It's not just whether peoples' lives improved. It's also how much they expected their lives to improve. If capitalism made life 10% better, that's good. If they expected capitalism to make life 500% better, then 10% isn't so good. And if they look around and see people whose lives are now 500% better, then the resentment is pretty natural.

It's not just that we (the EU, or even the West) let them switch to capitalism without a proper welfare system. We let them without giving them a government that knew how to run a capitalist country (because we didn't give them a government at all). But we let them have the expectations of a functioning Western government, instead of the expectations of a transitioning country that didn't really know how to do either democracy or capitalism.

It worked out pretty well for Germany and Japan to be conquered, and have the US spend a decade showing them how to do both democracy and capitalism. Just saying "Welcome to capitalism and democracy! Glad you're here!" turns out not so well. (The problem, of course, is that when you aren't a conqueror, the country doesn't want you to run it. And when you're fighting against the "evil colonialists" meme anyway, taking over is a really bad look, whether or not the results would be better in the long run.)