The core of liberalism is the decentralization of initiative. This is its great value if knowledge and creativity are diffused through the population and not subject to aggregation in some central authority. On this view, the compelling fact about liberalism is that, as Friedrich Hayek and others in the Austrian school of economics might say, it fits the epistemology of a creative social order. It does this because it gives autonomy to individuals and their own spontaneous, changing organizations. One might take such autonomy to be the central value of liberalism, or one might take the autonomy to be a means to other things, such as, especially, welfare. Nevertheless, as virtually all agree, we need government to secure our liberty. This generally means democratic government, and in the modern era of large states, it means representative democracy. Indeed, already in the days of the colony of Massachusetts, representation was necessary because the whole community could not possibly have met to govern. Each Massachusetts community of at least 120 citizens had one representative, and an additional representative was added for each additional 100 citizens. Today, the people of Massachusetts have one representative in the U.S. House of Representatives for roughly 640,000 citizens.

The Austrian vision of distributed knowledge is consistent with John Stuart Mill's grounding for his principle of liberty – that individuals have the best knowledge of what their interests are. This claim can be qualified, of course, in ways that the individual would allow.