ABSTRACT
The debacle of liberalism in the nineteenth century occurred when the thinking of liberals was arrested by their misunderstanding of laissez-faire and of the classical economics. The real problems of modern societies arise where the social order is not consistent with the requirements of the division of labor. The reformers of liberalism must aim, therefore, at correcting the conditions under which such unearned incomes arise, and in so far as the reforms are thoroughgoing and effective the unearned incomes will not arise. Liberalism is radical in relation to the social order but conservative in relation to the division of labor in a market economy. In the liberal philosophy the ideal regulator of the labor of mankind is the perfect market; in the collectivist philosophy it is the perfect plan imposed by an omnipotent sovereign.
