Why do different models of labor politics emerge as dominant across industrializing societies? Through the development of a comprehensive theory and an initial empirical test, this article accounts for the formation of different types of social democratic parties (quasi-revolutionary, evolutionary) and for the failure of social democracy that coin cides with the embrace of either insurrectionism (bolshevism, anarchism-syndicalism) or moderate syndicalism. The theory extends to all independent and sufficiently in dustrialized polities during labor's case-specific formative stage in the political arena throughout the late nineteenth and early twentieth centuries. It overcomes theoretical and empirical limitations of prior structural and overly deterministic approaches (socio economic, status system, institutionalist) by integrating socioeconomic background, political context, and elite agency into a systematic account for the interaction of labor elites with the environment that constrains and shapes their choices.1 Varying degrees of labor inclusion predict national variation in labor politics when the decision-making process of labor elites occurs along an path unaf fected by exogenous influences that would push outcomes off the equilibrium path.2 Whenever the following premises apply, an equilibrium outcome is predicted, and a particular environment of labor inclusion will lead to the formation of some model of labor politics that represents the optimal response of labor elites to the given set of external constraints. First, the primary interest of labor elites is to channel the demands of their constituency into the political arena through an optimal model that features the most rewarding cost-benefit ratio. Second, strategic preference formation is the result of a rational evaluation of labor inclusion as the set of external constraints on elite behavior. Third, the stable and unambiguous nature of this environment provides labor elites with accurate information about these external constraints. Labor inclusion is a latent variable derived from a consideration of its six manifest components: enfranchisement, political liberties, and responsible government, as well as the behavior of the state executive, the behavior of competing parties toward the labor constituency, and the behavior of competing parties toward labor elites. Variation in labor inclusion identifies the opportunity structures that exist across polities for the efforts of labor elites to relay the interests of their constituency into the arena of politics. A choice for some model of labor politics is optimal when it features the most rewarding cost-benefit ratio for mobilizing labor and channeling its agenda into the political arena in some given context of inclusion. 167