The live wire (typically called the "hot" wire) is the "source" of electricity from the utility, and the neutral wire is the return. In essence the live wire provides 60Hz 240 VAC relative to ground, and the neutral wire is ground. You need both to complete the circuit for electricity to flow from the utility to ground.
You might wonder what the difference between the neutral wire and the ground wire is. Essentially they're the same, and in fact are tied together at the service entrance. The neutral is provided for safety purposes:
1. By providing a low resistance path to ground it ensures that the chassis of your appliance is at the same potential as ground, and hence you won't be shocked if you touch the appliance and ground at the same time (such as when opening the door of your dishwasher wile touching the water faucet at the same time). The neutral wire doesn't provide as safe a path to ground because it is always energized, meaning it carries current. From V=iR the greater the current flowing through the neutral wire the greater the potential difference between neutral and ground at the appliance.
2. By providing a positive connection to ground in case of an electrical short inside the appliance. If the hot and neutral wires come in contact (say through a a frayed wire or faulty winding in an electric motor) it's possible for the neutral to be exposed to high voltage, so if the chassis of the appliance was connected to the neutral wire it would be energized and hence dangerous. Using a separate wire for ground therefore provides an extra layer of protection against injury from a short inside the appliance.