Well, I think here is were our view or understanding of a word differs. I see state rather as a physical body under goverment. I find state to be nescessary in modern days, but I do also see that goverment has not had need for state in some small groups like villages. I think that nation has been mixed with society and that has created idea that state is behind everything, rather than society and that has led to this goverment control and over-expansion of state.
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The State is just a collection of individuals who seek power over others, same thing as a gang or any other criminal class. Government in its true form is suppose to be about "self-governance", where individuals consent to its terms in a community. If you have an imposing faction that seeks to dominate you and others then they are no different than armed thugs.
I like Weber's idea of the state: "The state has a monopoly on violence"