IT WAS amusing to be denounced as a "liberal" in a comment to a recent blog post, clearly by someone who knew nothing of the Economist's history. But it did raise the issue of why liberalism has become a dirty word in the mouths of both the right and the left.

This newspaper was founded in the great liberal tradition on the issue of free trade, and in particular the abolition of the corn laws. In the 19th century, the Liberals were the party of the rising bourgeoisie, and were indulged in a struggle with the power of the aristocracy, whose wealth depended on agriculture. The corn laws were designed to prop up agricultural prices and thus boost the income of the aristocracy. By doing so, they forced up the price of food; food that was consumed by the workers in the factories (owned by the Liberals). Self-interest thus played its part. But the founding editor, James Wilson, had a strong moral bent arguing that

We must emancipate commerce and industry from those trammels and restrictions with which short-sighted jealousies have fettered them

adding that

We seriously believe that free trade ... will do more than any other visible agent to extend civilisation and morality throughout the world - yes to extinguish slavery itself.

The moral element of liberalism was personified in William Ewart Gladstone, the grand old man of British politics, who was prime minister on four occasions and whose sanctimoniousness was much resented by Queen Victoria. Despite the modern caricature of liberalism as "tax and spend", Gladstone was a great believer in balanced budgets, arguing indeed that wars should be financed out of current expenditure (rather than borrowing or money-printing) to make the cost clear to the electorate; had this precept been followed, there would have been a lot less bloodshed in the 20th century. Much distress would also have been avoided had Gladstone been able to push home rule for Ireland past the House of Lords.

However, the modern left-right divisions were rather blurred in those days. One of the pioneers of social legislation, such as limiting the working hours of children, was Lord Ashley (later Earl of Shaftesbury), a Conservative grandee. Disraeli, Gladstone's great rival, extended the franchise as a means of outflanking the "grand old man"; he also used nationalism as a device to try and recruit the working classes as allies for the aristocracy, against the middle-class and manufacturing groups that made up the voting base of the Liberals.

In the long run, these tactics worked. The extended franchise created the impetus for the foundation of the Labour party. Its rise pushed many frightened middle class voters into the arms of the Conservatives, and the Tories were able to play the patriotic card against the Liberals, notably during the Boer war. By 1924, a generation after Gladstone's death, the Liberals were finished as a likely election-winning party.

Liberalism remained as a concept of course but in two distinct forms; social and economic. The social form might best be described as libertarian and favoured the rights of minorities; in America, of course, this was symbolised by the civil rights movement. As Lyndon Johnson recognised, the Democrats lost the south as a result. Significantly, the interest groups represented by the Democrats (union members, African-Americans) tended to favour higher government expenditure and regulation which is where the right-wing use of "liberal" became an insult.

But in Europe, the economic liberal tradition lingered on in the form of parties like Germany's free Democrats. Conservative parties tended to be "corporatist", seeking to buy off the working classes with sufficient benefits to head off the threat of communism. In Britain, the home of classical liberalism moved to the conservative party; one could argue that Mrs Thatcher was a 19th century liberal in her economic beliefs. As a result, "neoliberal" became a term of leftist abuse.

The modern positions of the Economist stick by and large to the traditional liberal agenda, favouring free trade of course and a reduction in government involvement (see the editor's special report on the state) but also gay marriage and the liberalisation of drug laws. The first set of views infuriates the left; the second the right. Few political parties share our agenda in full but at least, as a result, we are not too tied to one side or another. But we are still liberals in the classic sense and proud of it.