Earlier quoted context omitted.
It is a good thing and it absolutely can function, but not as a society. Ayn Rand explicitly rejected this idea [1]: Q: Why is the lack of government in Galt’s Gulch (in Atlas Shrugged) any different from anarchy, which you object to? A: Galt’s Gulch is not a society; it’s a private estate. It’s owned by one man who carefully selected the people admitted. Even then, they had a judge as an arbitrator, if anything came…
That's a real circular answer there, "it's not a society because it's not a society". Claiming that a place specifically set up as a self-contained community hiding from the government, and hiding from government authority, is 'just a private estate' is rhetorical nonsense.
I do agree that a private estate cannot exist in a society without government. But it is private estate in the sense that the members recognize it as such, and that it can exist in this very narrow context.