As European social democracy responded tentatively to the challenges posed by Soviet communism, fascism, the economic depression of the 1930s and the trail of destruction a new world war left across Europe, it went through a new transformation in its second act. This transformation was neither rapid nor straightforward. By processes of drift and layering, but also in response to big external shocks, European social democrats slowly revised their doctrine, programmes and practices.

Having settled on a parliamentary path to socialism, which now required the development of diverse electoral coalitions and relied on potential tactical alliances with bourgeois parties, they now had to reflect on social democracy's approach to capitalism. That process of revisionism started as a pragmatic and ad hoc response to immediate economic and political crises and electoral pressures, but by the 1950s it became a new doctrine, which revised the means of social democracy.

To chart this second phase in the history of European social democracy, this chapter explains how social democratic parties and intellectuals responded to the varied and challenging crises of the 1920s and 1930s, namely the rise of fascism and economic depression. Next, the chapter analyses how the economic consensus that emerged at the end of the Second World War set the stage for the revision of social democratic doctrine. The final section of the chapter charts how the end of the postwar consensus in the 1970s placed European social democracy on the defensive again. Along the way, the chapter explores variations in the practice of social democracy across Europe.

The interwar period: responding to different crises

The interwar years were disorientating because they brought European social democrats closer to political power (in some cases – in Germany, Austria, Britain and Spain – into government), but ultimately, they became distanced from the goal of emancipating workers through revolution and the overthrow of capitalism. The truth was that this was not an easy time to lead governments or to participate in electoral politics. The threat of fascism, the emergence of communist parties that competed for the same voters as social democratic parties and the Great Depression were big challenges to which European social democracy was ill-prepared.

In the few cases where social democrats found themselves in power, they entered government without a roadmap that led to socialism.