Now I'm confused.  You posted a link to a state that existed from 930 to 1262 as evidence of the viability of a system invented by a guy born in 1819.  Did Gustave invent anarcho-capitalism, or the time machine?

At any rate, Iceland as a whole has never had more population than a small city, so it is hard to draw conclusions that would scale up to the size of the Roman, Venetian or American republics.