1. “To each according to what he and the instruments he owns produces.” Friedman denies this is an ethical principle because it is not related to morality or right behavior -- it is related to the fundamental freedom that a man enjoys by virtue of being a man.
2. "Allocation of resources without compulsion." The state is the keeper and enforcer of the law, without which the order the comes from the market could not exist.
3. Inequality can serve the good of society by virtue of the fact that wealth produces wealth. The principle that with more, more can be done -- so with more wealth in the hands of some, more wealth can be made for the good of all. Yes, capitalism and some types of inequality go together necessarily.
4. No, because the progressive tax restricts freedom, a fundamental right, on those who have more. It imbalances the system that would use large amounts of wealth to produce more wealth, rather than taking extra from the wealthy.