Contemporary Europe struggled with the legacies of the postwar era. The incredible economic boom of the postwar decades came to a screeching halt in the early 1970s, when OPEC, the international consortium of oil-producing nations, instituted an embargo of oil in protest of western support of Israel in the Yom Kippur War of 1973. Gas prices skyrocketed, and the incredible economic growth of the postwar era simply stopped, never to regain the momentum it had from 1945 – 1973. Those critical decades of the baby boom and economic boom had left their mark in several ways, however, resulting in social democracy, large immigrant populations, and high standards of living. Contemporary European politics have grappled with each of those factors in turn.

Politically and socially, one of the most difficult legacies of the postwar years has been immigration. While racism was always a factor in Europe, during the boom years immigrants were generally regarded as at the very least “useful” for European countries and their economies. They did the jobs that Europeans did not want and formed a vital part of the economy of western Europe as a whole. When the economic boom ended, however, they were rapidly castigated for their supposed laziness, penchant for criminality, and failure to assimilate – in a word, they were the scapegoats for everything going wrong with economics and social issues in the post-boom era. Thus, the far right in Europe was reborn, a generation after the defeat of fascism, in the form of harshly anti-immigrant political parties, often with a smattering of fascistic and anti-Semitic rhetoric mixed in (France’s National Front was the first, and remains a powerful force in French politics).

The new European far right called for extremely limited quotas for immigration, laws banning the expression of non-Christian religious traditions (most importantly, those associated with Islam), and a broader cultural shift rejecting the tolerance and cosmopolitanism of mainstream European culture after the war. They also attacked non-white citizens of European countries, citizens born in Europe to immigrant parents. In other words, citizens of immigrant ancestry were legally the same as any other citizen, but the far right capitalized on a latent racist definition of British or French or Swiss or German, as white†. This racially-based definition and understanding of European identity was simply factually wrong by the 1960s and 1970s: there were hundreds of thousands of non-white Europeans who had been born and raised in the countries to which their parents or grandparents had immigrated, but it remained the basis of the appeal of far right politics to millions of white Europeans.

While the far right has gained strength in many European countries over time, of greater overall impact was the changed identity of mainstream center-right conservatism. This form of conservatism is often called “neoconservatism” to differentiate it from the earlier form of postwar center-right politics. By far the most important change within neo-conservatism was that the center-right belatedly came to reject the welfare state. The compromise between left and right that had seen a broad endorsement of nationalized industry, free health care and education, subsidies for housing, and strong unions definitively collapsed starting in the mid-1970s. Neoconservatives blamed the welfare state and unions for exacerbating the economic crisis of the 1970s, arguing that the state was always inefficient and bloated compared to private industry, and they promised to do away with unneeded and counterproductive regulation in favor of unchecked market exchange.

The iconic neo-conservative politician was the British Prime Minister Margaret Thatcher, who held office from 1979 to 1990. Thatcher acquired the nickname “the Iron Lady” for her blunt manner of speaking and her refusal to compromise. While prime minister, Thatcher privatized a number of industries in Britain, most importantly the railways. She took a hard line with unions, shutting down northern English coal mines rather than giving in to the demands of the coal miners’ union (the English mining industry simply shut down as a result – it has never recovered). She slashed government subsidies for various industries, resulting in an explosion of unemployment in manufacturing areas.

The sectors of the British economy that benefited from Thatcherite policies were financial in nature: banks in particular thrived as regulations were dropped and banks were legally allowed to pursue vast profits through financial speculation. Britain began its transition toward what it is in the present: the dynamic, wealthy financial and commercial center that is London surrounded by an economically stagnant and often politically resentful nation. Thatcher herself was a polarizing figure in British society – while she was reviled by her opponents, millions of Britons adored her for her British pride, her hard-nosed refusal to compromise, and her unapologetic, Social Darwinist contempt for the poor – she once advised the English that they ought to “glory in inequality” because it was symptomatic of the strong and smart succeeding.

The British economy began to recover as a whole in the early 1980s, but the major reason that Thatcher stayed in power was her success in selling an image of strength and trenchant opposition to British unions, which had reached the height of their influence in the mid-1970s. A brief war over the (strategically and economically unimportant) Falkland Islands in the Pacific between Argentina and Britain in 1982 also buoyed her popularity with patriotic citizens. Finally, the British Labour party was in disarray, split between its still genuinely socialist left wing and a new more moderate reform movement that wanted to abandon socialist rhetoric in favor of straightforward liberalism. Thus, Thatcher remained in power until 1990, when her own party decided she was no longer palatable to the electorate and replaced her with a somewhat forgettable English politician named John Major.

Outside of Britain, the essential characteristics of Western and Central European politics were in place by the 1980s that remain to this day. Center-right parties from Italy to Germany and from France to Britain correspond to the Thatcherite neo-conservative model, embracing the free market and trying to limit the extent of the welfare state (although none of these parties advocate getting rid of the welfare state entirely; generations of Europeans, including people who vote for center right parties, expect free health care, education, and social benefits). Most center-right parties outside of Britain have been less willing to truly gut the welfare state than was Thatcher and her conservatives, but the general focus on the market remains their defining characteristic overall.

On the other side of the political spectrum, the major change within left-wing parties was the final and definitive abandonment of Marxist ideology. Again, Britain provides the iconic example: the triumph within the Labour Party of a centrist faction that created “New Labour,” a political philosophy that supports the welfare state but also accepts the position that the free market is the essential motor of economic growth. The iconic figure of New Labour was the prime minister Tony Blair, who held office from 1997 – 2007. Even in countries whose major leftist parties had the word “socialist” in their titles – France’s Socialist Party, for example – the whole notion of revolution was gone by the 1990s. Instead, the center-left parties came to be the custodians of the welfare state while belatedly joining the center-right in favoring market economics in the private sector.

Broadly speaking, the defining argument between mainstream leftist and mainstream rightist parties leading up to the present is about how much free-market deregulation to embrace. Many Europeans have become attracted to the far-right parties mentioned above as much because the two sides of mainstream politics are almost indistinguishable; to many Europeans, the far-right seems like the only “real” alternative. In turn, with revolution off the agenda, the far left in Europe is represented now by the Green parties. Green parties (the strongest of which is Germany’s) are very strong supporters of environmental legislation and are the most hostile to free market deregulation of any political faction, but they remain limited in their electoral impact.