Even democracy itself could be seen to be a collectivist system - where the will and needs of the majority are paramount. As to what Tolkien intended, he may have been against one type of collectivism, but he was not against all, as there are many different ways of interpreting and using the theory. I think we are in danger of equating collectivism solely with Communist states and believing that this was the only thing Tolkien mistrusted. However, this is only one kind of collectivism, controlled by 'the State' (and Tolkien was clearly against this); another kind is that exercised by large companies where the workforce are dispensable, faceless resources according to the wishes of the collective of shareholders. Tolkien was against any of these forms of collectivism which exploited and controlled the individual, this was his
'machine'.
In one sense, Tolkien has Utopian ideals (though I'm not so sure his books are exactly Utopian!), he certainly has a purist, Utopian vision of what Anarchism means. He dislikes the idea that a small group of people can control the population, and can see that a hierarchy and a complex state can lead to loss of individuality. Though I do doubt how far he really
does like the idea of Anarchy. It would mean that there would be no rulers, no class system, and it would mean the introduction of...collectivism. But this would be collectivism as seen on Kibbutzes, where the community works together to achieve what it needs for survival (in modern terms, if we had it, we might all take it in turns to empty the bins, care for the elderly, teach the kids, mend the roads etc). However, it does appear that in The Shire there could be such an idea in practice at its most simple level, community spirit.
Tolkien's political ideas seem confused at times to me, in one letter he mentioned that it was good for the ordinary man to doff his hat to the squire, which does not sit with the idea of the abolition of control! But we must be fair, he was not intentionally writing a political work (though some say that
nothing can be created that is without politics), and we have gleaned information on his own views from his letters, private documents. Tolkien's ideas are no more confusing than anybody's views!
Interestingly, an important influence on Tolkien (and on Lewis) was William Morris, a famous Socialist at the centre of the late Victorian Arts and Crafts movement. Morris himself was a writer, creating new versions of Icelandic sagas, and he wrote the Utopian novel News From Nowhere. The Arts and Crafts movement had the philosophy that craftspeople should enjoy their work, that they should create objects themselves, instead of having factories make objects; this tallies strongly with Tolkien's own dislike of the 'machine'. Morris felt strongly that traditional crafts should be kept going, and that craftspeople were important people, 'art'isans. That is reflected strongly in Tolkien's reverence for craftspeople, and hatred of people like Saruman who used technology to move towards soul-less mass production and control; it is also reflected in Tolkien's creation of The Shire, a rural society where a humble gardener like Sam can be 'important'. I think it is to Morris we should look if we want to find Tolkien's own ideas of how society should be.