The interwar period witnessed fierce criticism of the ways in which parliamentary democracies were operating in Europe. In many instances, authoritarian regimes replaced perceived malfunctioning democracies shortly after the ratification of democratic constitutions. Yet, many European intellectuals and politicians believed democracy was not entirely lost. Amidst the perceived crisis of democracy in Europe, one strand of intellectuals started to rethink the capacities of political representation and democratic governance, taking their cue from institutional innovations that incorporated group interests in state governance. Based on a range of representative councils installed in the 1920s, notions of ‘functional democracy’ were presented as a panacea for the crisis of European parliamentary democracy. This paper discusses the scope and impact of this strand of interwar political thought, alluding to the potential historical implications with regard to functional counter-balances within democratic governance in the face of the crises of democracy occurring in Europe today.