to which all corporations should abide, meaning that literally every single corporate entity has to expand or cooperate with another one to form any sort of coherent universal standard and even then you'd be lucky if every corporation in the world agreed by it. While that may not seem all that shocking at first, this means that there will be situations where you can't phone some of your friends because their telephones don't know how to register your telephone signal or that you can't do your job abroad without re-learning how to do it because the machines they work with have notably different architecture from the ones you are used to work with. In the end it ends up complicating the life for corporations and people alike.
Response to criticism
Proponents[Who?] argue that classic property rights assignment would solve both the externality and public good issues. Using the above examples, we can see that applying property rights to both the fisherman and pollution allows the market to perform efficiently. In the fishing example, if we give property rights of the lake to Bob, he will have an active interest in keeping the level of fish in the lake constant. He would likely set up a fishing permit, or maximum quota for fishermen using his property, which would solve the scarcity issue. Although this is not a true public good as asserted, property rights will still solve the presumed market efficiency.
Pollution would be solved in a similar manner. We can assign the property rights to a dumping lake to either the polluter or the victim of pollution with both similar results. If awarded to the polluter, victims of the pollution will determine a proper level of payment to the polluter to avoid overdone pollution. This will often end up with a complete lack of pollution, if the cost benefit from dumping is offset by the payment completely, they will seek other methods of waste management. If awarded to the victims of pollution, the polluter will determine a proper level of payment to the victims in order to pollute, or will look for other methods. In theory, both methods end up with the same price point per pollution reduced, which is the full economic cost.
The assertions that the free market would be unable to provide services like education, regulation, and infrastructure have been long debunked. Although hard to imagine for those who have grown dependent on government, all these services would be provided more freely and more efficiently under a free market. You could argue that the reason these services are operating in completely failed markets under our current system.
Corporate regulation comes freely and naturally by its nature in a free market as well. It has even done so in the US, despite the overwhelming regulation already in place. Professional associations create standards and give "seals of approval" to businesses that adhere to their guidelines, and in turn the consumer is protected from predatory practices by the people who understand the business the most.
Minarchy has also been advocated by some non-anarchist libertarian socialists and other left-libertarians. Minarcho-socialism is also an ideology that combines the principles of minarchy with socialism.