Directive 10-289 ends economic and personal freedom in the United States. The government now controls every aspect of an individual's economic life; it is a dictatorship. The best minds, including Dagny's, can't tolerate this change and choose to retreat.
But while the directive itself has an astounding impact, the most important event of this chapter is the steadily increasing liberation of Hank Rearden from the looters' moral code. Rearden has finally realized that he follows the code of life. He can mine ore, manufacture steel, create Rearden Metal, earn a fortune, make love to Dagny, and, in countless other ways, exult in his ability to live. Lillian and her allies can do none of these things. They can't produce steel or anything else. In fact, they couldn't even conceive of something as valuable as Rearden Metal. They are incapable of true love, and to them "friendship" denotes not affection and respect, but the opposite: mutual contempt and a desire to use each other to attain corrupt ends.
People such as Lillian, James Taggart, Wesley Mouch, and all the other looters can't survive on their own, and the purpose of the current government policies is to ensure that creative, productive people can't survive either. If Rearden's is the code of life, the government's is the code of death. He now understands the one error he's made — and its importance. He accepted the moral code of self-sacrifice, which convinced him that he had a duty to submit to suffering at the hands of Lillian, his family, and the politicians. By doing so, Rearden betrayed the code of life by which he's always lived, and he put his incomparable virtue in service to the code of death. He has made an enormous, though innocent, error, and he knows that he must pay for it, not Dagny. This is why he signs away the rights to Rearden Metal. He is now free forever from the code of death that has caused him so much undue suffering.
