Limited Government (Liberalism)

A limited government is one in which the powers of the state are limited by law, usually in a written/codified constitution.

The distinction between the two main strands of liberalism holds significant implications for the role of the state. Under classical liberalism the state performs the role of a night-watchman. A minimal state ensures that contracts are honoured and that the marketplace performs effectively. However, under social liberalism the state performs an enabling role based on positive liberty. T.H. Green defines positive liberty in the following terms - “when we speak of freedom … we mean a positive power or capacity of doing or enjoying something worth doing”. He also argued that the government should emancipate the poor from the limitations of poverty.

Based on this understanding, the role of the state can incorporate the provision of welfare from the cradle to the grave and the maintenance of a mixed economy. Yet despite this level of state intervention, social liberals fully accept the desirability of unequal outcomes. Even John Maynard Keynes - a figure widely celebrated as a champion of state intervention in the economy - once argued that “there is social and psychological justification for significant inequalities of income and wealth.” He also believed that the efficient allocation of scarce resources requires an economic system that facilitates the “animal spirits” of market competition. In other words, liberals of all persuasions believe the role of the state should be limited to that of providing liberal values such as equal opportunities.