Individualism is at the core of liberal theory. It suggests that the individual should be at the centre of political thought and must always take priority over any group. Individualism stands in opposition to collectivist theories such as socialism. This belief leads liberals to be very concerned to limit the power of the state and is also linked to the idea of foundational equality — that every person is born of equal value and therefore, regardless of ability, should receive equal rights. This is the Enlightenment idea of foundational equality, which challenges the conservative idea of natural hierarchy. Liberals believe that human nature is essentially rational and that individuals are capable of making their own moral judgements and controlling their own destiny. Although selfish, rationality means that we understand that reason, rather than force, should be used to resolve conflicts. This should result in peace and progress in society. The liberal view of human nature is a much less negative and pessimistic one than that of conservatism. However, liberals have two differing interpretations of individualism.

Classical liberals favour the idea of egoistical individualism, the selfish individual who seeks only his or her own pleasure. This suggests a self-sufficient sovereign individual, who owes nothing to anyone else.

Modern liberals developed the theory of developmental  individualism, which focuses on the ability to flourish and achieve your potential; this may involve some form of state intervention to ensure that you are able to do this. Modern liberals such as T. H. Green have argued that individuals can also have common goals with others in order to achieve self-realisation