Following the Second World War, the victorious Western capitalist countries were confronted with problems of reconstruction. Three major paradigms of economic and political organisation presented themselves: competitive market capitalism, hierarchically organised state socialism and welfare social democracy. Competitive market capitalism continued in the USA, but in the rest of the world it had suffered serious set-backs. The inter-war depression and the resounding defeat of right-wing forces during the war had weakened the legitimacy of capitalism and the Western European countries were also confronted by indigenous liberation movements in their colonies. The Soviet planned economy had emerged as a challenge to capitalism. The Western states had to ‘win the peace’. and to do this coordinated welfarist societies were devised. In this chapter, I outline the initial successes of West European social democracy which introduced coordinated welfarist economies. The focus here is on the British Labour Party, which is used as a reference point for European social democracy.

In 1945, only 28 years after the Bolshevik Revolution in Russia, social democratic-led governments (sometimes in coalitions or with the support of communist or liberal parties) came to power through the electoral process in the major Western European countries. Governments took office that offered an alternative social democratic form of capitalism to the liberal capitalism of the inter-war period. These governments adopted a piece-meal gradualist policy of reforms, which was predicated on the promotion of equality, and social justice. In practical politics, ‘social democratic’ policies – promoting equality of opportunity and a wider democracy, which often included the extension of public ownership – were also supported by liberal and conservative parties.

In the UK in the 1945 general election, the Labour Party gained 47.7 per cent of votes – giving Labour a majority of 146 Parliamentary seats. Similar political developments occurred in Western Europe: socialists and communists secured sufficient electoral support to form or to participate in governments. In the Scandinavian countries social democracy was particularly strong. Thought the Left was clearly in the vanguard, conservative political groups had a significant following. In the UK, for example, the Conservatives received 39.7 per cent of the vote, giving them 210 seats. Even in what has been called a landslide victory, Labour received only just over a third of the votes of the electorate (the total number registered to vote).