An interesting expression of the development of liberalism during the late 1800s and early 1900s was L. T. Hobhouse’s book Liberalism from 1911. Liberalism was once, Hobhouse claims, an effective force when it came to criticizing (and eventually tearing down) all authoritarian obstacles put in front of the free individual. Feudal structures were replaced by laws applicable to all and free movement for people and goods replaced a vassal-system based on land. But Hobhouse believes that in modern times, liberalism cannot only focus on tearing down obstacles; it must also build something. Freedom must mean that everyone really gets more choices and opportunities in life. Moreover, one must realize that the wealth of society is a social product, even if it is individual capitalists who have, as a matter of formality, created it. Those who criticize the right of government to tax its (rich) citizens “forget that without the organized force of society their rights [to their “natural” property] are not worth a week’s purchase. They do not ask themselves where they would be without the judge and the policeman and the settled order which society maintains. The prosperous businessman who thinks that he has made his fortune entirely by self help does not pause to consider what single step he could have taken on the road to his success but for the ordered tranquility which has made commercial development possible, the security by road, and rail, and sea, the masses of skilled labour, and the sum of intelligence which civilization has placed at his disposal” etcetera.
Classical liberalism Hobhouse describes as a system where everything is to work by itself, as long as the state upholds external security, suppresses violence, ensures the safe possession of people’s property and enforces contracts. A “natural harmony” will make sure that everyone is assigned their correct place in society. This became the philosophy of the so-called Manchester School. Hobhouse, however, is not sure that the free contracts which form the basis of this philosophy will create a situation that is good for everyone. He especially points out the bad bargaining situation of the individual industrial worker visavi his employer. That kind of situation does not make the laborer free. In order to become free he needs real opportunities grounded upon the kind of security that the state can provide. According to Hobhouse, the working person should regard it as a right to be able to live off his wages, including in times of illness, incapacitation, and old age. Those things the state can guarantee.
In short, one can say that Hobhouse poses the question that, in hindsight, can be seen as the question that were to guide the political compromising between the reformed socialism and the reformed liberalism during most of the 20th century, namely: How far is it possible to organize industry for the purposes of general welfare, without destroying the freedom of the individual or hampering initiative and determination. How far is it possible to fight against poverty, or to strive for economic equality, without hindering industrial progress?
Thus, while socialism went to the “right”, liberalism went to the “left”. But, as we have seen, this was not done without criticism. Lenin attacked Bernstein and his revisionist Marxism from the bolshevik direction. If we are to find a counterpart in the liberal camp – someone who, like Lenin, wants to “restore order” – then we might turn to Ludwig von Mises, who in 1927 published a book with the same title as Hobhouse’s book: Liberalism. To Mises’s mind John Stuart Mill is an “epigone of classical liberalism, especially in his later years, under the influence of his wife, full of feeble compromises. He slips slowly into socialism and is the originator of the thoughtless confounding of liberal and socialist ideas that lead to the decline of English liberalism and to the undermining of the living standards of the English people”. And when it comes to Hobhouse, he is just one of the several authors who has turned liberalism into “moderate socialism”.