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“Liberalism” was a term first ascribed to and advanced by a variety of enlightenment thinkers who pushed for greater political and (later) economic rights. The economic ideas advanced by 19th century liberal philosophers would today be associated with the political right. But these ideas in their more extreme forms were only briefly actually enunciated by the “liberal” parties that emerged in many Western European countries in the late 19th and early 20th centuries, however, and very rarely (perhaps never) in the context of fully democratic regimes.

In Europe, where working class political movements emerged earliest and most forcefully, “liberalism” quickly became a term to describe the political center, with conservatives and nationalists on the right and socialists, communists, and social democrats on the left. Sometimes, such as in 19th century England, liberals were able to coopt labor movements, resulting in the political coalition often termed “lib-labism.”

In the US, “liberalism” was first a term that also described the political center. For the first half of the 20th century, a “liberal consensus” of Keynesian centrism regarding economic matters characterized American politics. With the rise of conservativism in the post-war period, liberalism eventually became a term associated with “leftist” politics, although it was very similar to the centrist “liberalism” of Europe.

In Latin America, “liberalism” was a term that generally described political movements that wanted to commercialize agriculture and embrace more democratic politics in the 19th century. When the rise of the working classes spawned other movements and countermovements in the 20th century, the “liberals” often were left as the political alternative on the right. Thus, liberalism in Latin America to this day has connotations of right-wing politics, and the marketization of Latin American economies in the last generation is often termed “neoliberalism.”

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THIS is the right answer for the most part.

For some more background, liberalism stems from the writings of Thomas Hobbes, John Locke, Jean-Jacques Rosseau, John Stuart Mill, etc. In the most basic terms, liberalism basically means that the government's only role is to protect the citizens of whatever territory, and that is IT. In the beginning, that basically meant to only protect the citizenry from physical harm from foreign enemies and domestic criminals. As time went on, there were different interpretations for what "protecting the people from harm" meant, and that is how the questions of morality and economic intrusion by the government came to be.

There seems to be some confusion about this matter in this country. BOTH Democrats and Republicans are LIBERALS, they simply interpret what 'protecting the citizenry' means in different ways. Democrats simply cherish modern liberalism when it comes to the economic realm, and classical liberalism in the social realm. It is the other way around for Republicans. Liberterians would be the hard-core classical liberals and Communitarian (or whatever you want to call THOSE people), believe in government intrusion in everything.

I personally get annoyed when people badmouth liberals, and not realize that the only reason they can say any of it is because they live with a liberal system of government.