What has happened to the vision of a dynamic, unregulated Silicon Valley? With some companies embracing the antitrust attack on Microsoft and stepped-up campaign contributions from computer companies, some observers fear that the computer industry will be brought into the mutual shakedown scheme carried on inside the Beltway. “Washington, D.C., vs. Silicon Valley,” the second annual Cato Institute—Forbes ASAP conference on Technology and Society, held in San Jose, November 19—21, reminded the high-tech community that freedom is essential to innovation.

In the opening address, Cypress Semiconductor chairman T. J. Rodgers said that market institutions and trade are the foundations of the wealth we have come to take for granted. Leading science fiction writers warned of the advent of a “regulation chip” installed in every computer, or of our being so coddled by technology that we become “a nation of sissies” with safety our main concern. David Friedman of Santa Clara University and author K. Eric Drexler spoke of the transformation of human society by encryption and nanotechnology; in its own way, each of those technologies will empower individuals and undermine old authorities. Novell chairman Eric Schmidt described the evolution of a new networked economy, with prices tending ever more toward uniformity in response to rapidly transmitted information.

Controversy over the Justice Department’s antitrust attack on Microsoft ran throughout the conference. Ed Black of the Computer and Communications Industry Association argued that capitalism requires antitrust “checks and balances.” Nobel laureate Milton Friedman, however, noted that if the antitrust suit against Microsoft were to benefit consumers or the computer industry, it would be “the first time in history” that any such suit had done so. Friedman criticized the business community for its frequent shortsightedness in supporting the expansion of government powers.

The conference also drew attention to the power of markets to fix pernicious problems caused by government meddling. Scholar Andrew J. Coulson and entrepreneur J. B. Holston outlined the enormous inefficiency of today’s education establishment and described how competition, newly evolving technologies, and for-profit companies could markedly improve the state of education. Larry Ellison of Oracle expressed strong support for parental choice and school vouchers. A powerful panel featuring Intuit chairman Scott Cook, Chilean reformer José Piñera, and Financial Engines CEO Jeff Maggioncalda described how to use technology and markets to replace the collapsing government-run Social Security system.

The conference, organized by Cato’s director of information studies Solveig Singleton, can be viewed with RealPlayer on Cato’s Web site.

This article originally appeared in the January/​February 1999 edition of Cato Policy Report.