Unlike the crises of the early twenties, and the seventies and eighties, the Great Depression caused the center of gravity of the political system to shift in a social democratic direction. Liberal, conservative, and Christian democratic parties alike came to accept, and often spearhead, the need for economic policy interventionism and the political correction of market outcomes. Initially, it seemed that Western European economies would travel sharply divergent trajectories. While Scandinavian social democrats came to establish political and ideological dominance, the Nazi dictatorship destroyed organized labor in Germany. In Britain and the Netherlands, the liberal regime seemed to have survived with only minor alterations. Yet, despite the vastly different political fate of social democratic parties in the thirties, the new policy regimes all shared a basic rejection of the “liberal” political economy of the twenties. As Peter Temin has argued, “The Depression ushered in an age of moderate socialism, albeit in many variations.” And after the defeat of the Nazi regime, political convergence was added to convergence in economic policies.

In the eyes of many contemporaries the thirties marked a change from a regime based on the trust in the forces of the free market to a regime that recognized the inherent deficiencies of markets and assigned the state the task of correcting market outcomes. That the goal of internal equilibrium instead of a fixed exchange rate now achieved priority seemed the logical, if somewhat belated, consequence of general suffrage.