General-welfare liberalism steers a middle ground between unbridled classical liberalism (laissez faire) and the more extreme ideologies, such as socialism, that had become popular in Europe. An amalgam of individual rights and active government, it consists, as described in the beginning of the chapter, of two main parts.

The general-welfare component assigns government three important social and economic functions to smooth the rough edges of capitalism. First, it calls for government to manage the overall economy in order to minimize unemployment and inflation and encourage growth, an activity called macroeconomic policy. Second, government is asked to provide needy individuals with basic goods and services. Proponents of general-welfare liberalism interpret poverty not as a personal weakness but as resulting in large measure from the failure of economic institutions, and public institutions have a duty to compensate the victims of this malfunctioning. Politicians debate furiously about who deserves help and how much is required, but they usually agree on the general principle of government assistance. Government's third function is to enact measures to protect the public from the perils of industrial life--unemployment, environmental pollution, dangerous products, consumer fraud, catastrophic illnesses, hazards in the workplace, and natural disasters--with which they as individuals acting alone cannot reasonably be expected to cope. This aid is not a matter of assisting the destitute; even well-off citizens are entitled to these protections.

The philosophy's second major component, liberalism, reaffirms classical liberalism's central values. We continue to live in a "private" society in which individualism, political liberties, personal property, limited government, and capitalism hold sway. The government has indeed swelled in size and purpose, but in most key respects the ideas voiced by the Republic's founders influence how the political apparatus carries out its responsibilities.

Consider what general-welfare liberalism does and does not encourage:

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To sum up, general-welfare liberalism represents an accommodation of classical liberalism, with its emphasis on political equality, personal rights, private property, and individualism, to the harsh realities of corporate capitalism, a system that raised the standard of living in the United States to unprecedented heights while subjecting hundreds of thousands of individuals to financial insecurity and physical and emotional strain.

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