Liberalism generally holds that legitimate political power is limited and is to be impartially exercised, only for the public good. Liberals accordingly assign political priority to maintaining certain basic liberties and equality of opportunities; they advocate an essential role for markets in economic activity, and they recognize government's crucial role in correcting market breakdowns and providing public goods. Classical liberalism and what I call “the high liberal tradition” are two main branches of liberalism. Classical liberalism evolved from the works of (...) Adam Smith and the classical utilitarian economists; its major 20th century representatives include Friedrich Hayek and Milton Friedman. The high liberal tradition developed from John Stuart Mill's works, and its major philosophical representatives in the 20th century are John Dewey and, later, John Rawls. This paper discusses the main distinguishing features of the classical and the high liberal traditions and their respective positions regarding capitalism as an economic and social system. Classical liberals, unlike high liberals, regard economic liberties and rights of private property in productive resources to be nearly as important as basic liberties. They conceive of equality of opportunity in more formal terms, and regard capitalist markets and the price system as essential not only to the allocation of production resources, but also as the fundamental criterion for the just distribution of income, wealth, and economic powers. High liberals, by contrast, regard the economic liberties as subordinate to the exercise of personal and civic liberties. They are prepared to regulate and restrict economic liberties to achieve greater equality of opportunities, reduce inequalities of economic powers, and promote a broader conception of the public good. And while high liberals endorse markets and the price system as essential to allocation of productive resources, they do not regard markets as the fundamental criterion for assessing just distributions of income, wealth, and economic powers and positions of responsibility. The paper concludes with some reflections upon the essential role that dissimilar conceptions of persons and society play in grounding the different positions on economic justice that classical and high liberals advocate. (shrink)