Modern liberalism emerged as a reaction against free-market capitalism, believing this had led to many individuals not being free. Freedom could no longer simply be defined as ‘being left alone’.
Whereas early forms of liberalism viewed freedom as achieved via a limited role for the state, modern forms of liberalism took a very different approach. According to many historians, the laissez-faire approach became associated with causing the Great Depression of the 1930s. Individuals could not be described as free when exposed to the whims of the marketplace.
Free-market capitalism had failed to provide freedom to all; and a very different approach was required. This led to a shift away from classical economics towards a form of Keynesianism. A mixed economy became preferable to a system in which the marketplace was left alone.
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