FROM THE FINAL SUMMARY CHAPTER

Allow me to summarize this book in one paragraph.  Conflicts inevitably occur over the way physical and human resources are to be  used. We can never eliminate antagonisms or animosities between people. These will inevitably arise over questions of resource use.

Yet we may be able to channel violent inclinations into peaceful and even productive ways of resolving disputes. One means of channelling these inclinations is to give people property rights protected by the rule of law. With these in place, every disagreement over the use of property is resolved in such a manner that no one is made worse off and at least one person will be made better off. 

Any such exchange is called Pareto improving. Once people have exhausted all the Pareto improvements possible, they have attained a state of Pareto efficiency. This “peace of Pareto” is superior to other forms of imposed peace, such as central control, because it balances what people owe each other in a more precise and humane manner, one that leads invariably to prosperity. Yet it is impossible to allocate all resources using property rights because sometimes these rights simply cannot be created or established or determined. When property rights are absent, markets fail to correctly balance social accounts; government may step in to correct the imbalance, as it may in the case of public goods and common property resources. The problem then becomes one of ensuring that government, to whom we entrust a monopoly, if even temporary, over coercion, does not abuse its powers to charge a non-competitive “tax price” for doing its duty of plugging the gaps left by incomplete private property rights.

More critically, government must be prevented from acting in a short-sighted manner due to the political market’s problem of establishing competitive property rights over government power.

FROM THE USER GUIDE TO THE BOOK

This book can be read from start to finish because it has  a uniting theme: Pareto efficiency as a recipe for peace. It has also been  designed so that you can go to any page and start learning ideas in economics,  political science, and Public Choice theory, because everything in this book  relates to some important idea in one or all of these fields. 
 
Only a peace that is based on Pareto efficiency,  implemented through private property rights, can lead to prosperity and respect  for human rights in large societies. What is Pareto efficiency? Some people have  heard of something called the Pareto 80-20 rule which says that eighty percent  of the profits go to twenty percent of the people. Pareto was a multi-genius,  spawning ideas in statistics, sociology, demography, and economics that came to  dominate the field. But the 80-20 rule has nothing to do with his notion of  efficiency. Pareto efficiency is a much more powerful and subtle concept. A  division of resources in society is Pareto-efficient if the pie cannot be re-cut  in such a way as to improve the lot of at least one person whilst not making  others worse off. This whole book is devoted to exploring this seemingly simple  but devastatingly powerful definition of conomic efficiency.