We find ourselves using the term “classical liberal,” to distinguish from what is now understood as “liberal.”
“Classical liberalism" is the term used to designate the ideology advocating private property, an unhampered market economy, the rule of law, constitutional guarantees of freedom of religion and of the press, and international peace based on free trade. Up until around 1900, this ideology was generally known simply as liberalism.
Doesn’t sound too bad. What happened?
The qualifying "classical" is now usually necessary, in English-speaking countries at least (but not, for instance, in France), because liberalism has come to be associated with wide-ranging interferences with private property and the market on behalf of egalitarian goals. This version of liberalism — if such it can still be called — is sometimes designated as "social," or (erroneously) "modern" or the "new," liberalism.
Was it due to some nefarious plot, designed to bastardize the language of freedom? Maybe. But there may be a simpler – yet no less destructive – story.
From A Peace to End All Peace: The Fall of the Ottoman Empire and the Creation of the Modern Middle East, by David Fromkin:
Between autumn 1916 and autumn 1917, the Ottoman Empire held firm while the governments of its adversaries, the Allied Powers, collapsed.
In each of Britain, France, and Russia the governments that began the war were overthrown. To follow the history of the term “liberal” perhaps it is instructive to follow the British experience.
The Prime Minister who had brought Britain into the war was the first Allied leader to fall victim to it.
This would be the (classical) Liberal H.H. Asquith. He was to be replaced by the (once-was-but-no-longer-classical-instead-just-plain-new) Liberal David Lloyd George.
Asquith apparently prosecuted the war while respecting liberal traditions (to the extent such is possible). For example despite the military catastrophes in Mesopotamia, Gallipoli and on the western front he refused to initiate compulsory conscription.
Lloyd George, in dramatic contrast, made the conscription issue his own. In taking the lead on this issue he showed how much his political position had changed….Traditional Liberals, who had always opposed compulsion, felt that Lloyd George was going over to the other camp.
Having lost many of his former political colleagues due to his completely changed views, Lloyd George found some new ones. Most notable (to me at least) was Alfred Milner – the champion of imperialism.
Alfred Milner, 1st Viscount Milner KG GCB GCMG PC (23 March 1854 – 13 May 1925) was a British statesman and colonial administrator who played an influential leadership role in the formulation of foreign and domestic policy between the mid-1890s and early 1920s. He was also the key British Empire figure in the events leading up to and following the Anglo-Boer War of 1899–1902 and, while serving as High Commissioner, is additionally noted for mentoring a gathering of young members of the South African Civil Service, informally known as Milner's Kindergarten who, in some cases, themselves became important figures in administering the British Empire. In the later part of his life, from December 1916 to November 1918, he was one of the most important members of David Lloyd George's War Cabinet.
And his "kindergarten”?
Milner's Kindergarten is an informal reference to a group of Britons who served in the South African Civil Service under High Commissioner Alfred, Lord Milner, between the Second Boer War and the founding of the Union of South Africa. They were in favour of the South African union and, ultimately, an imperial federation of the British Empire itself.
Milner and Rhodes were joined at the hip on this project of a global, Anglo-imperialism, according to Stead. According to Maurice Hankey, the most influential group in Britain at the time was the Round Table group, and Milner was the leader.
Milner was a key figure in the launching of the Boer War in South Africa; at the time, Lloyd George “vigorously opposed” this venture, as any self-respecting liberal (as the term was properly understood) would have done. No more.
Lloyd George, the “pragmatic, intuitive opportunist” was now in the hands of Milner, who was “methodological in action and systematic in thought….” Daily, the “dictatorship of two” would meet at 11:00 AM, along with Hankey and the Chief of the Imperial General Staff. Only after this, at noon, would they meet with the other members of the war cabinet.
With Milner as an ally, Lloyd George set out on the transformation of the term “liberal”:
It was a sweeping, revolutionary change in the way the country was governed. Arthur Balfour, the former Prime Minister who became Foreign Minister in the new government, remarked of Lloyd George at the time: “If he wants to be a dictator, let him be. If he thinks that he can win the war, I’m all for his having a try.”
Lloyd George was the last Prime Minister of the Liberal Party. Thereafter, the office alternated between “Conservative” and “Labour.”
And that’s what happened to the term “liberal.”