In his essay “Left and Right: The Prospects for Liberty,” Rothbard describes the “Old Order”:
The myth held that the growth of absolute monarchies and of mercantilism in the early modern era was necessary for the development of capitalism, since these served to liberate the merchants and the people from local feudal restrictions. In actuality, this was not at all the case; the king and his nation-State served rather as a super-feudal overlord reimposing and reinforcing feudalism just as it was being dissolved by the peaceful growth of the market economy. The king superimposed his own restrictions and monopoly privileges onto those of the feudal regime. The absolute monarchs were the Old Order writ large and made even more despotic than before.
And about the incestuous love of the state and mercantilism by both right and left:
” Historians have long recognized the affinity, and the welding together, of right-wing socialism with conservatism in Italy and Germany, where the fusion was embodied first in Bismarckism and then in fascism and national socialism – the latter fulfilling the Conservative program of nationalism, imperialism, militarism, theocracy, and a right-wing collectivism that retained and even cemented the rule of the old privileged classes. But only recently have historians begun to realize that a similar pattern occurred in England and the United States. Thus, Bernard Semmel, in his brilliant history of the social-imperialist movement in England at the turn of the twentieth century, shows how the Fabian Society welcomed the rise of the imperialists in England.  When, in the mid-1890s, the Liberal Party in England split into the radicals on the left and the liberal-imperialists on the right, Beatrice Webb, co-leader of the Fabians, denounced the radicals as “laissez-faire and anti-imperialists,” while hailing the latter as “collectivists and imperialists.” An official Fabian manifesto, Fabianism and the Empire (1900), drawn up by George Bernard Shaw (who was later, with perfect consistency, to praise the domestic policies of Stalin and Mussolini and Sir Oswald Mosley), lauded imperialism and attacked the radicals, who “still cling to the fixed-frontier ideals of individualist republicanism (and) noninterference.” In contrast, “a Great Power . . . must govern (a world empire) in the interests of civilization as a whole.” After this, the Fabians collaborated closely with Tories and liberal-imperialists. Indeed, in late 1902, Sidney and Beatrice Webb established a small, secret group of brain-trusters, called The Coefficients……
Other members of The Coefficients, who, as Amery wrote, were to function as “Brain Trusts or General Staff” for the movement, were: the liberal-imperialist Richard B. Haldane; the geopolitician Halford J. Mackinder; the Imperialist and Germanophobe Leopold Maxse, publisher of the National Review; the Tory socialist and imperialist Viscount Milner; the naval imperialist Carlyon Bellairs; the famous journalist J. L. Garvin; Bernard Shaw; Sir Clinton Dawkins, partner of the Morgan Bank; and Sir Edward Grey, who, at a meeting of the club first adumbrated the policy of Entente with France and Russia that was to eventuate in World War I. 
The famous betrayal during World War I of the old ideals of revolutionary pacifism by the European Socialists, and even by the Marxists, should have come as no surprise; that each Socialist Party supported its “own” national government in the war (with the honorable exception of Eugene Victor Debs’s Socialist Party in the United States) was the final embodiment of the collapse of the classic Socialist Left. From then on, Socialists and quasi-Socialists joined Conservatives in a basic amalgam, accepting the state and the mixed economy (= neo-mercantilism = the welfare state = interventionism = state monopoly capitalism, merely synonyms for the same essential reality)…..”
And in an essay on Rothbard at LRC, Ryan McMaken shows how Rothbard broke away from the convenient linear history of the state’s triumphal march upward:
“In spite of his long-range optimism, however, Rothbard was always one to emphasize that history is in no way linear. In the High Middle Ages, the fledgling bourgeoisie might have thought that the benefits of free trade and weak States might have lasted forever. But Absolutism and “Enlightenment” intervened. The liberals of the 19th century might have thought similar thoughts. The disaster of the 20th century certainly put an end to that as well. Today, we are left wondering if the 21st century will be more like the 20th or the 19th. It is still too early to tell, but the problem for defenders of liberty is the same today as it has always been. The choice is between the State and liberty; between a free economy and a controlled economy; between peace and war. The myth that modern kings, and democracies, and armies of freedom secure the blessings of liberty for all has been an obstacle to real liberty for centuries. The real history of the State is one of power, war, and domination. Real freedom has advanced in great salvos against the State from political revolutions and from industrial and technological ones. In spite of the 20th century, and the seemingly insurmountable obstacles the State continues to pose against the cause of liberty, freedom has nevertheless erupted at the most unexpected times. Rothbard, knowing the resilience of liberty through the centuries, undoubtedly agreed with Thomas Paine that although “the flame of liberty may sometimes cease to shine, the coal can never expire.”