F.A. Hayek, in The Road to Serfdom makes it a point not to create a fetish out of democracy. "Nor must we forget that there has often been more cultural and spiritual freedom under an autocratic rule than under some democracies...The fashionable concentration on democracy as the main value threatened is not without danger. ... The false assurance which many people derive from this belief is an important cause of the general unawareness of the dangers which we face." (110-111) The problem is that the idea of limited government, in modern times, has been taken to mean a severely less-involved government than is typical in the life of the people. It thus, does not mean a government that is limited in authority but rather a government that simply opts not to get involved with every day affairs. That is a grossly misinformed point of view on the idea of limited government. Limited government is limited in authority. A limited government means a government that cannot swoop in and decide what marriage is. A limited government is what King Henry VIII had to deal with in his breakaway with the Church.
Philosopher Hans-Hermann Hoppe lays out the case for a monarchy even better. For a private government owner, he must rely on the population to increase his wealth. "He will not not exploit. But as government's private owner, it is in his interest to draw parasitically on a growing, increasingly productive and prosperous nongovernment economy" (Democracy: The God That Failed, 47). Further, private property is better respected and valued in a monarchy. "[A]ll government interference with private property rights reduces someone's supply of present goods" (49) but a democratic consensus resigns private property to be delivered into the hands of the government. With a monarch, we know taxation must happen in order to fund the monarch but the majority does not legitimate this as a non-violation of private property as occurs in a democracy.
Erik Ritter von Kuehnelt-Leddihn devastates the faulty associations of monarchy with authoritarianism and democracy with liberty. He pin-points that monarchies are not subject to partisan rule, he is a political and social head, not withdrawn from the people but apart, he is always educated for his profession both morally and spiritually, monarchs tend to be foreign mixed and they are hardly ever ethnically centered, they are interracial, uniting (Liberty or Equality, 150-155). "Since monarchy is 'rule from above' and thus does not have to exercise a horizontal pressure, it is by its nature more liberal than a democracy." (156) There exists a higher regard for freedom of thought in the universities than under a democracy since there exists no common framework of reference, a monarch is less exposed to bribery, far less inclined to lie, since he does not have to sway voters to keep him in power, he has to protect minorities since he himself is one, he can only be responsible to God alone and so he rules with fear, it is his interest to focus on the longterm benefits for his heirs and not himself, a monarch can plan for policies on a grand scale. (157-159). "The rank amateur, elected by the emotional masses, is less and less capable of facing the monumental issues of our day." (160) Having laid out all of this, Kuehnelt-Leddihn poiints out, "[o]nly in the Italian monarchy have we seen the rise of dictatorship on a party basis ... through...1922 until 1943, the Crown and the Party continued in a very uneasy partnership--the Crown actually remaining in a position of inferiority." (162)
I should not get too carried away. I am a monarchist. I believe it is a better form of government than democracy. Look at what has happened in many states which adopt democracy. We have developed into a point where the principles of democracy are so necessarily equated with freedom that if an election does not go the way we want it to go, we hypothesize and assert that the election was "rigged". Seriously? Is that the stupidity our fetish with democracy has led us to? Can we not admit that maybe a simpler explanation is not that an election was "rigged" but rather the emotions of the people was misguided and tends to be misguided on a very frequent basis? Monarchies do not guarantee a perfect system of government. Kuehnelt-Leddihn did not believe this and neither does Hoppe. Kuehnelt-Leddihn argued that since government is a necessary evil, monarchy is the best form of government. Hoppe argues that all government is evil and must be replaced by natural familial order. Of course, Kuehnelt-Leddihn might be more on the same line of thinking as Hoppe as he frequently characterizes monarchy as an organic system of government that reflects the nature of the family.
No form of government is perfect but libertarianism is not about the picking and choosing of a form of government. It is about the limitation of a government. It is about putting a check on the balance of power that a government holds. Is it more easy to put a check on a democratically elected government or is it more easy to put a check on an unelected single-ruling family? I would argue the latter. That is why I see no inconsistency with being a monarchist and a libertarian at the same time. Kuehnelt-Leddihn wouldn't have either.