From a distance of 60 years, it is hard to imagine the utter desolation of Europe after World War II. The mortality figures themselves defy conceptualization. In the European theater alone, the war dead numbered approximately 35 million. The Soviet Union suffered 16 million civilian deaths. An additional 3 million Russian soldiers died in Nazi prisoner-of-war camps. In Poland 5 million civilians perished. In Yugoslavia the figure was 1.4 million.

One of the war’s distinctly macabre and tragic aspects was that, in stark contrast to World War I, civilian deaths outnumbered military fatalities by a staggering ratio of 8-to1. The newsreel footage of charred cities and emaciated concentration camp victims is familiar, but these grainy, time-worn images fail to capture the accompanying psychological and moral devastation. After all, toward the war’s end many nations succumbed to bitter civil war between Nazi collaborators and antifascist partisans. France alone witnessed 9,000 summary reprisals in which resistants set themselves up as judge, jury, and executioner.

Where was Europe to turn for political renewal? In many formerly occupied nations, the only political force to emerge uncompromised was the communists, who had spearheaded the anti-Nazi resistance. The intoxications of V-E day – May 8, 1945 – were sweet but short-lived. Although one variant of the totalitarian menace had been vanquished, its Stalinist incarnation now dominated the continent from the Elbe to the Urals – a situation that was ratified by Allied leaders at Potsdam in July-August 1945. Could the United States be trusted to serve as a reliable guarantor of European security? (As it turned out, the answer would be an emphatic “yes.”) The traumas of world war rapidly metamorphosed into the uncertainties of cold war.

Given these formidable obstacles to renewal, postwar Europe’s rebirth is remarkable, and Tony Judt recounts the tale masterfully in “Postwar: A History of Europe Since 1945” (Penguin Press, 960 pages, $39.95). The narrative of renewal starts with economics. One of the key lessons that Europe’s fledgling postwar democracies drew from the 1930s was that severe economic distress breeds political extremism. The Nazis’ electoral breakthroughs during the early 1930s can be tied directly to the international economic crisis. Mr. Judt shows that the creation of the postwar welfare state was designed to ensure a level of economic stability that would prevent the masses from being tempted by demagogues and false prophets. Universal health care, unemployment benefits, paid vacations, and generous pensions provided the necessary socioeconomic incentive to keep democracy’s doubters in the fold.

In this respect, Europe was the beneficiary of much good fortune. The postwar economic growth rates on which the welfare state was built were some of the highest on record. Seemingly overnight, the nations of Western Europe rose from penury to consumer paradises – prototypical “affluent societies.” As Mr. Judt remarks: “In the space of a single generation, the economies of continental Western Europe made good the ground lost in forty years of war and Depression … European economic performance and patterns of consumption began to resemble those of the US.” The three decades between 1945 and 1975 were aptly baptized “les trentes glorieuses” – the “30 glorious years.” Economists and politicians naively assumed that the postwar boom would continue indefinitely. Today, we know better.

In the mid-1970s, the OPEC-induced rise in crude oil prices coupled with a precipitous decline in Europe’s export market brought the postwar expansion crashing to a halt. From an economic standpoint, Europe has never recovered its footing. Gradually the realization hit home that the welfare state’s long-term viability had been predicated on untenable long-term economic assumptions. Unpopular economic measures were necessary: cutbacks in public benefits, a reduction in deficit spending in order to curb inflation, allowing unprofitable economic sectors – mining or heavy industry – simply to fall by the wayside at the cost of escalating, double-digit unemployment.

In Britain, Margaret Thatcher accomplished these aims with alacrity, vowing to end “socialism” in Britain – by which she meant the welfare state model – forever. As Mr. Judt shows, in many respects Mrs. Thatcher’s privatizations and spending cuts set the stage for Tony Blair’s “New” Labor Party, which basically accepted the supply-side economic philosophy she bequeathed. In France, it was a socialist president, the durable Francois Mitterrand (1981-95), who during the 1980s played a semi-Thatcherite role, selling off state-owned industries to the private sector, reducing public expenditures, and nourishing the ethos of entrepreneurship. But in truth no European leader – Margaret Thatcher included – was willing to dispense entirely with the social safety net the welfare state provided. The social and political costs were politically unthinkable.

Mr. Judt’s erudition is formidable. But to his credit, he wears it lightly. His prose is lean, his metaphors vivid. Although his focus is primarily on political history, he impressively covers a broad array of cultural themes. Thus we are treated to learned disquisitions on the Beatles, youth culture, soccer, film, the decline of French intellectuals, architecture, and urban planning. Nor does “Postwar” neglect the nations of the European periphery: Spain, Portugal, Greece, and the lands of Eastern Europe all receive their due.

It was the momentous transition from dictatorship to democracy in Europe’s southern tier – Spain, Greece, and Portugal – during the 1970s that set the stage for communism’s collapse a decade later. Who would have thought that Spain’s fitful post-Franco evolution in the direction of parliamentary rule would have loomed so large in the political imagination of Eastern European dissidents like Vaclav Havel, Adam Michnik, and Jacek Kuron. If there are “heroes” in Mr. Judt’s narrative, it is unquestionably the plucky dissidents who, at great personal risk, challenged the communist system’s manifest brutality. The poetic justice of Mr. Havel replacing Gustav Husak (who had resigned in 1987 in favor of Milos Jakes, his one-time tormentor, as the leader of Czechoslovakia is a historical irony to savor.

The so-called “Velvet Revolutions” of 1989 are the high point of Mr. Judt’s narrative. For years experts decreed that the nature of the Soviet system made internal transformation impossible. But the manifest obsolescence of bureaucratic socialism’s “second wave” industrial economy meant that economic change was more or less inevitable. Would it be sudden and violent, or gradual and peaceable? Here, of course, the key figure is Mikhail Gorbachev, the reformer who let the genie of perestroika out of the bottle. Mr. Judt shows how Mr. Gorbachev was a figure trapped in a type of political no-man’s-land. He saw the need to induce qualitative change in order to rescue a moribund command economy, yet, to the very end, he remained paradoxically wedded to the Leninist model of political autocracy.

This is the triumph in Mr. Judt’s story, but he displays a skeptic’s reticence toward premature celebration, which given the frequency of modern Europe’s fratricidal bloodlettings is wise. Throughout his narrative, Mr. Judt deliberately underplays his hand. As he cautions in the introduction: “I have no big theory of contemporary European history to propose in these pages; no one overarching theme to expound; no simple, all-embracing story to tell.” After all, postwar Europe’s road to long-term peace and prosperity has been littered with temporary setbacks – most recently, the French and Dutch rejections of the European Constitution earlier this year.

Today’s Europe often resembles a hotbed of competing ethnicities. Anti-Semitism is on the rise. The mainstays of European unity, England, France, and Germany, have done a lamentable job of integrating Muslim immigrants, who number 5 million in France alone. Among continental states, strident right-wing populist parties stoke racial tensions. Anti-militarism – one of the moral “lessons” Europeans drew from the ravages of World War II – while commendable in certain circumstances, can prove disastrous in others. Thus in the early 1990s, Europeans watched helplessly as the civil war in the former Yugoslavia metastasized into outright genocide. Only American air power prevented an intolerable situation from spiraling totally out of control.

“Postwar” ends with a series of timely reflections on the role the Holocaust has played in modern European memory. For Europeans, the Shoah has served as a pivotal negative moral template – an absolute index of unspeakable human cruelty. Here, “unspeakable” is more than a metaphor. For, as Mr. Judt shows, for the first 15 years after the war’s end, the Holocaust was greeted with an eerie silence. The memories were too fresh, the images too painful. During the 1990s, however, European statesmen belatedly acknowledged the complicity of their respective nations in the massacre of the Jews. Last spring, Peter Eisenman’s majestic Holocaust memorial opened in the heart of Berlin, a stone’s throw from the Reichstag and rebuilt government quarter, lest the Germans be tempted to “forget.” To be sure, nothing can be done for the dead. Yet, by honoring their memory, Europe has taken a first step toward ensuring that future holocausts will not be countenanced.

Mr. Wolin teaches history and political science at the graduate center of the City University of New York.