The [British] government is making changes that accord with Conservative instincts -- favouring a smaller state and less top-down intervention. But there is also a willingness to try out ideas whose impacts cannot be predicted, amounting to “suck it and see” experimentation. This mix of cost-savings, reform and target-dumping disguises a more coherent underlying philosophy: the twin aims of reducing the size of government and bringing about a dramatic shift of power away from the centre.
Every government reflects the balance of domestic power. Inequality shifts that balance to favor certain groups over others. Because the natural logic of capitalism creates and sustains inequality through the ever-greater accumulation of wealth in ever-fewer hands, a government wedded to capitalism will always default to this purpose absent any demonstration of greater power by contending groups.
In this sense, what Marx called "bourgeois government" -- government by the private owners of social wealth -- can be assumed in capitalist societies as constant. The least amount of government will act to sustain capitalism, because without government, capitalism, and the property relations that it implies, cannot be sustained: the majority of people would not voluntarily submit to someone else's terms of employment if they didn't have to. Our laws are written in large part to ensure that we have to.
Liberalism evolved into a politics of "big government" out of an acknowledgment of this constant factor operating within the state. A government that "governs least" may be appropriate for a society whose economic affairs can be administered by free networks of small farmers and craftspeople, as Jefferson had hoped. But when the organization of all economic life falls to possessing minorities via "the compulsory nature of centralized authority," in Dick: Armey's words, then "less government" just means government for one part of society, and less for everyone else.
This is the sense in which liberalism came to embrace "big government" -- as a consensus policy arising from the conflict between classes. Big government added to the state's constant component a variable element: government for the rest of society.
That government for the rest of us functions as a variable phenomenon is plain to see in the various "reform" and deficit-reduction initiatives which have assumed priority-status. It is also evident in the cultural associations, for example, which have gained traction in the minds of Generations XYZ, that "Social Security won't exist when we retire," because "that's what they say." The expectation that one should retire at all is now being whittled away at by the same popular trend setters in the corporate press as well.
Contemporary liberalism should be understood as advancing a conception of domestic "rights" under capitalism. One needs a big government to do this, because "small government" is assigned to preserving property relations alone. This raises important questions about how the inequalities attending capitalism can be addressed and eventually overcome, since big government is only variably responsive the public, while its "bourgeois" directive pushes constantly to make it less so.