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This article explores the relationship between faith communities and the liberal system of government which operates in contemporary Britain. The problem addressed is as follows: liberal democracy relies upon the assumption of the validity of certain general truths: human rights, social justice, individual autonomy, and so on. In our postmodern society, however, social fragmentation has eroded the validity of such assumptions, leaving no universal or neutral benchmark through which to judge competing truth-claims. In particular, different faith traditions posit potentially incommensurable claims about what constitutes a good society. This article assesses the suggestion that in our pluralistic and differentiated society, more and more social decisions should be left to the market or to private rather than collective judgment and responsibility. It suggests various possibilities for reconceptualizing liberalism: for instance, as a modus vivendi providing a framework within which different moral outlooks can 'live and let live', but suggests that liberalism can have a positive moral content of its own, and need not be merely a coping mechanism for dealing with diversity.