Liberalism includes a broad spectrum of political philosophies that consider individual liberty to be the most important political goal, and emphasize individual rights and equality of opportunity. Although most Liberals would claim that a government is necessary to protect rights, different forms of Liberalism may propose very different policies (see the section on Types of Liberalism below). They are, however, generally united by their support for a number of principles, including extensive freedom of thought and freedom of speech, limitations on the power of governments, the application of the rule of law, a market economy (or a mixed economy with both private-owned and state-owned enterprises) and a transparent and democratic system of government.

Like the similar concept of Libertarianism, Liberalism believes that society should be organized in accordance with certain unchangeable and inviolable human rights, especially the rights to life, liberty and property. It also holds that traditions do not carry any inherent value, that social practices ought to be continuously adjusted for the greater benefit of humanity, and that there should be no foundational assumptions (such as the Divine Right of Kings, hereditary status or established religion) that take precedence over other aspects of government.

Anarchism is a much more radical form of Liberalism, although, like Anarchism, Liberalism historically stands in opposition to any form of authoritarianism, whether in the form of Communism, Socialism, Fascism or other types of Totalitarianism. Its emphasis on individual rights (Individualism) also puts it in opposition to any kind of collectivism, which emphasize the collective or the community to a degree where the rights of the individual are either diminished or abolished (e.g. Communitarianism).

The word "liberal" derives from the Latin "liber" (meaning "free" or "not a slave"). In everyday use, it means generous and open-minded, as well as free from restraint and from prejudice. Its use as a political term, however, only dates from the early 19th Century.

The modern ideology of Liberalism can be traced back to the Humanism which challenged the authority of the established church in Renaissance Europe, and more particularly to the 17th and 18th Century British and French Enlightenment thinkers, and the movement towards self-government in colonial America.

John Locke's "Two Treatises on Government" of 1689 established two fundamental liberal ideas: economic liberty (meaning the right to have and use property) and intellectual liberty (including freedom of conscience). His natural rights theory ("natural rights" for Locke being essentially life, liberty and property) was the distant forerunner of the modern conception of human rights, although he saw the right to property as more important than the right to participate in government and public decision-making, and he did not endorse democracy, fearing that giving power to the people would erode the sanctity of private property. Nevertheless, the idea of natural rights played a key role in providing the ideological justification for the American and the French revolutions, and in the further development of Liberalism.

In France, the Baron de Montesquieu (1689 - 1755) advocated laws restraining even monarchs (then a novel concept), rather than accepting as natural the mere rule of force and tradition, and French physiocrats (believers that the wealth of nations was derived solely from the value of land agriculture or land development) established the idea of "laissez-faire" economics as an injunction against government interference with trade.

In the late French Enlightenment, Voltaire argued on intellectual grounds for the establishment of a constitutional monarchy in France, and Jean-Jacques Rousseau argued for a natural freedom for mankind, and for changes in political and social arrangements based around the idea that society can restrain a natural human liberty, but not obliterate its nature.

Rousseau was also instrumental (along with Locke) in the development of a key liberal concept, that of the social contract (the idea that the people give up some rights to a government in order to receive social order). He asserted that each person knows their own interest best, and that that man is born free, but that education was sufficient to restrain him within society, an idea that rocked the monarchical society of his age. He also asserted, again in contravention of established political practice, that a nation could have an organic "national will" and a capacity for self-determination which would allow states to exist without being chained to pre-existing social orders, such as aristocracy.

Another major contributing group to the ideas of Liberalism are those associated with the Scottish Enlightenment, especially David Hume and Adam Smith. Possibly Hume's most important contribution to Liberalism was his assertion that the fundamental rules of human behaviour would eventually overwhelm any attempts to restrict or regulate them (which also influenced Immanuel Kant's formulation of his categorical imperative theory). Adam Smith expounded the theory that individuals could structure both moral and economic life without direction from the state, and that nations would be strongest when their citizens were free to follow their own initiative ("The study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society"). In his influential "The Wealth of Nations" of 1776, he argued that the market, under certain conditions, would naturally regulate itself and would produce more than the heavily restricted markets that were the norm at the time, and he agreed with Hume that capital, not gold, is the wealth of a nation.

Much of the intellectual basis for the American Revolution (1775 - 1783) was framed by Thomas Paine (1737 - 1809), Thomas Jefferson (1743 - 1826) and John Adams (1735 - 1826) who encouraged revolt in the name of "life, liberty and the pursuit of happiness" (echoing Locke), and in favour of democratic government and individual liberty. In particular, Paine's widely-read pamphlet "Common Sense" (1776) and his "The Rights of Man" (1791) were highly inflential in this process. The goal was to ensure liberty by preventing the concentration of power in the hands of any one man.

The French Revolution (1789 - 1799) was even more drastic and less compromising, although in its first few years the revolution was very much guided by liberal ideas. However, the transition from revolt to stability was to prove more difficult than the similar American transition, and later, under the leadership of Maximilien Robespierre (1758 - 1794) and the Jacobins, power was greatly centralized and most aspects of due process were dispensed with, resulting in the Reign of Terror. Nevertheless, the French Revolution would go further than the American Revolution in establishing liberal ideals with such policies as universal male suffrage, national citizenship and a far reaching "Declaration of the Rights of Man and Citizen".

John Stuart Mill popularized and expanded liberal ideas in the mid-19th Century, grounding them in the instrumental and the pragmatic, particularly in his "On Liberty" of 1859 and other works. He also propounded a utilitarian justification of Liberalism, in which the moral worth of the economic system is determined solely by its contribution to overall utility in maximizing happiness or pleasure among all people.

Gradually, the idea of liberal democracy (in its typical form of multiparty political pluralism) gathered strength and influence over much of the western world, although it should be noted that, for liberals, democracy is not an end in itself, but an essential means to securing liberty, individuality and diversity). Towards the end of the 19th Century, though, splits were developing within Liberalism between those who accepted some government intervention in the economy, and those who became increasingly anti-government, in some cases adopting varieties of Anarchism.

In the 20th Century, in the face of the growing relative inequality of wealth, a theory of Modern Liberalism (or New Liberalism or Social Liberalism) was developed to described how a government could intervene in the economy to protect liberty while still avoiding Socialism. Among others, John Dewey, John Maynard Keynes (1883 - 1946), Franklin D. Roosevelt (1882 - 1945) and John Kenneth Galbraith (1908 - 2006) can be singled out as instrumental in this respect. Other liberals, including Friedrich Hayek (1899 - 1992), Milton Friedman (1912 - 2006), and Ludwig von Mises (1881 - 1973), argued that phenomena such as the Great Depression of the 1930's and the rise of Totalitarian dictatorships were not a result of "laissez-faire" Capitalism at all, but a result of too much government intervention and regulation on the market.

There are two major currents of thought within Liberalism, Classical Liberalism and Social Liberalism:

• Classical Liberalism holds that the only real freedom is freedom from coercion, and that state intervention in the economy is a coercive power that restricts the economic freedom of individuals, and so should be avoided as far as possible. It favours laissez-faire economic policy (minimal economic intervention and taxation by the state beyond what is necessary to maintain individual liberty, peace, security and property rights), and opposes the welfare state (the provision of welfare services by the state, and the assumption by the state of primary responsibility for the welfare of its citizens).
• Social Liberalism argues that governments must take an active role in promoting the freedom of citizens, and that real freedom can only exist when citizens are healthy, educated and free from dire poverty. Social Liberals believe that this freedom can be ensured when governments guarantee the right to an education, health care and a living wage, in addition to other responsibilities such as laws against discrimination in housing and employment, laws against pollution of the environment, and the provision of welfare, all of which would be supported by a progressive taxation system.

As with many political philosophies, there are several forms and variations of Liberalism, including the following:

• Conservative Liberalism is a variant of Liberalism representing the right-wing of the Liberal movement, and combines liberal values and policies with conservative stances. Unlike Liberal Conservatives, however, who tend to be more committed to authority, tradition and established religion, Conservative Liberals are supporters of the separation between church and state. It also differs from Libertarianism in that it is far less radical in its economic program, and in its support for an active defense policy and military interventions.
• Economic Liberalism is the theory of economics in Classical Liberalism, developed during the Enlightenment, particularly by Adam Smith, which advocates minimal interference by government in the economy. Libertarianism, Neoliberalism and some schools of Conservatism, particularly Liberal Conservatism are often referred to as Economic Liberalism.
• Neoliberalism refers to a program of reducing trade barriers and internal market restrictions, while using government power to enforce opening of foreign markets. In some ways it is a modern attempt, championed by Conservatives like Ronald Reagan (1911 - 2004) and Margaret Thatcher (1925 - 2013) since the 1970's, to revert to a more pure Classical Liberalism.
• American Liberalism is largely a combination of social liberalism, social progressivism, and mixed economy philosophy. It is distinguished from Classic Liberalism (see above) and Libertarianism, which also claim freedom as their primary goal, in its insistance upon the inclusion of positive rights (such as education, health care and other services and goods believed to be required for human development and self-actualization) and in a broader definition of equality.
• National Liberalism is a variant of Liberalism commonly found in several European countries in the 19th and 20th Century, which combines nationalism with policies mainly derived from Economic Liberalism (see above).
• Ordoliberalism is a mid-20th Century school of Liberalism, developed mainly in Germany, emphasizing the need for the state to ensure that the free market produces results close to its theoretical potential.
• Paleoliberalism is a term that has at least a few distinct, though largely ambigious, meanings, including extreme Liberalism, and very socialist or socially libertarian Liberalism, and opposed to Neoliberalism (see above).
• Cultural Liberalism is a liberal view of society that stresses the freedom of individuals from cultural norms.