In 1958 the party admitted to its ranks the members of the recently dissolved Independent Socialist League, which had been led by Max Shachtman. Shachtman had developed a Marxist critique of Soviet Communism as "bureaucratic collectivism", a new form of class society that was more oppressive than any form of capitalism. Shachtman's theory was similar to that of many dissidents and refugees from Communism, such as the theory of the "New Class" proposed by Yugoslavian dissident Milovan Đilas (Djilas). Shachtman was an extraordinary public speaker and formidable in debate, and his intelligent analysis attracted young socialists like Irving Howe and Michael Harrington. Shachtman's denunciations of the Soviet 1956 invasion of Hungary attracted younger activists like Tom Kahn and Rachelle Horowitz.
Shachtman's youthful followers were able to bring new vigor into the Party, and Shachtman encouraged them to take positions of responsibility and leadership. As a young leader, Harrington sent Kahn and Horowitz to help Bayard Rustin with the civil-rights movement. Rustin had helped to spread pacificism and non-violence to leaders of the civil rights movement, like Martin Luther King. Kahn and Horowitz quickly became close assistants of Rustin. The civil rights movement benefited from intelligence and analysis of Shachtman and increasingly of Kahn. Rustin and his young aides, dubbed "The Bayard Rustin Marching and Chowder Society" by Harrington, organized many protest activities. The young socialists helped Rustin and A. Philip Randolph organize the 1963 March on Washington, where Martin Luther King delivered his I Have A Dream speech.
Michael Harrington soon became the most visible socialist in the United States when his The Other America became a best seller, following a long and laudatory New Yorker review by Dwight Macdonald. Harrington and other socialists were called to Washington, D.C., to assist the Kennedy Administration and then the Johnson Administration's War on Poverty and Great Society.
The young socialists' role in the civil rights movement made the Socialist Party more attractive. Harrington, Kahn, and Horowitz were officers and staff-persons of the League for Industrial Democracy (LID), which helped to start the New Left Students for a Democratic Society (SDS). The three LID officers clashed with the less experienced activists of SDS, like Tom Hayden, when the latter's Port Huron Statement criticized socialist and liberal opposition to communism and criticized the labor movement while promoting students as agents of social change. LID and SDS split in 1965, when SDS voted to remove from its constitution the "exclusion clause" that prohibited membership by communists: The SDS exclusion clause had barred "advocates of or apologists for" "totalitarianism". The clause's removal effectively invited "disciplined cadre" to attempt to "take over or paralyze" SDS, as had occurred to mass organizations in the thirties.
The experience of the civil rights movement, and the coalition of labor unions and other progressive forces, suggested that America was changing and that a mass movement of the democratic left was possible. In terms of electoral politics, Shachtman, Michael Harrington, and Kahn argued that it was a waste of effort to run electoral campaigns as "Socialist Party" candidates, against Democratic Party candidates. Instead, they advocated a political strategy called "realignment," that prioritized strengthening labor unions and other progressive organizations that were already active in the Democratic Party. Contributing to the day-to-day struggles of the civil-rights movement and labor unions had gained socialists credibility and influence, and had helped to push politicians in the Democratic Party towards social-democratic positions, on civil rights and the War on Poverty.