If politics is at its root the struggle for power, then the rarest event in political life is a voluntary abdication of power. That is precisely what happened in Mexico last Sunday. For the first time in its long, tight reign, the Institutional Revolutionary Party held reasonably free elections, knowing full well that it could lose. Having built a colossal edifice of authority over eight decades, the PRI -- or, more accurately, Mexico's brave president, Ernesto Zedillo -- decided to risk it all to put Mexico on the path of genuine democracy.

Obviously, Mr. Zedillo was not acting purely from altruistic motives. The PRI had come under increasing pressure, both from domestic opposition and from the U.S., to end its notorious use of corruption, corporatism and fraud in Mexico's elections. Still, the PRI could just as easily have fixed the elections one more time. Even when pressed, elites don't usually cede power peacefully, or gracefully. So far, however, the Mexican ruling class seems to have done so. Nothing has become its rule so much as the leaving of it.

The election is important in another sense as well. It exemplifies the collapse of "institutional revolutionary" parties across the world. Mexico's exquisite oxymoron describes nicely the dominant party in several important countries where, sometimes as the voice of anticolonial liberation, one party literally created the modern nation and dominated its politics for decades. These once-revolutionary parties became the establishment.

Only months ago, Taiwan voted out of office the Kuomintang, the party that had defined its entire existence as a nation. Earlier in the year, India's Congress Party lost power to an alliance of opposition parties for the second time in as many years; and its percentage of the total vote has slipped in the last 15 years from around 50% to only half that. In Indonesia, Abdurrahman Wahid, a moderate Muslim cleric, became president last year, ending the ruling Golkar Party's long reign. In South Korea, too, Kim Dae Jung turned the system on its head by winning power in 1998.

In all these nations, once-great parties frayed because of their failures. They lost public trust because they stayed in power too long, using too many fraudulent means, and became too corrupt in the process. They had come to power in times of international tension and ideological divisions, when the world economy seemed turbulent and punishing, and when national unity was fragile. They had promised to forge a nation, ensure self-sufficiency, and press down subnational impulses, be they ethnic, linguistic or religious. But today there are no barbarians at the gate against whom to stand guard. Corruption can no longer be justified in the name of a greater national cause.

But the weakness of these parties is also a sign of their success. The PRI, Congress and Golkar did, in fact, create national unity and stability. They modernized their countries. Eventually -- often reluctantly -- they liberalized their economies. As a result, they conspired in their own obsolescence, becoming out of place in the new order that they had helped to usher in. They are leaving power, or have left it, in a world of relative peace and global capitalism. The grip of politics and ideology has weakened, as has that of nationalism itself, although perhaps to a lesser extent. As a result, the countries they leave are less socialist but also less unified, secular and tolerant. Religious bigotry and violence is on the rise in some of these countries, especially in India and Indonesia.

There are, of course, dozens of examples of "institutional revolutionary" style parties that have not ceded power. Africa, more than any other continent, is littered with one-party states where the ruling elite has maintained power by whatever means necessary. Don't hold your breath waiting for Egypt, Syria or Kenya to follow Mexico's suit. And a week before the Mexican elections, we were treated to a jarring counterexample in Zimbabwe: There, the ruling ZANU-PF party, led by Robert Mugabe, did its best to fix the elections. Perhaps fearful of the party's incompetence, even in its chief area of expertise, its leaders also announced that they would form a government even if ZANU-PF lost. (They need not have feared. Mr. Mugabe's party won, though more narrowly than it anticipated.)

Why have some hegemonies cracked and others not? Although the answer is complicated by the many local variations on the question, one basic generalization is entirely valid: Capitalism helps to create liberal democracy. In virtually every successful transition to democracy outside Eastern Europe in recent decades -- Taiwan, South Korea, Chile and now Mexico -- the ruling party first liberalized the economy and then, often decades later and under pressure, liberalized politics.

Economic freedom produced greater personal freedom. It also helped to sustain the rule of law, as well as to create a small but effective bourgeoisie that clamored for political reform. (In the Mexican case, the North American Free Trade Agreement increased the pressure for better laws, cleaner business practices, and greater political openness.)

The ruling parties, always sure they could maintain a balancing act, tried to keep enough reform going so that modernization could proceed -- but at a pace that would not topple them from power. With the exception of tiny Singapore, these parties miscalculated. Economic freedom can breed political freedom and create a secure base for a genuine, liberal democracy.

Last week, at Secretary of State Madeleine Albright's urging, several dozen foreign ministers gathered in Warsaw to pontificate about democracy. I was there too, pontificating on democracy at a parallel conference held by Freedom House. At neither the ministerial nor the nongovernmental event did anyone say much about economic liberty.

The Warsaw declaration issued by the governments listed as many as 19 "core democratic practices," including "the right of every person to respect for private and family life." Not one mentions economic liberty or private property. At the Freedom House event, globalization and trade were mentioned frequently -- but as ugly, merciless forces from which new democracies had to be protected.

A joint declaration that mentioned in passing the benefits of "a global market" was roundly rejected. Several important participants felt that it endorsed crude, American-style capitalism. Mr. Zedillo was not mentioned, or lauded. Indeed, despite its 20 years of liberalization, Mexico did not even make the cut as one of Freedom House's good guys. Instead, that list of "electoral democracies" gives a pat on the back to such paragons of liberalism as Russia, Ukraine, Haiti, Ghana and Albania. But these countries have merely created charades. Mexico, on the other hand, might well create a democracy.

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