In Europe, liberalism refers mostly to the economic side of liberalism (IE laissz-faire). This is, in fact, pretty much the only definition of the word in France, and it's actually mostly the conservatives that bring about statist economic reform. In most Scandanavian and most other nations, it has two meanings, one like the French one, and one that's somewhere in between that and the American one.
In America, the meaning of liberal really doesn't resemble much what it does in Europe at all. Neither does conservatism, though. The philosophies in Europe and America were isolated from each other for a long time and developed wildly into different meanings. In America, the other European meaning also died a pretty quick death because the single-member district system usually denied such solidified "other" philosophies from getting elected, and liberalism increasingly became associated with more and more government and control over society, so that it actually somewhat resembles European conservatism. Today, it's pretty much trivial for someone who believes in radial laissez-faire to call themselves a "liberal" in the main Euorpean sense.