Without being so pedantic as to pull up the dictionary definition, let's identify libertarianism as an ideology of government that holds the following: The best government enforces simple rules of property ownership and contract obligations and restrains coercive behavior (i.e., threat of force to extract negotiating concessions), but does not otherwise constrain behavior. Individual people should be (this ideology holds) free to move about and engage with each other in voluntary interactions.
Libertarian litererary works focus on freedom of action and contrast it with restrictions: Capitalism and Freedom, The Road to Serfdom, Free to Choose, Atlas Shrugged, and so on. The greatest good is achieved when the use of force is restricted to stopping the use of force.
Whence justification for this position? Libertarians are highly suspicious of centralized economic and social coordination for several reasons. These are perhaps the three most cited, aside from a moral imperative that freedom be preserved.
- The Hayekian information problem: no single agent can have enough information to successfully coordinate economic activity.
- The public choice criticism: Dominant groups subvert central coordination to perpetuate their own dominance.
- The efficiency critique: A central planner will require the use of resources to centrally plan, and one large enough to direct the economy will consume a portion of economic resources that could be otherwise used for investment or consumption.
These justifications continue to claim that the well-being of society is higher with minimal government intervention. Libertarianism is a superior ideology, then, for utilitarian reasons: Society as a whole is better off with less central intervention, even if some people are worse off. The better-off people are better off than the worse-off people are worse off.
Collectivism is often thrown around as an epithet by libertarians: "Oh, you're a collectivist." (Apparently, it's often leveled at less dogmatic libertarians as well as at progressives, socialists, or communists --- in one entertaining account, Ludwig von Mises stormed out of a meeting of the Mont Pelerin Society after accusing Milton Friedman of being a socialist.) An ideology may be described as collectivist insofar as it requires the subordination of individual freedom and well-being to the collective good of all of society.
So here's the interesting comparison. Let's grant for a moment the proposal of utilitarian libertarians that a libertarian society is better off than a non-libertarian society. In particular, those who are less well-off than under alternative systems should accept that, for the greater good. Laid-off steel worker? Find a different job - your sacrifice enables lower prices for most people; they are better off than you are worse off. Trained as a vacuum-tube computer punch-card operator? Sorry, obsolete technology - we're all better off using semiconductor computers, except maybe you. Low education? Accept that minimum wage job - you're not capable of offering any more to society, and the resource use in a higher wage is better used elsewhere. If you don't like your circumstances, you should work to improve yourself, not expect society to dump resources into your life so you can be a net drain on it.
What is this, but collectivism? This vision of libertarianism sees humans like ants, and economic order in human society arising as spontaneously as order in an ant colony. To distort that spontaneous order is to hurt the colony as a whole; to embrace that spontaneous order is to embrace the greater good of the colony.
Meanwhile, no ant is intrinsically worthwhile. All ants contribute, and together create great things; but if an ant ceases to be a net contributor, it must change or cease to exist. Same with humans - as a professor of mine once indignantly exclaimed, "Why shouldn't people have to pay the costs they impose on other people?" (Corollary: If someone can't pay, why should they be able to exist?)
It seems to me that this libertarian perspective holds that, sometimes, in service to the greater good of society, people's livelihoods and well-being have to be sacrificed. Society is best off when resources are directed according to free markets, and if that hurts people - so be it; they must have been net drains on society. Thus: libertarianism as collectivism.