Yeah, I don't have time to reply to all these comments on pareto. Newsflash: I'm not a student in a statistics class.

I think it's weird, though, that you don't think this multipart statement of pareto superiority can't be summarized in simpler terms. You're hiding it behind fortifications, whereas the essence of it, it seems to me, is that trades in a market are best when they don't harm anyone, in the sense of taking someone's private property. It's just an appeal to Mill's harm principle, applied to trades in a market.

Thus, the question is whether returning ill-gotten gains counts as harm. In the limit case, suppose a master thief steals everyone's private property and locks it up in a fortress like Smaug from The Hobbit. Suppose two other people want to engage in a trade. Alas, they have nothing to offer each other, since the thief has stolen everything. Thus, the two parties sneak into the fortress and retrieve some of their items so they can make their trade.

Would that trade count as pareto inferior to the scenario in which the two parties, say, starve to death because they have no resources left? Does "harming the third party" outweigh everything else? Obviously it shouldn't, but your account of pareto superiority leaves out a historical consideration of who should or shouldn't be harmed, or whether Robin Hood harms the corrupt establishment by stealing back what was effectively stolen in the first place. That's what makes this squeaky clean principle of pareto superiority propaganda.