George H. Smith, in his new book The System of Liberty, gives us this explanation:
Although all of the proceeding explanations have merit, I have focused in this book on the one offered by Hayek. In particular, I have discussed how the presumption of liberty, when not accompanied with clear criteria of defeasibility, sometimes became so diluted as to be rendered ineffectual as even a theoretical barrier to the growth of state power. This was especially true for those liberals who placed more stress on the ‘public good’ or ‘social utility’ than they did on natural rights; and when the Bethamites later excluded natural rights altogether from the liberal lexicon, the game was essentially over. Without this moral foundation, liberals were reduced to quibbling over what governmental measures did and did not promote the public good, when there were no longer definite standards to decide such matters from a liberal perspective. It is scarcely coincidental that those nineteenth-century liberals, such as Thomas Hodgskin and Herbert Spencer, who protested most vigorously against the incursion of state power were also strong advocates of natural rights.
Of course, one could argue that Hayek was part of the problem….