There's the kind in which contracts are broken or over-ruled, promises discarded and obligations ignored - the bad kind of chaos. Nothing is predictable and normal life isn't feasible; society disintegrates. It could come to that, if we don't stop government in time.
The other kind is simply the absence of imposed order; that is, no ruler, no edicts. People do with their own lives whatever they wish to do. Anarchy, in fact. That's the good kind of chaos; the kind that's a perfect fit for human nature.
The enemies of anarchism - government, or people who wish to write and enforce those edicts - delight in trying to confuse the two; to teach the public that we favor the first kind, whereas we actually want the second.
"The market" is another name for anarchy, or Chaos-2, the second kind; for it functions around a vast number of agreements or contracts made by people all of whom see a subjective advantage in so doing. An agreement is a deal, planned only by those directly involved, not by any Planning Authority. It's Chaos-2.
We live today in an era of Chaos-1, the bad kind. We agree to provide 40 hours of labor and be paid $500, but at week's end the pay check is for only $400; a well-armed third party has intervened and taken the rest. It's a group of people calling itself "government." Not only is the nominal contract flouted, even the measure itself (the "dollar") fluctuates unpredictably, unlike an "inch" or a "meter"; in some instances by huge amounts called Hyperinflation. Chaos-1, squared.
We raise children and wish them to be educated, but the money needed to pay for that is seized by that same group, who provide in place of education a form of indoctrination. Our intended contract with a school is over-ridden, Chaos-1 prevails. A kid leaves an inferior government school with few skills, yet finds an employer willing to buy them; but the group forbids the deal unless he pays more than the skills are worth; Chaos-1 makes the young man unemployable.
We wish to buy insurance to cover serious ill-health, but find that the same group has so controlled health-care providers that they have to charge prices few can afford so instead our intended contract is prevented; Chaos-1 intervenes, and forces a resulting distortion of family life and work.
From time to time (115 times, since the same group was formed in 1783) a war is fought, and for the big ones we or our children again have our plans disrupted by being forced to go help fight it. Sometimes, we never come back. Chaos-1 destroys our hopes and lives.
There are many other examples, yet this Chaos-1 could get far worse. The controlling issuer of edicts is not only powerful and armed, but also seriously incompetent; it makes huge mistakes. Eventually, it may very well distort people's choices in the economy so badly that it collapses; the essentials of modern life may grind to a halt. Its repeated failure to store sufficient water may cause mass starvation. Its persnickety control of fuels may cripple the electric grid. Its endless string of needless wars may bring retaliation that nukes a large part of the population. Now, I don't predict that something like this will happen; but it quite possibly might. Chaos-1 could become near-total.
Survivors will have a terrible time. At first, life itself will be the paramount need, so those with active kitchen gardens will be well placed - as will those with guns (and ammo) ready to fend off looters. Some weeks later those still alive will wish to trade with each other and rebuild a primitive economy, for people have a variety of skills so an exchange mechanism will evolve.
For that, some form of money will be needed; and I predict that they will mostly choose gold and silver for that purpose. Those who have already set aside a store of such coins will be well placed to prosper, and here come a pair of interesting points: (1) the choice of that medium of exchange will be made by the survivors, not handed down by a government edict; for government will have collapsed. Then (2) the fixed quantity in circulation will not matter. There may be 1,000 coins or a million, but it will make no difference except to the number of digits in each price.
And so, slowly, society will rebuild itself, with individual members making agreements with each other in an increasing and unpredictable number of ways. In other words, Chaos-2 will come about; an anarchist society will have begun. A form of order will have spontaneously arisen; not by a handed-down set of rules, but by a vast series of individual contracts.
As this unplanned, spontaneous order emerges it will be reflecting what the rest of the natural world always does. Animals and plants, the lot, have no kind of overall planning authority directing what's to happen; nature just takes its course, species prosper or die, and evolve. The elegantly balanced result is also a Chaos-2 phenomenon, and in his superb Liberty, Dicta and Force Louis Carabini reasons that mankind needs to blend in with the rest of nature and do the same.
Chaos-2 is going to take place anyway, and if readers act on the advice of The Demolition, a free market will have developed in time to catch and replace failing but in-demand activities government now carries out, before it distorts the present Chaos-1 into near-total destruction. There will still be a collapse of the State, but it will follow a total walk-out of its workers and cause little damage because those who walked out will have been busy starting to replace those marketable activities. Imposed "Order" produces Chaos-1, but Chaos-2 produces real, spontaneous order.