A Liberal Democratic system combines two different streams of thought regarding systems of governance.
Firstly, the word 'Liberal' is used with reference to a society which emphasises the individual rights and liberties of citizens. Obviously, the citizens must consent in general terms to the legal boundaries of the broader society which they inhabit.
A Liberal ideology emphasises certain forces within a society. Economically, Liberalism encourages the Capitalist system, which depends on the existence of a free market, in which individuals are free to participate in the production and distribution of goods and services for their own benefit. Politically, Liberalism encourages the limitation of the powers of government, the rule of law and the free association of individuals.
The word 'Democracy' refers to the notion of self-governance by the public. Democracy emphasises participation of citizens in decision making processes. It can be argued that Democratic societies are composed of citizens who voluntarily give up some of their rights, in exchange for the assumption that public policies will continue to represent the will of the people.
Democratic thought includes concepts such as the freedom of all individuals to engage in political activity, a state composed of representatives of the people and the provision of basic public welfare and education services to facilitate community participation in democracy.
Examples of Liberal Democracies in 2002 include the United States of America, Australia and Canada.