Current debates about liberalism—especially about whether a free society can thrive alongside ever more urgent calls for government action—bring to mind an episode from the Edwardian era. It was then that the Liberal Party in Britain underwent a kind of identity crisis over policy and principle. Richard Burdon Haldane, later Viscount Haldane, stands out as a key figure in that story. Haldane (1856-1928) was “a picture of the well-fed but poorly slept” lawyer, John Campbell says, a man who combined professional success and public service. Now largely forgotten, Haldane embodied a political type that is familiar to Americans in the high-minded figures of the Progressive Era and in their descendants today, who possess an almost missionary zeal for human betterment.

In “Haldane: The Forgotten Statesman Who Shaped Britain and Canada,” Mr. Campbell, an investment banker with childhood ties to Haldane’s family, makes a persuasive case for his subject’s importance and, along the way, touches on larger questions of culture and governance. The book’s structure—less chronological than propelled by themes and causes—may challenge readers new to the story, but its wealth of detail and insightful character sketches will reward the effort.

As Mr. Campbell shows, Haldane’s family heritage adumbrated his public role. His English mother was descended from an eminent Tory jurist and lord chancellor (a position Haldane would himself occupy). On his father’s side, his grandfather and great-uncle both retired from military service to promote the evangelical movement in Scotland. Though strict Calvinism was at the center of the family’s Scottish home, Haldane lost his faith as a teenager. Over time, and perhaps without realizing the change, he transformed it into a secular commitment to reform and social progress.

Haldane studied classics and philosophy at Edinburgh University, but his six months at Göttingen, in Germany, had a greater effect. Idealist philosophy, with Hegel as its leading figure, came to guide his worldview, as did German social policies. His outlook was less empirical than that of his English counterparts—more inclined to abstract reasoning and arguing from first principles.

Even so, Haldane was a man of the world. After practicing law in London and making a good deal of money, he was elected to Parliament in 1885—at a pivotal moment, as Mr. Campbell shows. The Liberal Party had dominated British politics since 1830, but tensions among its members were growing even before William Gladstone split the party in 1886 over Irish Home Rule.

Mr. Campbell describes Haldane as a living embodiment of such tensions—between an older liberalism of laissez-faire economics and limited government and a new kind, which responded to the rising spirit of socialism and organized labor. (It was around this time that Marx’s ideas were being popularized in England.) The young politician sought a rationally organized state along German lines, what his friend Beatrice Webb called “a deliberately organized society.” Haldane’s liberalism went beyond the ideals of an earlier Liberal Party, which had sought to minimize the state’s checks on individual action. He preferred to follow Wilhelm von Humboldt’s idea that government intervention, especially in education, helped citizens cultivate themselves. He thought property owed a debt to society for guaranteeing the wealth it earned. While this new liberalism inspired Haldane and his colleagues to press for costly social reforms, it drove others toward the Conservative Party.

Early in his career, Haldane helped establish the London School of Economics, and he guided the University of London toward its becoming a true teaching institution. He advised colleges in provincial cities to extend their access to a wider range of students and social classes, and he drew on German models to improve technical education.

Oddly, though, it was in military matters that Haldane’s legacy is most notable. When, in 1905, a Liberal prime minister—Henry Campbell-Bannerman—reached an impasse with his party’s grandees, he offered Haldane the War Office, hoping that “Schopenhauer,” as he called him, could manage what was viewed as the cabinet’s most thankless job. The post gave Haldane plenty to reform. He restructured the army to cut costs and created an expeditionary force that could be quickly sent abroad with reserves at home to reinforce it. He also created a General Staff to facilitate planning. These changes helped Britain stop the German invasion of France in 1914 and led Sir Douglas Haig to call Haldane “the greatest secretary of war England ever had.”

A career capstone came with Haldane’s elevation to lord chancellor in 1912—the head of Britain’s legal system. As a longtime member of the judicial committee of the privy council, which heard appeals from the empire’s dominions, he played a “leading role” in shaping the development of Canadian law, according to Mr. Campbell. For a time, his knowledge of Germany, and fluency in the language, gave him a liaison role. After Wilhelm II asked him to join a meeting with the kaiser’s ministers, he joked about Haldane’s being the only Englishman to sit in a German cabinet. But tensions with Berlin made his position difficult. On a visit to London, the kaiser invited himself to lunch at Haldane’s home, intensifying doubt about his loyalty—“doubt that would, in time of war, bury Haldane’s reputation and political career,” Mr. Campbell writes.

If Haldane’s career anticipated later technocrats and reformists, as Mr. Campbell argues in this splendid portrait, World War I made him an outsider in the Britain of his day. After the war, few looked to Germany for models of any kind. Despite his sociability, Haldane, with his Continental orientation and intellectual bent, never quite fit Britain’s political culture. In retrospect, he seems more akin to John Dewey and other Progressive leaders in America than aligned with the British liberal tradition—which may account for why, though his accomplishments have lasted, the man himself has faded from view.

Mr. Hay is the author of “Lord Liverpool: A Political Life.”