The period of domination by the ND included concerted attempts at national reconciliation. Economically, Karamanlis pushed for closer integration with Europe, a policy rewarded in 1981 with full membership in the EC. The ND government practiced statist capitalism, meaning that the state had an intrusive and direct role in determining economic policy at the same time that it tried the foster a free-market system. The primacy of the state in economic affairs was evident in all areas, from prices and wages to labor law. In postjunta Greece, the debate has centered on the degree, rather than the existence, of government intervention in the economy.

Karamanlis called an election in 1977, a year earlier than required by the constitution. A particular goal of this strategy was to obtain validation of his government's foreign policy initiatives. The major surprise of the 1977 election results was the rise of Andreas Papandreou and PASOK. ND's share of the vote fell to 42 percent (172 seats) while PASOK's share rose to 25 percent (93 seats). The Center Union dropped into a distant third place (12 percent and 15 seats), barely ahead of the KKE (10 percent, 11 seats). PASOK's success came largely at the expense of the declining Center Union, which split into factions shortly thereafter. ND's losses had multiple causes. Some ND supporters moved to a new far-right party, and the political equilibrium that Karamanlis had achieved since 1974 removed some of the urgency with which Greeks had supported him in the previous election. ND lacked a clear ideology; instead, the charisma of its leader was its chief rallying point.

At the same time, PASOK's message had increasing resonance with the people. In his rhetoric, Papandreou crafted a skillful mix of nationalism ("Greece for the Greeks") and socialism ("PASOK in government, the people in power"). PASOK promised a "third road" to socialism and a middle way in foreign policy, restoring national pride by breaking the bonds of foreign dependency and reorienting Greece with the nonaligned countries. PASOK's structure also gave it a base of grass-roots support that other parties lacked. Besides its strong central committee, PASOK had local party offices and cadres in towns and villages across Greece. This system proved very effective in organizing support and validating the claim that the party was not based, like the others, on networks of patronage. And, perhaps most importantly, PASOK's slogan of "change" struck a cord with the Greek people's search for a new way forward after forty years of conservative rule.