The Cambridge Malting House, an experimental school, serves here as a case study for investigating the tensions within 1920s liberal elites between their desire to abandon some Victorian and Edwardian sets of values in favour of more democratic ones, and at the same time their insistence on preserving themselves as an integral part of the English upper class. Susan Isaacs, the manager of the Malting House, provided the parents – some of whom were the most famous scientists and intellectuals of their age – with an opportunity to fulfil their ‘fantasy’ of bringing up children in total freedom. In retrospect, however, she deeply criticized those from their milieu for not fully understanding the real socio-cultural implications of their ideological decision to make independence and freedom the core values in their children’s education. Thus, 1920s progressive education is a paradigmatic case study of the cultural and ideological inner contradictions within liberal thought in the interwar era. The article also shows how psychoanalysis – which attracted many progressive educators – played a crucial role in providing liberals of all sorts with a new language to articulate their political visions, but, at the same time, explored the limits of the liberal discourse as a whole.