The political economy that emerged in Europe from the second world war was successful to an extent that remains underappreciated. At a ten-year interval Germany and France went through intense episodes of institutional and policy renewal. State capacity was lifted by rebalancing power away from parliament towards the executive branch, consolidated by majoritarian political systems. Government legitimacy was enhanced by associating expertise to democracy. Thanks to ideational leadership, social groups' expectations were refashioned and made compatible to low inflation, export-driven growth programmes. This new ‘purposeful state', profoundly different from the earlier liberal version, provided the underlying momentum of the European unification and a regulatory state steered by equalitarian productivism. Productivity eventually matched America's, with more equal outcomes. Applied to Britain and Italy, the model provides key insights on their underperformance. This convergence of democracy and productivity disrupts the corporatist political science consensus on the postwar – where change is unexplained – by upgrading the role of ideas and pluralist state agency.