The Republican governor of that reddest of red states, Arkansas, just refused to sign the anti-gay Religious Freedom Restoration law his Republican legislature produced. Wal-Mart, the second-largest employer in the state (after the government itself), told him not to. This would be newsworthy in itself.

Even more important than this victory is that it is the first real crack in the deal that built the Republican revival of the last nearly 40 years: secular capitalists and religious fundamentalists agreeing on the marriage of free-market economics and a conservative religious social order.

As early as the mid 1970s, secular conservatives like Howard Phillips and Richard Viguerie consciously undertook to make a coalition with the religious right and succeeded beyond all imagining. Sincere or not, each party agreed to embrace the others’ agenda, and they began to win elections. Probably nothing has been more central to the movement—and the Republican Party’s—success than the stability of that deal. Much evidence suggests that neither faction really embraces its partners’ programs. But sincerity is not the currency of electoral politics. As long as the two parts of the Republican machine held together, progressive politics did not stand a chance.

No one represents the fruits of that electoral bargain better than the players in Arkansas: religious fundamentalists behind the last-ditch defense against LGBT victory in the name of “religious freedom” on the one hand and the lowest of low-wage employers, Wal-Mart, on the other. This week it cracked wide open. Deliciously, the breach happened at the behest of the LGBT movement, a tiny minority, underfunded, and still often closeted. Wal-Mart told the religious freedom crew to stop the restoration.

The Arkansas Moment may have taken some by surprise, but it was completely predictable. In 2012, former Solicitor General Paul Clement, a leading partner in the uber-establishment law firm King & Spalding, agreed to represent the Republican House of Representatives in fighting for the Defense of Marriage Act in the Supreme Court. By the time the firm’s largest client (Coca-Cola) called to ask King & Spalding what they could have been thinking, LGBT operatives were already preparing a law school campaign to ensure that K&S would never again hire a desirable young associate. Days later, management magically found that Clement had not followed the proper procedure when he agreed to take the case. The ink was still wet on the Human Rights Campaign signs (“Shame on you King & Spalding”) when Clement quit his job.

How did the LGBT movement achieve the great progressive triumph? Victory has a thousand parents.

Importantly, a thousand fathers. No. 1, gay people are increasingly mainstreamed into corporate America. Sure, Apple’s Tim Cook was nominally in the closet, but as he even acknowledged in coming out recently, everyone knew. And still he rose. He was not alone. Many American companies have LGBT employee affinity groups, and many of those employees occupy critical positions in their businesses. They are the business manifestation of the old Gay Liberation motto, “Just come out!” The flipping of the business community is a particular example of the impact of people coming out in all parts of life. But once the mostly male LGBT people scaled the ramparts of rampant capitalism, their presence turned the force of the market actors against their old conservative ally.

Two, relentless, brilliant management of the new political weapon of social media and the bottom-up threat of real boycotts. Katie Blair, the young, savvy advocacy coordinator at the Indiana ACLU, has a communications degree from the University of Missouri. Within days of Indiana moving on the RFRA, the hashtag #boycottIndiana was trending on Twitter. Arkansas happens to be the home state of activist Chad Griffin, president of the largest LGBT organization, the Human Rights Campaign. As soon as the RFRA action moved to Arkansas, pictures of Chad’s mother demonstrating against the law went viral on the Internet.

Some economic institutions are fragile, as the panic at King & Spalding reflected. Southern-based, family-owned businesses like Chick-fil-A might be able to resist a gay boycott, but most institutions seek a broader market. Fragile, low-wage Arkansas isn’t California. It doesn’t have a million employers. They need customers, and, like King & Spalding, they need people to want to work for them.

Third and maybe most importantly, the LGBT movement has conquered the moral high ground. Once, the religious had an iron grip on the moral high ground. Religion was for most of human history the source of most moral teaching. Initially, only the religious right used moral arguments—“life” against “convenience” for women seeking abortions, “family,” “defense” of marriage. But in time the marriage equality activists took a moral stance in favor of love and commitment in the marriage arena. Now the gay revolutionaries have broadened the argument in the most ambitious way. It’s “discrimination” that’s immoral again in America. Anti-discrimination is the new moral high ground.

You can see it in the statements the businesses put out. They aren’t saying, although it is true and is not shameful, that they are looking after the bottom line. They see themselves as noble defenders of right and justice. As Arne Sorenson, president of Marriott Hotels, put it: “The law is not just pure idiocy from a business perspective… to discriminate against people just because of who they are, it’s madness.”

Now of course it is possible that the Republicans can patch the alliance together again. They’ve done it before. Attention will lag. But the religionists have gone more and more to their corner of the culture and business has spread more and more to every corner of the culture. With every move, the gap widens. The LGBT movement saw it happening and is exploiting it brilliantly.