Plus, the free-market doesn't exist anywhere in the world. In a free market, monopolization is virtually impossible. A monopoly is an organization that has sole control of production and dispensation of a product. If the people owned a factory, and no other factory would be allowed to compete with it, the definition of a monopoly would be realized. Of course, we would have to fix the government so it really does represent the people.
Social democracy can work if the proper measures are put in place.
Call them taxes, regulations, tariffs or subsidies, whatever, they will be necessary for a healthy society. Since Libertarians do not accept that presupposition, it does not fail. Or just a majority. But even this admission negates your opposition to the phrase tax is theft on the grounds that government is a separate entity. Your statement claims that government is a separate entity of persons who represent others.