How would it work, given the existence of the Internet, to "dismantle the security state"?

[pnwmom]

How you dismantle the security state as networked computers and wireless devices intrude more and more deeply into our lives?

If the government takes a "hands off" position with regard to the Internet, how do we ensure that corporations and individual hackers don't take advantage of the vacuum?

If the government is not monitoring internet traffic, how does it identify and stop hacking into and within the U.S.?