He might not know it, but his reply to my point is actually a better argument against the state:
As Stefan Molyneux has pointed out, the problem with the state is the imbalance of incentives. The “ultimate arbiters” only have a few pennies taken from them, while the people in power get millions and a pension. They’ll fight tooth and nail to keep it. But what incentive do the “ultimate arbiters” have?
This is another problem. Is his example, it’s one or a few people paying for a single service. With the state, the cost is collectivized. Why not simply scrap that mechanism of effed up incentives?

In other words, the Constitution didn’t fail us; we failed the Constitution.”

To which I responded with: “So when Communism fails, it doesn’t fail, the people failed communism.

I’m sorry, but reading that comes off as blatant apologetics.”

To which he responded with: “No, because Communism is not analogous to the Constitution; it’s more analogous to the free market.

It’s like: you hire a security force to keep people from stealing your stuff; they do nothing while people steal your stuff; they’re the ones that failed you.

We the people are supposed to be the ultimate arbiters and defenders of the Constitution. We are the ones who are supposed to hold the politicians accountable when they violate the Constitution. We failed.”

Another Anarchist: “WOW Shane I’m speechless.

Do you not hear how brain washed you sound that you cant admit the constitution is useless?

“we failed the Constitution”
So now we are obligated to the constitution? it wasn’t just suppose to be a mechanism to protect us from the state?

And if the people are the only ones that can limit the state what is the point of having a constitution?

Statism will always end in tyranny.

Constitutions give the state the ideological cover it needs to enslave the people.”

To which the minarchist responded with: “Why do you think a piece of paper with ink on it is able to do ANYTHING? And you call ME brainwashed?”

So how many logical fallacies can you spot in that?
I see special pleading and pleading and red herring.

Anyway, the fact that the farmer is behaving irrationally is indeed part of that example. Means of exchange which are also utilitarian are subject to distortion by certain behaviors, often irrational ones. Free markets will favor means of exchange which are least subject to such distortion.

The usefulness of apples is intrinsic, but their value is not. Value is solely set by the market. The value of an item is only what someone will pay for it. If no one wants to buy your apples at any price, their value is zero, regardless of the fact that you can eat them. The value of god is set exactly the same way.

Regarding monopolies as a “failure of the market,” there’s flat-out no such thing. “The market” is a mathematical function, and it never fails. Monopolies, when not supported by government force, are just as subject to market competition as any other business. If I’m the only one who sells widgets and I don’t have the State preventing others from competing with me, the asking price must be such that I can make a profit, but is low enough that no one else wants to bother selling widgets in my area. I’m still subject to the influence of competition, even without any actual competitors.