Between 1870 and 1914 a second industrial revolution forced rapid economic, political, and social change throughout most of the West. During the 1850s and 1860s Western countries consolidated earlier industrial gains and passed social legislation to improve working conditions. After 1870 heavy industry, financed by specialized banks, began to concentrate in cartels and monopolies, their owners and managers gaining unprecedented political and social power. This rapid growth and the wealth it generated were unevenly distributed. Consequently, resentments intensified between bourgeoisie and proletariat, between rural and urban labor, between craft and industrial labor, between labor and management, between advanced regions and backwaters, and between ethnic minorities and dominant groups. This wave of industrialization both drove and was driven by rapid technological development. Industrialists applied scientific research to engineering, creating new processes and devices that, in turn, spurred advances in transportation, communication, and energy use. Industrialization also drove urbanization. More and larger cities emerged as people increasingly left rural and backwater regions seeking work in the industrial centers. These rising industries required huge amounts of unskilled labor. Workers typically toiled for low wages, suffering terrible working and living conditions. Older craft unions gradually gave way to labor unions which, along with government intervention and increased productivity, helped to improve labor's standard of living. Socialist parties also emerged, turning the cause of labor into an international struggle.

By 1914 each of the major Western countries had responded to this second industrial revolution with varying degrees of success. Through the 1860s Britain was the most advanced industrial state and appeared to be the most progressive. However, after 1870, even as British industry expanded, British democracy was threatened by rising labor unrest and conservative reaction. France experienced slow, uneven economic development and swung between authoritarian and republican extremes. By 1914, France was divided between conservative elites and increasingly radicalized workers, all of whom mistrusted the Republic. In unified Germany, liberals failed to oppose Bismarck's Kulturkampf against the Catholic Church and attacks on socialists. Although Germany maintained some forms of democracy, Prussian authoritarianism prevailed, presiding over rapid industrialization that caused severe social dislocation. By 1914, Germany was the most advanced industrial state in Europe, with strong labor unions and a successful socialist party that was the lone voice of liberal reform. After unification the Italian government failed to overcome regional divisions or the conservative pressure of the Catholic Church. Workers joined radical parties, convinced the government would not address their needs, while the elites encouraged an expansionist nationalism. An economic backwater, Russia was composed of diverse cultures forcibly held together by the tsarist regime. Conservative tsars tried to insulate Russian from the West through "official nationality," while reformist monarchs encouraged westernization and industrialization within the context of traditional autocracy. Pan-Slavist intellectuals opposed many Western ideas, and thwarted liberals gave way to radical revolutionaries devoted to violent action. After the Civil War, the United States rose to surpass Britain and rival Germany as an industrial power. Immigration from Europe answered the labor demands of expanding industries, but the U.S. did not pass social legislation or develop a labor movement comparable to those of Britain or Germany.

The nineteenth century appeared to many as an age of unprecedented peace and prosperity. However, the late-century confrontation with modernization created and exacerbated political and social tensions, tensions many believed liberal democracy could not address.