Words that confuse me: 'liberal'

Growing up in the UK in the 90s and 00s, the Liberal Democrat Party was the main option for left-wing voters who didn't trust Tony Blair's 'New' Labour Party. Though (or perhaps because they were) electorally something of a running joke, always third and never in a position to contest for second, they stood for everything that real politicians lacked the conscience to stand for. They were, or at least seemed like, a party of compassion in an age of spin, a party of reason and intellect in an age of populism, the first party beside the Greens to take ecological issues seriously and so on.

I was proud to help my dad campaign for them in the 2001 and 2005 general elections, to support him in his (ultimately unsuccessful) bid to be a Lib Dem councillor, and to vote for them twice myself, at a by-election in 2005 and again in 2010 - though in the latter case, the choice proved profoundly misguided. It will be a long time before I vote for them again, I suspect, but that's a different story.

That was my first experience with 'liberalism'. In college and university, studying philosophy, I had my second, in John Stuart Mill's 'On Liberty' and related reading. As presented in that book (though a broader picture of Mill's work is more complex), liberalism is a primarily social doctrine about ensuring equality of treatment for all and maximising personal freedom, particularly of culture and expression. It fit very well with my understanding of 'liberal'.

So I was very surprised, when working as support in a sociology of education lecture, to hear the lecturer say that the father of classical liberalism is Adam Smith, he of 'The Wealth of Nations', which to me at the time was the founding work of the profoundly right-wing ideology of laissez-faire capitalism.

I was discussing this contrast with a friend a couple of weeks ago (hi Andy!) and he opined that 'liberal' is a meaningless term these days. It's certainly hard to reconcile a term that can refer both to Mill and Adam Smith, or in a more modern frame to both John Maynard Keynes on the left and Milton Friedman on the right.

Partly, it's to do with the growing gap between American and British English. Even Wikipedia has had to admit that there's a split developing. Roughly, in Britain where socialism has always traditionally represented the left, 'liberalism' is generally taken in a more right-wing sense (though this is less true in the middle class, who I think are less influenced by a socialist conceptual scheme), whereas in America, where socialism has been so thoroughly demonised that it's a political smear, 'liberal' is the safe (or at least safer) label for a left-wing politician. It wouldn't be the first time that I've absorbed the American definition of a term over the British.

Anyway, I'm interested to hear if anyone else is as confused as I am by all this. What does 'liberal' mean to you?

(Sidebar: let's keep the - entirely justified - complaints about the behaviour of the lib dems since 2010 elsewhere, please? None of us are happy about it, but it's a debate for a different time.)