While a few libertarians base their views strictly on moral grounds, the vast majority are at least willing to supplement any moral arguments with practical arguments about the ineffective or counter-productive nature of government action. When it comes to government regulation of the economy, such practical arguments often involve appeals to the deterant effect taxes or regulations can have on productive activity. If you raise the cost of doing business, Libertarians will say, and you discourage economic growth, as these increased costs will discourage people from engaging in otherwise profitable activity, to the detriment of society. The underlying assumption of such arguments is that people respond to laws raising the cost of doing something by doing less of it.
When the subject turns to so-called “victimless crimes,” however, the Libertarian argument seems to be exactly the reverse. Laws against drug use, say, are ill advised as they will not stop people who want to do drugs from doing so, but will only drive such activity underground. Here the operative assumption is that law cannot deter behavior, or get people to do less of something by making it more costly. Of course, libertarians do not make this argument about laws against murder, rape, or theft. In those cases it is assumed that the law does exert a deterent effect sufficient to justify their continuation. While not rising to the level of a formal contradiction, one might wonder what it is about things like prostitution, drug use, gun ownership, etc., that make them unique among all human activities in that they are unresponsive to changes in cost.
A sophisticated Libertarian can, I think, avoid this inconsistency through two considerations. The first is that the effect of a law on behavior is not an all or nothing matter. When a libertarian argues against regulation and taxation of business on the grounds that it will deter business activity, he does not mean to make the ridiculous claim that it will deter all business activity, only that it will deter some such activity. Likewise, an honest libertarian should acknowledge that laws against drug use, say, do decrease the total amount of drug use to some extent, even if (as is undoubtedly also true) many people will still take drugs even if illegal.
Whether these sorts of harms attendant on suppression are sufficient to outweigh any benefit that comes from suppression is, of course, an open question, and one that may vary from case to case. I happen to think, for example, that such a case is weak with regards to abortion (the idea that a market in murder would be more harmful in driven underground not seeming very plausible), strong with regard to drugs, and unclear with regard to prostitution. But the argument should at least suffice to acquit libertarianism on the charges of inconsistency.