You can have a mix of different types of gov/econ.. it seems you describe the extremes of either a command economy with totalitarianism or a capitalistic and anarchic society. It's not a 0 or 1 game
Discussion
No, the seed of forced funding always grows.
That's what the failure of the American experiment teaches. The effort to create the smallest & most restrained govt ever, produced the largest & most destructive govt ever.
The aim was decent. The economic freedom produced prosperity. But the prosperity was fertile soil for the growth of the parasite they created. No piece of paper is ever going to be enough to restrain any organization once the power to steal with impunity gas been legitimized in the eyes of the people who are then destined to be its slaves.