I think one of the main limitations of the libertarians OTL is their ideology. I think that a lot of their ideological appeal is directed towards entrepreneurs and the middle-class. After all libertarianism is the ideology of the true free market will allow anyone to succeed if they have the talent and ambition, which is understandably appealing to small business owners looking to expand their business and other entrepreneurial minded types. However, it also means that they don't have much to offer the average working stiff trying to make ends meet, who may well regard such talk as pie-in-the-sky nonsense. Likewise for the other end of the spectrum, with the exception of anomalies like the Koch brothers, libertarianism doesn't have much to offer the super-rich captains of industry and Wall Street Bankers, especially given their strong anti-corporate welfare view. Even within the small demographic that they target, however, they have to compete with the already well-established Democrats and Republics, both of which have programs and support among the middle-classes. Ultimately, the main problem with libertarian ideology is that it offers too little to too few, and what it does offer in terms of promises rests on gambling that a radical free market approach will benefit everyone, which I think is far too much of a risk for people to be willing to back, especially when compared to more concrete policies offered by the Republicans and Democrats.
One thing that libertarian as a whole could do to improve their popular position is to rediscover and embrace the
American populist tradition and present themselves as the modern day versions of
William J. Bryan and
Huey Long. As a result they would embrace some of the traditional policies and goals of the populist movement, such as trust-busting and trade unionism.
It would also inherit some of their class politics, which OTL the libertarian movement has tended to shy away from. For all their talk they are often unwilling to go after the corporate side of corporatism, tending to focus almost entirely on the role of the state. A populist libertarian movement would probably be much more willing to attack the big banks and businesses directly, perhaps even arguing in favour of forcibly breaking them up. After all (according to them), they only got that big and powerful because of statist corporatism, and thus they are a distortion of the free market. Therefore they would be entirely justified in breaking these undeserved monopolies up.
When it comes to welfare they could attempt to revive the
Share Our Wealth movement as a replacement for the welfare state. This isn’t too farfetched as various libertarian thinkers, most notably
Hayek, were flirting with the idea of
universal basic income. Another area where they might try to develop a libertarian approach to welfare could be through actively encouraging and supporting mutual aid societies and other non-state institutions. This could lead to a radical pro-union stance as an alternative to government mandated welfare. After all, why have state mandated pensions and minimum wages when a strong union movement would be able to negotiate these sorts of things in the free market? Indeed the mixing together of radical free-markets with strong unions is not unheard of in American politics, most notably
John L. Lewis, who argued that unions would only be able to bargain effectively with private bosses, and that they would be powerless against state bureaucrats. A strong union stance could also help to build support for the Libertarian Party amongst the working class, especially in the 70s. It's also worth noting that quite a few classic liberals like
J. S. Mill and
Adam Smith were quite pro-union, which would also serve as an ideological justification for taking this stance. Likewise for the cooperative movement, which a more successful Libertarian movement would probably seek to build ties with.
In terms of taxes I could see them embracing a
Geolibertarian approach that sees land and natural resources as common property and therefore proposes a tax system based a single tax on land (basically as a form of rent that businesses pay the community in exchange for using the land). In addition there would also be a 100% inheritance tax. Another possible source of income they might try, especially if they are cribbing from Huey Long’s sheet, is a wealth tax above a certain threshold (say $50 million). Whilst this would probably alienate the superrich, I suspect that a large portion of the alt-Libertarian support base is going to come from small-businesses owners for whom $50 million is going to be an incredibly distant goal.
On environmental policies I can see a number of ways that they might attempt to appeal to environmentalists. They could probably justify some measure of environmental protection based on protecting property rights especially if they go the Georgist route. After all, if you dump a load of chemicals in a river and it damages someone’s farm that constitutes a violation of the non-aggression principle and must be rectified. OTL some
green libertarians advocate carbon taxes as a means of preventing environmental damage from being externalised. They might also attempt to establish an early form of
carbon trading. Abolishing federal sovereign immunity is also supported by some libertarians IOTL, one the grounds that the state should also be held accountable to the same regulations that are placed on businesses. I can also see the alt-Libertarians enthusiastically supporting and patronising green technologies and green businesses, and in particular I think the
organic movement would gel quite well with them. These policies don’t necessarily have to be effectively environmental, indeed I suspect that a lot of
greenwashing and marketing would be involved, but if they can at least be seen to be environmentally savvy they could gain quite a few supporters in environmentalist circles.
On the issue of affirmative action I can see things going two ways. Either they dismiss the issue as liberal statist nonsense, which would earn brownie points with conservatives and racists. Alternatively, they could embrace it, which could help build support in the black middle-class. Either they could support mandatory affirmative action as a necessary short term corrective to the problems of institutional racism (which they would have no trouble linking to corporatism and state intervention), or they would morally support it, but attempt to enforce it through non-state means i.e. through the unions and organised boycotts.
As a result this would probably mean that American libertarianism ITTL would be a fairly different beast than IOTL, with strong
left-libertarian,
distributivist,
Georgist, and perhaps even
left-wing market anarchist and
individualist anarchist tendencies. This form of libertarianism would also be in a much better position to pull off the proposed alliance between libertarians and the
New Left proposed by the likes of
Murray Rothbard and
Karl Hess in the 60s, especially over issues like imperialism, LGBT rights, prohibition etc. I suspect figures like
Kevin Carson or
Hillel Steiner are going to be a lot more prominent ITTL's libertarian movement.
This shift to the left is also likely to alienate
Ayn Rand and the
Objectivists even more than IOTL, especially if they appeal to Christianity like many of the OTL populists, so I could also see a fringe Objectivist Party trying to present themselves as the true libertarian option against these “hippies of the right”. I would consider this a bonus in terms of popular perception and credibility.
Ultimately a Libertarian Party based on this ideology would be in a much better position to establish a wide following in American society, offering a radical, but non-socialist program, that can appeal to entrepreneurs and small business owners, students, unions, oppressed sexual minorities, and the rural poor (a demographic that has pretty much been ignored since the 1930s).
In addition to ideological changes, another thing that would likely help the Libertarians would be electoral reform. One of the key features of American libertarianism is that it’s eclectic. People from across the political spectrum can look at it and find at least some thing they like even if they disagree with it fundamentally (I myself am a radical socialist, yet I can appreciate their anti-imperialism, opposition to the war on drugs, and criticism of corporatism, even if I think everything else is wrong). Therefore, if America implements a voting system that allows for alternative or multiple votes (AV/STV) then they could end up benefiting from their lesser evil status in many people’s eyes.