Differences in the intra-party balance of power explain variation in social democratic responses to the economic crisis of the late 1970s. This article evidences this claim by analysing the case of welfare state retrenchment by social democratic parties. Welfare state retrenchment is electorally risky for social democrats and often contrary to their principles. Therefore cases of welfare state retrenchment by social democrats provide an excellent case study of the difficult trade-offs parties have to make between office, policy and vote pay-offs. The article claims that leadership-dominated parties advance office-seeking strategies and are therefore responsive to economic conditions and public opinion. Conversely, activist-dominated parties advance policy-seeking strategies and therefore support traditional social democratic policy platforms or seek more radical solutions. By comparing seven social democratic parties (Denmark, France, Germany, the Netherlands, Spain, Sweden and the UK) between 1980 and 2005, this article explains variation in when social democrats introduced welfare state retrenchment.