For most of his career, economist Friedrich Hayek was the proverbial “voice in the wilderness” with his championing of free market capitalism over socialism. Then an amazing thing happened – socialistic thought was soundly defeated, at least everywhere but the higher reaches of many American elite universities. His breakthrough work was The Road to Serfdom in 1944 which, at the time, was overshadowed by the central planning theories of John Maynard Keynes, but won a Nobel Prize for Hayek thirty years later. In 1960, he wrote The Constitution of Liberty, a favorite of Margaret Thatcher. As late as 1988, he wrote The Fatal Conceit, which stressed the evolutionary nature of capitalism. Hayek’s central theme is that only markets, through the pricing system, can properly produce the necessary information flows to ensure economic prosperity and preserve liberty. His view of capitalism as an organic and spontaneous information processing system was one of the 20th century’s compelling ideas. It followed that central planning was doomed to failure because it denies sufficient information to coordinate social behavior, and it led him to the conviction that capitalism is an absolute prerequisite for democracy. He never accepted the view that fascism was a capitalist phenomenon, but that Stalin and Hitler were “two peas in the same pod” of collectivism. His thought spawned a network of libertarian groups and inspired many currently prominent thinkers. He died earlier this year, but thankfully his ideas proved superior to the competition and will live on. We’re going to need them to counter such foolishness as central planning of the health care and pharmaceutical markets.

Journalist and former LBJ aide Bill Moyers delivered the spring commencement address at my alma mater, The University of Texas at Austin. I wasn’t there, but I read the speech and it struck me as something out of The Great Society dustbin. Here’s an excerpt: “You would think a rich, dynamic nation with the most powerful economy in the world would be putting its house in order — making sure we are not only a prosperous society but a just, good, and fair society. It’s not happening. And it’s not happening because money has a stranglehold on democracy….Most of that money comes from a relative handful of wealthy individuals, organizations, and interests. Dominant among them are the financial and corporate elite who want no rules to govern the social and economic behavior of investors and multinational corporations;…..who want to hold to the barest minimum the wages and salaries of people who should otherwise share in the profits of industry…”

I could go on, but you get the picture. He further encouraged the graduates to take a leadership role in “a new politics of justice”. Well, Bill, I live in the business and organizational world you vilify, have been politically active for all of my adult life and, yes, I have known a few people and organizations like the ones you describe, but not many, and even those lack credibility with their peers. But I also know that, as Joseph Epstein noted in his “The Education of an Anti-Capitalist”, the passion of the anti-capitalist is for justice (read equality) over freedom. And one of the things of which I am confident is that justice has the best chance of being achieved in a society where freedom is greatest.

One of the clearest wedge issues between Republicans and Democrats should be tax policy and it has always amazed me how Republicans have defaulted their natural advantage on this issue. Of course, the “read my lips” commitment of 1988 still haunts, but the most damaging to this advantage has been the failure (and often unwillingness) to defend the supply side tax policies of Ronald Reagan from the relentless assault of the media and the political left. Without getting tangled in the arcana of tax policy, we should focus the debate on these points: (1) the current economic expansion dates from 1982, not 1993, and began with the Reagan marginal tax rate cut, (2) Federal taxes as a share of GDP have increased to 21%, the highest since World War II, (3) the goal of tax policy should be economic growth, not redistribution, (4) dynamic (behavior based) scoring of tax rate cuts is proven methodology, (5) there are only two things government can do with a surplus – spend it or refund it, and (6) whose money is it, anyway?

Unfortunately for the republic, one of the most critical issues that energize both sides of the Presidential election is the prospect that the new President will likely appoint several Supreme Court Justices, not to mention scores of Federal judges on lower benches. I say “unfortunately” because our Founders could not have conceived of the current policy domination of the judicial branch and the degree to which the legislative branch has abdicated its role in the development of public policy in many crucial areas, particularly social policy. Some have gone as far as to suggest judicial hubris in the conduct of the Supreme Court, particularly in its view of the U.S. Constitution as a document authoritative only as to questions, not answers. It is as though the Court feels that some hot-button issues cannot be peacefully handled by the democratic process. To some, republican democracy is not an institutionalized process, but a list of substantive results based on universalistic principles of equality and justice as they define them. The potential backlash is damaging to the institutional integrity of our constitutional system which is based upon balance among the three branches. David Broder has warned of the “derailing” of democracy in his recent book that discusses the growing trend toward the use of Initiative and Referendum, which he says is driven by the power of money because it can dictate the success or failure of issues in a referendum. I’m no fan of I&R because it is antithetical to our republican system of legislating, but it fills a void because it is customer-driven and offers an opportunity for real debate on issues that are often perverted by the legislative process or deferred to the judiciary. In 1996, the journal First Things conducted a symposium on this issue, entitled, strangely enough, “The End of Democracy?: The Judicial Usurpation of Politics”, in which the participants condemned recent judicial activism as both procedurally undemocratic and substantively immoral or unjust. I read most of the proceedings and came away feeling that there is, in fact, serious cause for concern about the integrity of our republican system and our ability to govern ourselves if we continue to allow the judiciary to usurp the legislative process and balance of powers.

We should be greatly encouraged by the results of the election in Mexico in early July. If for no other reason, the Institutional Revolutionary Party (PRI) had been in power for 71 years, longer than any one-party rule in the world other than the Soviet Communist Party (74 years). It represents another defeat for a party of centralized government and protectionism and a mandate for more openness and deregulation. Granted, President-elect Vincente Fox’s mandate did not extend to complete control by his party of the Chamber of Deputies, but the reform message is clear and the inevitability of deregulation and privatization of which I spoke in a previous essay will be sustained by the need to be competitive in world capital markets. The left will resist, but it has been discredited and is in obvious disarray. Ironically, it was the policies of outgoing President Zedillo, including NAFTA, which fueled the fires of reform and made possible the smoothest, most democratic election in Mexican history. The new class of business leaders spawned by NAFTA will not go back to the hierarchical, top-down, patronizing system of old, and, with enlightened U.S. Presidential leadership, can now help President Fox make good on his commitment to a North American common market within 30 years. In the 1980’s, then Secretary of State George Schultz said that Mexico would be more important to the U.S. than the Soviet Union by the year 2000. For more reasons than one, he was right.

According to Alexander Tytler in The Decline and Fall of the Athenian Republic, the great democracies of history have tended to last only a couple of centuries, during which time they have progressed through the following sequence: From bondage to spiritual faith; from spiritual faith to great courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to complacency; from complacency to apathy; from apathy to dependency; from dependency back into bondage.Where are we in this sequence?