This book is about the twentieth century, although centuries are of course not real historical units. What happened in the first period of that century definitely started emerging during the last decades of the nineteenth century. The Second Industrial Revolution of that period had its real fruition during the next century. The revolts of the peripheries, the rise of wild nationalist and social conflicts, extremism, proto-fascism, communist ideology were all born at that time. The first chapter of this book on the twentieth century consequently incorporates phenomena from the late nineteenth century. The main historical processes of the twentieth century also did not end in 2000, but continued in the early decades of the twenty-first century. Globalization, globalized deregulation, and speculative, casino-type banking had their painful backlash in 2007–8, the most serious Great Recession that did not end in Europe before the late 2010s. The last chapter of the book thus incorporates the very first decades of the twenty-first century as well.

Looking back over that longer twentieth century, one may imagine Charles Dickens's feelings when he reflected on the bloody ending of the eighteenth century. He opened his 1859 A Tale of Two Cities with the words: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair …”

Indeed, as Sir Isaiah Berlin expressed it, the twentieth century was the most horrible century of Western history. Eric Hobsbawm characterizes it as the Age of Extremes, “a sort of triptych or historical sandwich: a quarter of a century of a ‘Golden Age’ between two, equally long periods of catastrophes, decomposition and crisis” (Hobsbawm, 1994: 1, 6). Mark Mazover gave the provocative title Dark Continent to his book on Europe's twentieth century, which “brought new levels of violence into European life, militarizing society … killing millions of people with the help of modern bureaucracies and technologies” (Mazover, 1998: 404).

World War II shocked Europe and the world. The continent was literally decimated, losing 10 percent of its population on average, and as much as 14–16 percent in some of the countries. Twenty to thirty million uprooted people migrated within the continent, including expelled Germans from Central and Eastern Europe and half of the Jews who survived the industrialized Holocaust. In addition to the human cost, the war had also caused physical devastation. Half of the total European railroad capacity was destroyed, along with 70 percent of Europe's entire industrial infrastructure. Several countries lost one-third to one-half of their total urban housing stock, rendering millions homeless. Food and energy production that did survive satisfied only a fraction of the need, and, as a result, calorie intake was reduced to merely half of its pre-war norm in several countries.

Moreover, war exhaustion and devastation led to shocking hyperinflation in seven countries, which, in its most extreme case reached 12 percent per hour. Such severe hyperinflation caused money to lose its value and forced people to return to trade in kind. Two generations of progress were destroyed, and most countries declined back to their economic level in the 1870s–90s. Worst of all was the repetition of the deadly trend: World Wars I and II were so closely connected that some characterize them as a single Thirty Years' War of the twentieth century, with an armistice in between. By 1945, including the death toll, declining birth rates and increase of disease, these wars had eliminated 110–20 million people and wounded and crippled about four times as many.

After all of this, how could Europe recover? How could it rebuild homes and life? How could it prevent continued repetition of war? A return to the prewar economic nationalism that characterized history's most devastating Great Depression and war preparation was out of the question.

Out of two world wars, the unprecedented depression and postwar desperation, however, emerged a new mentality, a new appreciation for the importance of solidarity and the essential role of the state in economic affairs, as championed by John Maynard Keynes and Karl Polanyi. As governments began to recognize their responsibility for human needs and to promote more egalitarian income distribution, the postwar reconstruction of Europe increasingly included a modified capitalist system, a managed social-market economy.