I hate to defend John McKay, but here goes. Bob Black argues from authority. Rand and Peikoff do not, regardless of their claims to the contrary, have the ability to define and delimit Objectivism. In trying to do so, they have ignored their own views of concepts, definition, and rationality. According to them, none of these can be based on arbitrary, unjustifiable assumptions. This is a standard that all derived concepts should be held to.
That being so, it is necessary to ask whether the political positions Rand, Peikoff, and other Objectivists take are derived from their explicit philosophical base (their metaphysics, epistemology, and ethics). At this point, it is necessary to point out that political philosophy is not self-evident, but a highly derived body of knowledge. Without a properly formed base, the whole project falls prey to floating abstractions and contradictions. Witness the conservative defenses of the free market and limited government.
Rand's main argument for limited government can be found in her article "The Nature of Government" (in The Virtue of Selfishness). Peikoff's can be found in his recent book Objectivism: The Philosophy of Ayn Rand. These arguments have to be analyzed against the base of their philosophies to see if the former are supported by the latter.
McKay and other anarchists might argue that Rand's and Peikoff's political positions 1) contradict their [Rand's and Peikoff's] philosophy or that they 2) are not necessitated by their philosophy. (I am assuming that Rand and Peikoff are identical when it comes to basic philosophy. While one can claim there are some differences, they are not very relevant here. Or so I believe!) If it's 1, then we have to ask what political positions are compatible with Objectivism. If it's 2, we pretty much come to the same conclusion, though there is no necessity to choose some of version of anarchism over the limited government Rand and Peikoff advocate. However, we might then ask why they advocate their political view, i.e., what other principles or motivations are involved in Objectivists justifying limited government?
It might turn out that Objectivism and anarchism are incompatible, but Black has yet to prove this. Nor do I think he's adequately familiar with Objectivism or any of the primary texts. Instead, I think his attack is based on mere cariacature and ad hominem.
What is Rand's argument for government? It is that humans rely on reason as their means of survival. Thus, only a social system which allows humans to use reason – i.e., prevents others from denying them their ability to use reason – is compatible with human nature. To Rand and Peikoff, the way to insure that when humans live together in society that they do not resort to the use of force is to limit the social organ that uses force (read: the government) to protecting individual rights – the negative rights advocated in the Lockean political tradition, rights to life, liberty, property, and the pursuit of happiness. Only this system, according to Rand and Peikoff, is consistent with human nature.
This is not to say that humans can't live and prosper under other forms of government. Obviously they can. However, it is only because the governments of those other systems do not completely forbid reason. In a sense, some measure of freedom can be found in almost every society, but the catch is that this is usually by accident. Few societies in history have built in safeguards against the expansion of government power or against its arbitrary use, or disuse in the case of governments carrying out their mission. The idea here is that a government with a constitution that spells out the limits of state power is better than a government without one, all other things being equal. Granted also, no constitution or legal tradition surrounding one is invulnerable to misinterpretation and erosion, but it is better than its absence.
Anarchists such as McKay might argue that the above argument is faulty because their form of anarchism might better or equally well protect individual rights. The former appears to be the position of Objectivist-influenced anarchists, such as George H. Smith and Larry Sechrest.
Of course, in a general sense we need not only to derive anarchism from Objectivism but to validate the latter. This is another matter, but a more important one. I get the idea that Black is interested in neither issue except in so far as he can use the term Objectivist as an insult.