The relationship between liberalism (in the European sense) and the state is one of the most ambivalent problems of modern history. It cannot be discussed without taking into account previous experiences with totalitarian regimes. Some radical liberals regard the state as their natural enemy, but have to admit that rules of behaviour need to be accepted and enforced in order to avert chaos and irrational anarchy. Therefore, even these liberals are obliged to accept some common values, irrespective of the intraliberal discussion about the importance of certain political procedures and their results. Free societies can be self-regulating to a large extent, comparable to a healthy human body, but they are not perfect under all conditions. Can the state be useful and play the role of a social therapist, at least in emergency situations? The author discusses the limited knowledge of governments, resistance to reasonable proposals, the function of reliable information and the social function of the state. Total self-regulation of legal and institutional developments by spontaneous processes is shown to be defective, if not insufficient. Nevertheless, the concentrated and dangerous power of the state must be controlled by law and restricted as far as is reasonable. Total privatisation of all state functions, however, is shown to be irrational. During the 19th century, the state became more liberal, more restricted in its powers, and therefore more efficient. This induced the ruling forces to start the military and political catastrophes of the 20 th century. However, after the Second World War, a limited return to liberal principles proved to be both unavoidable und successful. This was the result of the return to sound liberal principles while at the same time specific concepts developed by liberals for the reformation of the state were successfully applied.