You buried an unsupported premise in plain sight with the sentence: “However, if all individuals are pursuing their own goals with no unified effort, chaos will result.”

Who says individuals pursuing their own goals cannot do so with a unified effort? This odd assumption … that individuals left to pursue their goals will not naturally group together voluntarily to pursue them … is also at the root of the common yet uncalled-for conflation of anarchy with chaos.

You are correct in your analysis that democracy must encroach on liberty, but a person emotionally untethered to the contemporary religious devotion to “democracy” naturally asks the question, “Why sacrifice liberty at all if society can be organized voluntarily, leaving behind the coercive attributes of nation-states?

The idea of an authoritarian, coercive force to organize society is something our forebears inherited from the systems they replaced: monarchies. Instead of the king handing out edicts, you let the people come together in some way and do it instead. It was of course a natural progression … taking the monarchy idea and dressing it up in clothes more suited to the egalitarian thinking of the 18th and 19th centuries … and one doesn’t want to belittle the huge advances in justice wrought by the efforts of the Enlightenment thinkers who laid the groundwork for democracy, but the nation-state is still the same old coercive, violence-based structure as before.

From our perspective two or three centuries later, we now have more evidence available and we’re in a position to dig a little deeper. Free people, we now know, spontaneously create order. It’s all around us … in clubs, in churches, in all kinds of organizations created to accommodate and foster common interests. The only thing that prevents people from organizing peacefully and non-violently around their ultimate common interest … getting along with each other … is the existence of the nation-state with its politicians and their mercenaries bearing guns.

It’s actually quite remarkable when you think about it: the nation-state is the only organization deliberately structured to emulate the very things it is supposed to prevent! We want a safe, peaceful environment in which to conduct our lives, free from thieves, kidnapper, murderers, and so on, and to achieve it we create an organization with a license to steal, kidnap and kill!