In any serious discussion about policies and political ideology, the topic of political semantics and ideology is a complex and multifaceted issue that often leads to spirited debates. It's a topic of immense importance, and I'm excited to delve into it to raise awareness on what these ideologies actually mean, according to the official definitions, and what they mean in practice. This will be the second part of a multipart series, and it is all about liberalism and the different shades it brings. This article will focus on the three main types of liberalism: Classical Liberalism, Social Liberalism, and Neoliberalism, as well as how they are used across the world, because the term's implication can change based on regions around the world. Before we begin on a study on liberalism, I would like to thank all my readers for a fantastic 2025, and I wish nothing but the best for everyone in the coming year of 2026. With that out of the way, let's dive into the complexities of liberalism.
Classical Liberalism
The Mises Institute defines classical liberalism as "the term used to designate the ideology advocating private property, an unhampered market economy [the laissez-faire approach], the rule of law, constitutional guarantees of freedom of religion and of the press, and international peace based on free trade." This idea was developed in the 17th to 18th century as a reaction to absolute monarchism and mercantilist policies, which essentially empowered the state around a particular entity (usually the monarch) and controlled trade policies by maximising exports and minimising imports to instead favour the liberty of the individual in all policy discussions. The leading proponents of this ideology were from the growing bourgeois class, born out of the old burgess class, which included property owners, intellectuals, and merchants, and they eventually, in the case of the United States and the United Kingdom, formed the Whig party and coalesced around it, arguing for classical liberal ideas.
The most prominent individuals who argued for this ideology include John Locke, Adam Smith, and, later on, Friedrich Hayek and Milton Friedman. Locke, who was considered the father of liberalism, argued that every individual had certain, in his words, "natural rights" - most notably, the right to life, the right to liberty, and the right to estate, now known as property, which are not granted by the state but are inherent to us as human beings. Adam Smith, a Scottish economist and widely regarded as the father of Economics, argued in his book entitled "An Inquiry into the Nature and Causes of the Wealth of Nations," which is widely known today as "The Wealth of Nations, that individuals pursuing their own self-interest in free markets unintentionally benefit society. This concept is now known to be called "The Invisible Hand."
Even though classical liberalism has been out of fashion for a while now, it influenced one of the major schools of economics that is still around today, albeit significantly marginalised: the Austrian School of Economics. The Austrian School of Economics is the school of thought that promoted the idea of classical liberalism across the world, starting in 19th-century Vienna, which emphasised individual choice, subjective value, and free markets, and rejected mathematical models in regard to economics in favour of focusing on real human action and spontaneous order. It developed economists like Ludwig von Mises and Friedrich Hayek, who created their own type of liberalism decades later, known as neoliberalism, which will be explored later on. However, during the period of the Great Depression, many saw the flaws in the thought process of classical liberalism, which has made it marginalised in economic academia.
Modern/Social Liberalism
Merriam-Webster defines Social Liberalism as "a political philosophy stressing the importance of the government's role in promoting the public good, relieving social and economic inequities, and protecting and supporting marginalised people." The idea formed in the late 19th century as a reaction to social injustices like poverty, which were a direct cause of industrialisation and urbanisation. The Great Depression actually accelerated the idea, as classical liberalism failed to take into account the possibility of such an event taking place - they merely believed that the economy would go up forever. Their arguments for diverging from the classical liberalist worldview were that social liberals thought that the Government could be used to advance individual freedom by providing public services, which classical liberals reject.
The leading proponents of this ideology would be John Maynard Keynes and President Franklin Delano Roosevelt, both coincidentally finding their rise in the aftermath of Black Thursday, the day of the Wall Street crash of 1929, which would eventually be known as the Great Depression. John Maynard Keynes, a British Liberal MP, would write one of economics’ great works: "The General Theory of Employment, Interest, and Money," or more commonly known as "The General Theory," in 1936, which gave rise to the aptly named Keynesian economics. Keynesian Economics argues that government intervention via fiscal policy and monetary policy is crucial in stabilising economies, particularly during recessions, by managing spending levels, output, employment, and inflation. While classical liberals believe that the market would eventually self-regulate, Keynes correctly believed that markets don’t always self-correct quickly. President Franklin Roosevelt was elected as President in 1932 and promptly implemented his grand economic plan - the New Deal. The New Deal followed John’s line of thinking, with large-scale government intervention via welfare plans like Social Security, financial regulation, and the implementation of social safety nets to ensure citizens’ freedom through economic security.
The eagle-eyed amongst the readers may raise questions as to why Keynes and Franklin Roosevelt are not considered social democrats, as they seem to share plenty of the same goals with social democrats, which I’ve touched on in part 1 of this series. The key difference, however, lies in the details. During this period of time, the interwar period, the primary goal of social democrats was to have a long-term goal of transitioning the economy from a capitalist system to a socialist system, but the New Deal programme implemented by President Roosevelt did not threaten private ownership of production, which is clearly at odds with socialist aims.
Neoliberalism
Britannica defined neoliberalism as an ideology and policy model that emphasises the value of free market competition, and it has been the prevailing thought of economics since the Reagan and Thatcher days nearly four decades ago. Neoliberalism emerged from classical liberal ideas with thinkers like Friedrich Hayek and Milton Friedman, who were devout followers of the classical liberal thought, with Hayek honing his thoughts at the Austrian School of Economics and Friedman honing his at the Chicago School of Economics, to respond to Keynesian economic shortcomings, particularly stagflation - a state of persistent high inflation combined with high unemployment and stagnant demand in a country's economy.
Obviously, the leading proponents of this ideology would be Friedman and Hayek, with politicians like Reagan and Thatcher espousing that ideology. Neoliberalism is associated with deregulation, liberty from government intervention, eliminates the idea of the public good, and generally advocates for lower taxes, particularly on wealth [to stimulate economic growth] and higher taxes on consumption to balance the budget and lower debts. Even though it seems that we are many years removed from the times of neoliberalism, we are still feeling the effects today. One of the neoliberal experiments that the United States Government did was in Chile with the coup of Salvador Allende and his government on September 11th (ironic, I know), 1973 and replaced him with the US-allied Pinochet, who transformed Chile’s economy into a neoliberal styled economy - which Friedman hailed as a miracle, even giving the name: "The Miracle of Chile" in 1982. Critics of neoliberalism point to Chile, where they went through rapid inequality, the privatisation and underfunding of public services, which leaves those who cannot afford it behind, making it more susceptible to financial instability and bringing countries under the heel of corporations as they outsourced their labour to other countries.
The Similarities and Differences between the "liberals"
The significant similarity is that they all believe that the individual, rather than the collective, should be the centre of policy-making. They think that autonomy and individual freedom are king, and they generally support the natural rights put out by John Locke: the right to life, liberty and [private] property - viewing each as a pillar for prosperity. In addition, all three support market economies and oppose state control that stifles competition, like a policy of mercantilism. However, they differ on plenty of things.
Classical Liberalism was a political philosophy that was shaped around the natural rights put forward by John Locke. They also argued that to achieve true freedom, government intervention needs to be kept to a minimum and believed that a laissez-faire approach to the economy was the best way to free the people (in other words, give them liberty) from coercion. In addition, they focus on the idea of negative liberty, i.e. the freedom from interference. Social Liberalism was a philosophy based on broader societal reforms and focused on achieving freedom through the liberty to act. They argued that the government must take a proactive role in ensuring social justice, welfare and equal opportunity for all people, which includes the marginalised. In addition, they focus on the idea of positive liberty, i.e. the freedom to achieve potential. Neoliberalism is more likened to Classical Liberalism in the way that they are a revival of classical ideas by reducing state intervention in markets, and promoting the private sector, and their focus is also on the concept of negative liberty. However, where they differ is in what they fundamentally are: where Classical Liberalism was philosophical, Neoliberalism is applied economics.
Different implications around the world
To round off this article, there needs to be an exploration of the different implications of the word around the world. The word "liberal" has been thrown around in political discourse to the point where plenty are just confused about what the word actually means. However, in reality, the meaning changes depending on which country is currently in the conversation.
In the United States, the term "liberal" has almost become synonymous with the Democratic Party, the party of the "centre-left" in the United States, and at least in the United States context, they are considered to be "social liberals". However, this term has often been used pejoratively by conservatives. In Europe, the term "liberal" refers to entities and parties that are pro-market, having a significant emphasis on civil liberties and are considered to be centrist. However, they will side with the centre-right on economic issues. In the Global South, like Malaysia, for example, it tends to mean alignment with the West in a process known as "Westernisation" and elite cosmopolitanism. How often have we heard the term “liberal Malays" in a political discussion, being used as a term for the voting base of Malays who are classified as moderate and open-minded? That’s the nuance that differs between types of countries.
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