In Europe and the United States, in the end of the 19th century and the early 20th century, governments started to intervene massively in the economy; this trend sky-rocketed with World War I, and even more so after the Great Depression of the 1930s. People like L.T. Hobhouse theorized why and how a government could intervene in the economy without the country becoming a socialist planned economy. They took the name of new liberals, to signify how they endorsed the evolving tradition of political liberalism, while rejecting the radical element from the classical liberal school of economic thought as well as the then-revolutionary elements from the socialist school.
New liberals believe that while some individual freedom should be guaranteed, classical free-market liberalism had failed to protect the basic rights of citizens, and that government is the solution to many social and societal problems. New liberals think of their stance as a pragmatic midway between socialism and classical liberalism.