Libertarianism is a political philosophy. Like all political philosophies, it is a system, or set of principles, for allocating property ownership. It provides an answer to the question: who is the rightful owner of X?
Law is the application of political philosophy. All courts must operate according to some political philosophy, since dispute resolution involves, first and foremost, determining who the rightful owner of the disputed property is.
In libertarianism, property can be rightfully acquired only by (a) homesteading, or (b) voluntary exchange. These principles are held to be universal: no-one can rightfully acquire property any other way, for example, by stealing it.
Property is originally created through the interaction of labor and nature. The homesteading principle is that the first owner of the property – the “homesteader” – is the individual who supplied the labor. It is the formation of an objective link between the homesteader and the property that gives him the right to ultimate decision-making jurisdiction over how that property is used, i.e. ownership rights.
Property ownership rights can be transferred from one individual to another by either voluntary exchange or coerced exchange. Libertarians believe that only voluntary exchanges constitute a rightful exchange of property. Involuntary exchanges include murder, rape, slavery, assault, theft, fraud and trespass. Under libertarian law, these activities are outlawed.
Libertarianism can be contrasted with socialism. Under socialism, the first owner of original property is not always the homesteader; the most obvious case being the outlawing of drugs. And some involuntary exchanges are lawful; the most obvious case being taxation.
Socialism is necessarily non-universal; there are different laws for State employees, such as tax collectors, than there are for non-State employees. Most individuals are not allowed to threaten others with violence if they do not pay tribute.
Government is incompatible with libertarianism. A government is a territorial monopolist of law. The only way a government can maintain this territorial monopoly is by aggressing against potential new competitors in the production of law and forcing individuals within the territory from using any other legal system for conflict resolution. Government therefore necessarily violates the libertarian principle that only voluntary exchanges are rightful.
A libertarian, qua libertarian, is concerned with ending acts of aggression, as that term is understood according to libertarian philosophy. Under libertarian law, no individual is allowed to initiate coercive exchanges.