It is somewhat of a cliche among the classical liberals to think of democracy as being a threat to liberty and that the only way of protecting liberty is to limit democracy. That's deemed the best way to avoid tyranny of the majority. This view prevails equally among the majority of classical liberal philosophers and among many practical statesmen, most notably American "Father of the Constitution" James Madison. Beneath the surface of this "concern" for liberty there has been always a distinct note of contempt for the ordinary folk, for the stupid rubes who would ruin everything if left to govern themselves according to their unenlightened biases and whims. Very slyly, many a critic of democracy would say even that the rule of the mob leads to big government and socialism because they want free money from the taxpayer, and are going to elect the demagogues to provide them with the transfers.
However, if historical experience of the 20th century had shown anything with clarity it is the fact that the trend of modern centralized nation state to grow immensely actually did not go hand in hand with incrased "democracy". If anything, it well may have been the other way around - that democracy, in other words, a more direct electoral control and political decentralization, was destroyed together with liberty by the alienated bureaucratic and judicial elites, short-circuiting all the standard rules of constitutional governance and especially local self-government. The choice, in this perspective, would not be the one between liberalism and democracy, but rather between the tyranny of majority and the tyranny of minority. Far from being an offshoot of democracy, the modern national welfare-warfare state was an anti-democratic coup d'etat par excellence, a true tyranny of the minority, imposed through administrative and regulatory centralization behind the back of the voter. Big government in the 20th century was not a project of the stupid rubs, but rather of their Wise Overlords from the political, intellectual and financial elites.
If we look a bit deeper into this problem, we shall see that this was not by accident; a taste for an elitist rule by the few is very obvious among the many "liberals" and "constitutionalists". For example, so much touted Madison's warning against tyranny of majority was just a thinly veiled plea for the tyranny of minority. Don't forget that the argument in the Federalist 10 allegedly warning of tyranny of majority actually offered an argument for a large, more centralized state as a "remedy" for the "factional strife" of the republic under the Articles of Confederation. The same man who developed the canonical and most influential justification of the new Constitution was the one who advocated bitterly, just few months before that, a strongly centralized government with swiping powers of the Congress and President, including the veto power over the state laws and the right of the federal military to invade the grumbling states. Those are the same people who believe that nine unelected and politically well-connected lawyers in the black robes in Washington D.C. should have a monopoly in interpreting the Constitution and an implicit law making power!
However, American political tradition is so wonderful because it offers us a plenty of "basic symbols", political figures, books and documents to fight this tendency; to articulate and defend the idea of liberty preserved by democracy, i.e. by local self-government. Just read the Kentucky and Virginia resolutions of 1798 written by Jefferson and Madison (yes, the same flip-flopper Madison who changed his mind in the meantime) in which the idea of state nullification is elaborated - a right of states to refuse to apply an unconstitutional federal law. Or the noble tradition of secession, which has been repeatedly used by both Northern and Southern states. Or take the books of the authors like Abel Upshur, Litleton Waller Tazawell or John Taylor of Caroline in which the theory of the union as a compact between the peoples of sovereign states is most brilliantly elaborated. We have the beautiful intellectual weapons at hand to help us fight the centralizing ideology and defend an old idea of liberty in a new and unfavorable environment - that of the post-modern centralized and tightly controlled government. And herein lies the historical significance of American political culture! It gives us a manual how to bring back classical liberalism.