Chapter 12: The Ethics of Capitalism

• Failure of Consequentialism: De Soto argues that consequentialist approaches to economics, focused solely on cost-benefit analysis and maximizing positive outcomes, have demonstrably failed.

• “The consequentialist ideal, consisting of believing that it is possible to act by taking decisions to maximize the forecast positive consequences on the basis of given means and costs which are also known, has ostensibly failed.”

• Dynamic Efficiency and Justice: De Soto proposes a dynamic view of the market, emphasizing human entrepreneurial capacity and the continuous creation of new ends and means.

• "According to this conception, the considerations of ‘efficiency’ and ‘justice’, far from being a trade-off which would allow different combinations in varying proportions, would appear to be two sides of the same coin."

• Kirzner's Contribution: De Soto highlights Israel Kirzner's work on entrepreneurship and its ethical implications. Kirzner's theory, which emphasizes the individual's right to the fruits of their entrepreneurial creativity, provides a powerful ethical foundation for free markets.

• "the most just society will be the society that most forcefully promotes the entrepreneurial creativity of all the human beings who compose it."

Chapter 13: A Hayekian Strategy to Implement Free Market Reforms

• Overcoming Political Impossibility: While acknowledging the theoretical arguments presented by the Public Choice School regarding the inherent difficulties in implementing free market reforms, de Soto argues that historical examples, such as the liberalizations in post-war Germany and the Thatcherite revolution in the UK, demonstrate the feasibility of overcoming these challenges.

• Dual Strategy for Libertarians: De Soto advocates for a dual strategy for libertarian theorists:

• Unwavering pursuit and dissemination of free market principles.

• Development of transitional policies that move society towards the ultimate goal of a free market while remaining consistent with those principles.

• Avoidance of compromises that betray libertarian ideals or confuse the public regarding the ultimate objectives.

• Three Levels of Action: De Soto proposes three levels of action required for successful free market reforms:

• Theoretical: Rigorous development and dissemination of sound economic theory emphasizing the dynamic efficiency and ethical superiority of free markets.

• Ethical: Articulating the moral foundation of capitalism and exposing the immorality of interventionism and the privileged pressure groups that benefit from it.

• Historical: Engaging with intellectuals, journalists, and policymakers to shape public opinion and influence political processes in favor of libertarian ideals.

Chapter 14: The Future of Liberalism: The Deconstruction of the State through Direct Democracy

• Direct Democracy and Secession: De Soto agrees with Bruno Frey's advocacy for direct democracy through referenda, arguing that it offers a potential avenue for limiting government power.

• "for a libertarian it is of the utmost importance to combine the political procedures of direct democracy with the effective existence of the right of secession"

• Towards a World of Smaller States: De Soto envisions a future where technological advancements and globalization empower individuals to participate in direct democracy and exercise their right to secession.

• Private Property Anarchism as the Ultimate Ideal: De Soto ultimately views a free market encompassing all spheres of human activity, including those currently under government control, as the ultimate ideal.

• "the most perfect direct democracy only will be reached once the free market is also extended to the areas currently covered by governments through a constellation of overlapping voluntary and competing private agencies, associations and corporations."