Unfortunately this approach generally fails with anything more complex than a tiny village of 1-200 people at most. There's no particularly system with which hierarchical/authoritarian structures can easily be replaced (observe the tendency of most religions to end up concentrating temporal power even where said power is doctrinally discounted) and attempts to replace fallible human agency in the hierarchy with an incorruptible technical solution typically veer into absolutism and tyranny, whether by institutional capture or simple inertia.
The basic problem (it seems to me) is that we don't have a good theory of government by which we can measure institutional health and reliability. Anarchists and libertarians are excellent at pointing out the shortcomings of government, but as you point out their response to this is basically dismantle it, which seems to be about as sensible as saying the cells in your body will enjoy greater freedom if one would only commit suicide. Governments exist for the same reason that complex multicellular life exists.