The article examines the rapidly diminishing capacity of social democratic parties to offer a credible response to the crisis of capitalism. Moderate social and economic reforms made possible by the expansion of the state could be pursued so long as this expansionary role coincided with the interests of capital. But with the onset of prolonged recession this coincidence of interests has largely disappeared, leaving social democracy in the difficult position of having to choose betwee preserving and extending reforms or continuing to satisfy the requirments of capital. In most cases it has chosen to sacrifice reform on the altar of electoral pragmatism.