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His "liberal of the old type" is of course what we would call a classical liberal, not a modern "liberal", who is a socialist who has Orwellianly appropriated the word "liberal".

The most effective way of making people accept the validity of the values they are to serve is to persuade them that they are really the same as those they have always held, but which were not properly understood or recognized before. And the most efficient technique to this end is to use the old words but change their meaning. Few traits of totalitarian regimes are at the same time so confusing to the superficial observer and yet so characteristic of the whole intellectual climate as this complete perversion of language.
The worst sufferer in this respect is the word ‘liberty’. It is a word used as freely in totalitarian states as elsewhere. Indeed, it could almost be said that wherever liberty as we know it has been destroyed, this has been done in the name of some new freedom promised to the people. Even among us we have planners who promise us a ‘collective freedom’, which is as misleading as anything said by totalitarian politicians. ‘Collective freedom’ is not the freedom of the members of society, but the unlimited freedom of the planner to do with society that which he pleases. This is the confusion of freedom with power carried to the extreme.

Here Hayek nails the "Orwellian" (Hayek's notes have Orwell reviewing Serfdom, in late '44, and Orwell chose the date 1984 by inverting the last two digits of the year of publication - 1948. So Orwell cannot be said to have invented the concept of word-meaning inversion - or at least not as late as the publication date of 1984) "Newspeak."

It is however ironic that Hayek, in a preface to a later edition of the full Serfdom text, discusses the American inversion of the word "liberalism" defensively. He mentions there his 'regret' at using so liberally a word which was perfectly understood in Britain at that time but which in America at that same time meant "very nearly its opposite" of the old British meaning.

It will take you a long way in translating leftist Newspeak if, whenever you hear the word "social" as a word or the root of a word, or you hear the word "public," you mentally pencil in the word "government" as a possible replacement. Thus "socialism" is accurately translated into "governmentism" - which is, aptly a synonym for "tyranny." And thus when the leftist says, "society should feed its children" no one can seriously question that someone in society should and must - but the leftist actually means nothing other than that the government should do it. "The public sector" is a circumlocution for "the government," too - and (as Milton Friedman vigorously asserts) a "public school" is a government school.

It is however ironic that Hayek, in a preface to a later edition of the full Serfdom text, discusses the American inversion of the word "liberalism" defensively. He mentions there his 'regret' at using so liberally a word which was perfectly understood in Britain at that time but which in America at that same time meant "very nearly its opposite" of the old British meaning.

I found the actual quote, which was sourced to the preface Hayek wrote for the 1956 edition:

The fact that this book was originally written with only the British public in mind does not appear to have seriously affected its intelligibility for the American reader. But there is one point of phraseology which I ought to explain here to forestall any misunderstanding. I use throughout the term "liberal" in the original nineteenth-century sense in which it is still current in Britain. In current American usage it often means very nearly the opposite of this. It has been part of the camouflage of leftist movements in this country, helped by the muddleheadedness of many who really believe in liberty, that "liberal" has come to mean the advocacy of almost every kind of government control. I am still puzzled why those in the United States who truly believe in liberty should not only have allowed the left to appropriate this almost indispensable term but should even have assisted by beginning to use it themselves as a term of opprobrium. This seems to be particularly regrettable because of the consequent tendency of many true liberals to describe themselves as conservatives.
It is true, of course, that in the struggle against the believers in the all-powerful state the true liberal must sometimes make common cause with the conservative, and in some circumstances, as in contemporary Britain, he has hardly any other way of actively working for his ideals. But true liberalism is still distinct from conservatism, and there is danger in the two being confused. Conservatism, through a necessary element in any stable society, is not a social program; in its paternalistic, nationalistic, and power-adoring tendencies it is often closer to socialism than true liberalism; and with its traditionalistic, anti-intellectual, and often mystical propensities it will never, except in short periods of disillusionment, appeal to the young and all those others who believe that some changes are desirable if this world is to become a better place. A conservative movement, by its very nature, is bound to be a defender of established privilege and to lean on the power o f government for the protection of privilege. The essence of the liberal position, however, is the denial of all privilege, if privilege is understood in its proper and original meaning of the state granting and protecting rights to some which are not available on equal terms to others.

As I mentioned elsewhere, American conservatism is a strange duck. Conservatism nurtures tradition, but American tradition is freedom - and freedom allows change. It is for that reason that conservatism is not really such a terrible name for Hayek's "liberalism."

Note that from my perspective "the denial of all privilege, . . . understood in its proper and original meaning of the state granting and protecting rights to some which are not available on equal terms to others" would certainly include the dismantling of the FCC's licensing of some few of us to be broadcasters and its consigning of the rest of to the role of mere listeners.

Here is this guy, writing this book back in the 1940’s, talking about what the lessons of socialism are and how people continually forget those lessons of history, and...here we are again 65 years later, and every single word he writes is applicable TODAY with absolutely no transposition or word substitution (although I admit, I have to continually transpose “conservative” for “liberal”...)

The most effective way of making people accept the validity of the values they are to serve is to persuade them that they are really the same as those they have always held, but which were not properly understood or recognized before. And the most efficient technique to this end is to use the old words but change their meaning. Few traits of totalitarian regimes are at the same time so confusing to the superficial observer and yet so characteristic of the whole intellectual climate as this complete perversion of language. The worst sufferer in this respect is the word ‘liberty’. It is a word used as freely in totalitarian states as elsewhere. Indeed, it could almost be said that wherever liberty as we know it has been destroyed, this has been done in the name of some new freedom promised to the people. Even among us we have planners who promise us a ‘collective freedom’, which is as misleading as anything said by totalitarian politicians. ‘Collective freedom’ is not the freedom of the members of society, but the unlimited freedom of the planner to do with society that which he pleases. This is the confusion of freedom with power carried to the extreme.
http://www.freerepublic.com/focus/f-news/1394906/posts?page=23#23

At the start of the Twentieth Century the term "liberal" meant the same in America as it still does in the rest of the world - essentially, what is called "conservatism" in American Newspeak. Of course we "American Conservatives" are not the ones who oppose development and liberty, so in that sense we are not conservative at all. We actually are liberals.
But in America, "liberalism" was given its American Newspeak - essentially inverted - meaning in the 1920s (source: Safire's New Political Dictionary). The fact that the American socialists have acquired a word to exploit is bad enough; the real disaster is that we do not now have a word which truly descriptive of our own political perspective. We only have the smear words which the socialists have assigned to us. And make no mistake, in America "conservative" is inherently a negative connotation just as surely as marketers love to boldly proclaim that the product which they are flogging is NEW!

I have my own Newspeak-English dictionary:

objective :
reliably promoting the interests of Big Journalism. (usage: always applied to journalists who are members in good standing; never applied to anyone but a journalist)

liberal :
see "objective," except that the usage is reversed: (usage: never applied to any working journalist)
progressive :
see "liberal" (usage: same as for "liberal").
moderate:
see "liberal." (usage: same as for "liberal").
centrist :
see "liberal" (usage: same as for "liberal").

conservative :
rejecting the idea that journalism is a higher calling than providing food, shelter, clothing, fuel, and security; adhering to the dictum of Theodore Roosevelt that: "It is not the critic who counts . . . the credit belongs to the man who is actually in the arena (usage: applies to people who - unlike those labeled liberal/progressive/moderate/centrist, cannot become "objective" by getting a job as a journalist, and probably cannot even get a job as a journalist.)(antonym:"objective")

right-wing :
see, "conservative."

conservative :
opposed to radical change of the sort which promote the idea that assigns authority to "liberals" while leaving the responsibility with those who work to a bottom line and therefore are subject to second guessing.