I do not think that most Serbs would commit mass murder if left on their own. The Serbian government did some horrible things. If the government had been much more limited the damage would have been less.
After 9-11 GWB started a couple of wars without declarations. If government had been limited such that a declaration had been necesaary before starting a war, perhaps we would have avoided a lot of death and destruction. George Bush is not a bad person. If he had really thought about it, he might not have done it the same way but with no limitations a bad decision on his part (IMO) was more greatly magnified than it would have been with a limited government.
So now you're making two arguments; that government is bad because it gives bad people the power to make bad decisions, and that government is bad because it makes good people do bad things. Neither one substantiates your claim that people are inherently good, and neither one is really true.
At the end of the day, your idea just doesn't work because the sum total of the things everyone wants in this world is greater than the sum total of everything there is. As long as this is true, there will be "force and fraud", and the only way to mitigate this is an orderly way is a legal system backed by force.
The idea that if government stopped existing people would start coexisting and interchanging goods and services harmoniously is the zenith of naivete. For someone who has such a veneration for capitalism, you don't really seem to understand the forces that underpin it. Capitalism is a system of economic thought. Economics is the study of how humans allocate scarce resources. Your argument rests on an assumption that renders both economics and capitalism obsolete, that people will not use any means to get what they want. Unfortunately, it is a faulty assumption.
Government force is integral to capitalism because without an assurance from an overarching authority that people will not steal and take by force, the price mechanism of transaction is unprofitable. The fact that peaceful coexistence and economic interchange has become so ingrained in our society has blinded you to the need for the overarching authority. Because our system works so well, you have come to believe that it is just in our nature to not steal and take by force.
Unfortunately, that isn't true. What our nature tells us is to take the most we possibly can for ourselves at the lowest possible cost. What our legal system does is make it unprofitable to take by unscrupulous means. So, with these new incentives and disincentives in mind, we take the most for ourselves at the lowest possible cost by other means.
Government force is necessary to the equation. The second there are no consequences for stealing, our entire society will collapse.