Any government is illegitimate and, therefore, needs to cease to exist. But how will that actually happen? How can you go back to the way things were before government existed? Governments have been interfering with the free market for a long time and it would be very difficult to try to reverse everything that even a single government has done. I have a proposal for dealing with such a situation. My plan is simple, it can be done in an orderly fashion, and it requires no additional aggression or central planning.
Step 1: Get a critical mass of individuals to reject the notion of government authority (simple enough, right?).
Step 2: Let the now-impotent government turn into a corporation with stockholders. The new corporation will own all of the assets and liabilities of the government that it replaced. The stockholders will include individuals and entities (or their heirs) that have ever paid taxes to that government. A simple formula can be used, such as: X/1000 = total number of shares, where X = the amount of dollars that have ever been paid in taxes, as far as records can ascertain.
Step 3: Let the stockholders elect a board of directors. Perhaps the previously-elected lawmakers will act as the interim board of directors when the government's authority ends (I suspect that most politicians will not want to stick around since corporations exist to create value and make money in a competitive environment while governments exist to steal and spend other people's money in a non-competitive environment). In any case, the board of directors will guide the direction of the new corporation.
Step 4: Let the corporation manage its assets. The corporation will own all the assets of the government it replaced.* Some of the assets may already be making a profit for the new corporation (e.g. utilities, national parks). Some of the assets may be able to make a profit with some modifications (e.g. roads, schools, courts). Many assets, however, will never make a profit for the corporation (e.g. IRS, SWAT team equipment). The board of directors will decide which assets to keep and which assets to sell.
Step 5: Let the corporation manage its liabilities. The corporation will own all the liabilities of the government it replaced.† It will owe a lot of money to creditors, retirement funds, and other things. All these creditors will attempt to collect what is owed to them because there will be no government to prevent that collection. As with any corporation, I believe the debts owed to creditors can only be limited to the assets of the corporation. The board of directors can oversee the payment to creditors.
Step 6: Let the free market decide the ending. I foresee three possible endings for any government-turned-corporation. One possibility is that the assets of the previous government will be more than enough to pay off all of the debts, some assets will become profit-making ventures of the new corporation, and the corporation will continue to exist as just another business. A second possibility is that the assets of the previous government will be enough to pay off all of the debts but everything will be liquidated, the stockholders will receive a liquidating dividend, and the corporation will cease to exist. The last possibility is that the assets of the previous government will not be enough to cover all the debts, the creditors will only partially collect what they are owed, the stockholders will hold worthless stock, and the corporation will cease to exist.
I believe this plan is the most peaceful way to transition from a society dominated by aggression to a free society. If this plan is implemented, I believe the practical effect of it would be the voluntary reallocation of scarce resources to the people who can make the most of them. That's pretty much the free market in a nutshell. Do you have a good plan to end a government? If so, please share in the comments!
*I have previously argued that a government has absolutely no legal right to undeveloped land. When a government ends, any undeveloped land could either be claimed by the new corporation as an asset or go back to a state of nature. Only private arbitration will be able to determine ownership rights of such land.
†The new corporation could be found liable (by private courts) for any aggression that the previous government committed against individuals or businesses. This would simply add to the liabilities of the corporation.