Our times are much like the 1930s, when it was widely assumed that there are only two viable ideological positions: communism or fascism. Liberalism of the old school was considered to be a failure, and not even worth considering.
Why does libertarianism never entirely disappear, despite every attempt to kill it? In part, because a strain of American ideology from the colonial period to the present supports it. Murray N. Rothbard’s 4-volume Conceived in Liberty demonstrates that the theory and practice of radical libertarian thinking can even be thought of as the very core of American political values.
Just to cite one case, the preachers and religious leaders who spoke out prior to the American revolution were knowledgeable of and friendly toward the liberal tradition. They cited Locke as freely as they cited the Bible. Americans of all classes resented the smallest intrusions on liberty and property as tyranny itself. After the revolution, we enjoyed some 10 blissful years of near-anarchy under the Articles of Confederation.
This is our heritage. It is also why every president appeals to libertarian ideals to gain public backing. Clinton did, and Bush does as well. They all invoke Jeffersonian rhetoric. The problem is that the middle class continues to be bamboozled by this rhetoric, even as the power elite continues to conspire for ever more money and power.