This article examines tensions in the egalitarianism of J. S. Mill and R. H. Tawney alongside national education systems to develop a critical theory of democratic equality. Mill and Tawney advanced strong conceptions of democratic equality but with meritocratic elements that foreshadowed liberal governmental practices that have reconciled substantial inequalities in modern capitalist democracies with official commitments to the moral equality of persons. These practices include IQ testing, educational tracking, Taylorism, and the deployment by social scientists of the “underclass” category. While Mill and Tawney partly prefigured liberal governmentality, they also offered the basis for a compelling democratic egalitarian response.