We get detailed description of liberalism in the work of Locke, Bentham and Adam Smith. At that time, its form was negative and it was known as individualism or classical liberalism. In 19th century, John Stuart Mill reformed it to positive form. 

We can differentiate traditional liberalism and modem liberalism on the following basis :

• With regard to state : 

In traditional liberalism, state is regarded as necessary and although its existence was mandatory, but in the context of individual freedom, it was thought to be bad. In modem liberalism, the state is regarded as positive goodness. 

• In respect of personal liberty : 

Traditional liberalism emphasises on personal freedom and wanted to free the human race from religion and cultural chains of medieval period. It puts belief in free will and equality of individuals. Modern liberalism also advocates for all round development of an individual in all the areas. 

• With regard to personal wealth and capitalism : 

Traditional liberalism supports the principle of private wealth and in this form a particular group becomes synonymous to capitalism. It develops social inequalities. As a result, Marxist revolution takes place which opposed capitalism. Under this scenario, liberalism changed its doctrine to check the effect of Marxism and it gave birth to modem liberalism. This supports a public welfare state. It restricts private wealth and advocates for tax on capitalists. 

• In respect of economy : 

The economic society of traditional liberalism is common association which takes care of only aged persons. It overlooks the interests of common people. Modern liberalism advocates for mixed and controlled economy in place of market economy.