LIVE: Argentina’s Javier Milei delivers keynote at Davos WEF

The restriction of the life project of others, based on the principle of aggression and in defense of the right to life, liberty, and property, whose institutions are private property, free markets free from state intervention, competition understood as free entry and exit, the division of labor, and social cooperation. Naturally, associated with this social order, the question arises of whether it is just. Therefore, to determine if the system is just, the obligatory reference is Ulpian, whose basic premise constitutes the foundations of Roman law and is undoubtedly one of the pillars of Western civilization. Thus, justice is the constant and persistent will to grant each person his right. This is the intention to give each one what is his due. However, Ulpian's sentence did not stop there; it added that the principles of law consist in living honestly, not harming anyone, and giving each what is theirs. Therefore, from all this it follows that one of the characteristics of free-market capitalism is that it is a just doctrine. Given the emerging institutional framework, which we have proven is just, now it is time to prove that it is also efficient.

The first approach in this regard was made by Adam Smith, who, using the invisible hand argument, postulated that each individual, pursuing his own interest, leads to maximum social welfare. Later, the neoclassicals, guided by an idea of the invisible hand based on the Pareto optimum, managed to derive the first welfare theorem: every competitive equilibrium is Pareto optimal. However, this implied embracing a mathematical structure that left the door open to state intervention under the good intentions of correcting market failures, which, from my point of view, do not exist.

The proof that Hans Hoppe developed, based on property rights in line with Locke's principle of original appropriation together with the non-aggression principle, is not only satisfactory in proving optimality but also leaves no room for doubt for intervention. Thus, Hoppe points out, any deviation from this set of rules implies, by definition, a redistribution of property titles and therefore of income, from users and contracting parties of goods to non-users, producers, and non-contracting parties. Therefore, any deviation in this sense implies that there will be relatively less original appropriation of resources whose scarcity is known, and hence less production of new goods, less maintenance of existing goods, and fewer mutually beneficial contracts and trades. This naturally implies a lower standard of living in terms of goods and services that change hands.

Furthermore, the postulate that only the first user, not the last, of a good acquires the property right over it, ensures that productive efforts will be as high as possible at all times. In turn, the notion that only the physical integrity of property, not its value, must be protected, guarantees that every owner will make the greatest productive efforts of value. This means efforts to promote favorable changes in the value of property and to prevent or counteract any unfavorable change in its value. Therefore, any deviation from these rules implies a reduction of productive efforts at all times. Note that pivoting on private property and not on excess demand functions derived from optimization exercises allows reaching an optimum without the need for esoteric assumptions that later provide support for state intervention. At the same time, it avoids falling into the empirical absurdity of the second welfare theorem, which postulates independence between production and distribution, as if the choice between capitalism and communism were neutral in terms of outcomes.

Therefore, having proven that the institutions of free-market capitalism supported by natural rights, Locke's principle of original appropriation, and the non-aggression principle are not only just but also efficient, at least in static terms, it is time now to prove that free-market capitalism also meets all these same properties in dynamic terms. Xenophon, already 380 years before Christ, pointed out that economics is a knowledge that allows men to increase the estate while postulating that private property was the most beneficial vehicle for each person's life. After that, Xenophon deals with the concept of efficiency, which he approaches from two perspectives. On one hand, from a static vision, he defines efficiency as the management of available resources aimed at avoiding waste, also highlighting the benefit of private property by noting that the eye of the master is the best formula to fatten his livestock.

On the other hand, Xenophon, in his second definition of efficiency, delves into the dynamic field, pointing out that efficiency also implies increasing the estate. That is, it is about increasing the available quantity of goods through entrepreneurial creativity, through trade and speculation. This latter criterion of efficiency is of fundamental importance for the study of an economy's growth, since, unlike a static model that only considers what Robert Lucas Jr. defined as deep parameters—preferences, technology, and initial resource endowments—in the dynamic sphere, both technology and initial endowments can vary and, in fact, do so continuously as a result of entrepreneurial creativity. Moreover, a separate chapter concerns the institution of private property, and pivoting on it, the Austrian School of Economics, from Mises, Hayek, Rothbard, Hoppe to Jesús Huerta de Soto, have demonstrated the impossibility of socialism and thus debunked the phantasmagoric idea of John Stuart Mill that postulated independence between production and distribution—an academic deafness that led to socialism and cost the world the lives of 150 million human beings, while those who managed to survive terror did so in absurd poverty.

According to what has been pointed out and in line with Xenophon's second definition, economic theory has identified four sources of economic progress. First, we have the division of labor, which was exemplified by Adam Smith with the pin factory. Basically, it is a mechanism that generates productivity gains manifested as increasing returns, and although its limit is set by market size, the market size is positively affected by it. However, it is also worth clarifying that this virtuous process is not infinite; its limit collides with the initial resource endowment. Second, the accumulation of capital, both physical and human. Regarding physical capital, the interaction between savings and investment is crucial, highlighting the fundamental role of the capital market and the financial system in achieving such intermediation. On the side of human capital, the focus should not be limited to education but must also consider the development of cognitive abilities from birth, nutrition, and health—essential elements for accessing education and the labor market.

Third, we have technological progress, which means being able to produce a greater quantity of goods with the same amount of resources or produce the same using a smaller quantity of inputs. Finally, we have the entrepreneurial spirit, or rather the entrepreneurial function, which, according to Professor Huerta de Soto, constitutes the main driver of the economic growth process. Although the three factors mentioned are important, without entrepreneurs there will be no production, and the standard of living would be extremely precarious. The entrepreneurial function focuses not so much on short-term efficiency but rather on the growth of the quantity of goods and services, which leads to higher living standards.

Based on all this, what is truly important is to expand the production possibility frontier to the maximum. Thus, dynamic efficiency can be seen as the capacity of an economy to drive creativity and entrepreneurial coordination. In turn, the criterion of dynamic efficiency is inextricably linked to the concept of the entrepreneurial function, which is the typically human capacity to realize profit opportunities that arise in the environment and act accordingly to take advantage of them, making the task of discovering and creating new ends and means fundamental, driving spontaneous coordination aimed at resolving market imbalances. Moreover, this definition of dynamic efficiency proposed by Huerta de Soto appropriately and coherently combines Peter's idea of creative destruction with North's adaptive efficiency.

Naturally, given the role of the entrepreneurial function, the institutions under which it develops are of vital importance. In this sense, both Douglas North and Jesús Huerta de Soto see a key function of institutions as reducing uncertainty. Thus, while North presents it as a set of constraints devised by humans that structure social interaction in a repetitive way, Huerta de Soto considers that these institutions, conceived by human beings, emerge from a process of social interaction spontaneously, without the design of a single person, which reduce the uncertainty of the market process. As Roy Cordato points out, the appropriate institutional framework is one that favors entrepreneurial discovery and coordination. Therefore, in this framework, economic policy should be oriented toward identifying and removing all artificial obstacles that hinder the entrepreneurial process and voluntary exchanges.

In this sense, given the decisive influence of institutions on economic progress, this directs our gaze toward the importance of ethics, since those societies that adhere to stronger moral values and ethical principles in support of institutions will be dynamically more efficient and thus enjoy greater prosperity. Thus, the fundamental ethical problem is conceived as the search for the best way to foster coordination and entrepreneurial creation. Therefore, in the field of social ethics, the conclusion is reached that the conception of the human being as a creative and coordinating actor implies accepting axiomatically the principle that every human being has the right to appropriate the results of his entrepreneurial creativity. That is, the private appropriation of the fruits of those who create and discover by entrepreneurs is a principle of natural law, because if the actor could not appropriate what he creates or discovers, then his capacity to detect profit opportunities would be blocked, and the incentive to carry out his actions would disappear. In short, the ethical principle we have just enunciated is the fundamental ethical basis of the entire market economy.

Therefore, what we have just demonstrated is that free-market capitalism is not only just, but also efficient, and it generates the highest growth rate. Thus, given the conceptual framework of dynamic efficiency and the existence of dilemmas between efficiency and ethical values when designing public policies, its implementation in real life is of interest. Beyond the enormous achievements we have shown during these years of management—extirpating a fiscal deficit of 15 points of GDP, lowering inflation from 300% to 30%, reducing the country risk by 2,500 basis points, and growing the economy while poverty fell from 57% to 27%, guiding public policies by ethical and moral values—I would like to focus on the case of the Ministry of Deregulation, or as we call it inside, the Ministry of Increasing Returns.

This ministry is inspired by the evolution of GDP per capita since the Christian era, which has the shape of a hockey stick. This figure arises from the fact that until the year 1800, GDP per capita was almost constant, and from then on it multiplied 15-fold in a context where the population size multiplied 10-fold. In parallel, while GDP grew, extreme poverty fell from levels of 95% to 10%. However, this marvel implies the existence of increasing returns, which in economics is associated with concentrated market structures. And that is where the public policy dilemma arises between Pareto efficiency and justice. In the Pareto analysis, increasing returns imply the existence of non-convexities in the production set, which, let's say, does not allow deriving benefit functions that yield a maximum, so neither the supply of goods nor the demand for inputs are optimal. Faced with this, it is proposed to regulate companies and assimilate them to a perfectly competitive case. This kills increasing returns and with it economic growth. If you don't think so, look at the effects that regulation causes everywhere in the world.

The vision based on the ethical values of capitalism points out that if that position was reached through discoveries, voluntary exchanges, and without violence—upholding the non-aggression principle—there is no reason to justify intervention. In fact, intervention is a violation of property rights, so by punishing profits, the potential growth of the economy falls. Hence, intervention and regulation are dynamically inefficient because they are violent and therefore unjust. That is why, since coming into administration in 2023, we have carried out, thanks to the cyclopean task of Minister Federico Sturzenegger, 13,500 structural reforms, which today allow us to have a more dynamically efficient economy, enabling us to grow again. This is Make Argentina Great.

Therefore, this shows how questionable the Pareto optimum analysis is. Based on it, many consider it pertinent to regulate such concentrated structures, assimilating their results to a competitive model. However, as I had pointed out, that implies killing increasing returns, whose undesirable side effect is to kill growth. Note that along the same line we can address the issues of artificial intelligence. In this sense, said instrument could be seen as the 21st-century version of Adam Smith's pin factory—that is, an enhancer of increasing returns and thus greater growth and well-being. So the most responsible thing states can do on the matter is to stop bothering those who are creating a better world. To put it more directly, politicians must stop bothering those who are making a better world. At the same time, I want to point out that all the fears associated with dystopian scenarios are nonsense. The answer is Adam Smith. The limit of increasing returns is given by the size of the market, and finally we must not forget that launching these projects requires real financial inputs and resources, so expansion will be limited by initial endowments.

For those interested in the theoretical foundations of these arguments I am presenting, today Dr. [name] uploaded to the networks the work we did in collaboration and developed the theoretical foundations of this: that regulation kills growth—that is, the omnipotence of the state and regulations destroy property rights, which kills increasing returns, and therefore growth is lower. Finally, linked to this phenomenal future ahead, the role of human capital is of vital importance. In this sense, in Argentina, thanks to the management of Minister Sandra Petovelo, for vulnerable sectors we have stopped giving away the fish and instead taught them to fish and, if possible, motivated them to create their own fishing company.

Finally, despite popular criticism, free-market capitalism does not undermine moral values. After all, economic progress via the invisible hand mechanism arose from the moral sentiments of Adam Smith, and the modern era owes its existence to the bourgeois virtues pointed out by Deirdre McCloskey. In turn, thanks to the great work of Huerta de Soto in developing the concept of dynamic efficiency and its implementation in Argentina, we can be sure that the dilemma between efficiency and justice is false. That is, markets are not only superior from a productive standpoint but are also just, and therefore public policies must be guided by ethics and not utilitarianism—whether economic or political—which always lead to unjust, populist, and impoverishing solutions. Therefore, I reaffirm what was said at the beginning of this lecture: Machiavelli is dead, so it is time to bury him. Moreover, given the deep link between morality and free markets, the latter make us better people, because thanks to dynamically efficient markets, we can at the same time progress economically, defend private property, maintain peace, achieve social harmony, and strengthen those social virtues indispensable for a prosperous society.

Lastly, I want to leave you with a reflection on this week's Torah portion. The portion describes that moment when Moses confronts Pharaoh, symbol of the oppressive power of the state, to warn him that if he did not free the Hebrew people, the last three plagues would fall upon Egypt. Faced with Pharaoh's refusal, the plague of locusts came, which means famine. Then came the plague of darkness, which means the loss of clarity for decision-making. Finally, the plague of the death of the firstborn, which reveals the destiny of a society that denies freedom. The analogy with what is happening today in the West is tremendously clear. For some time now, the West, for some strange reason, has begun to turn its back on the ideas of freedom, which is why in this same place in 2024 I stated that the West is in danger, as a result of having embraced increasing doses of socialism in its most hypocritical version: wokism. In turn, in 2025 I explained the mental parasites that the left has sown in humanity. However, 2026 is the year I bring you good news. The world has begun to wake up. The best proof of this is what is happening in America with the rebirth of the ideas of freedom. Therefore, America will be the beacon of light that will reignite all of the West and thus will pay its civilizational debt with a show of gratitude toward its foundations in Greek philosophy, Roman law, and Judeo-Christian values. We have a better future ahead, but that better future exists if we return to the roots of the West, which means returning to the ideas of freedom. May God bless the West, may the strength of heaven accompany us, and long live freedom. Thank you very much.