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at the water's edge
“”Those damn socialist Scandanavians keep outperforming everyone in everything.
Somewhat confusingly, social democracy is not the same thing as democratic socialism, nearly-identical names notwithstanding. Modern social democrats believe in maintaining the capitalist system — democratic socialists (in fact, all socialists) do not.
 Social democratic approach to change
While social democrats belong firmly in the progressive camp, they reject the need to change society by means of revolution and class warfare. Instead, they affirm the need of obtaining a mandate within the confines of existing democratic structures and, once in power, focus on implementing policies designed to bring about reform of a country's society and economy towards a more equal distribution of wealth. Since the end of World War II, European social democrats have generally abandoned the goal of building an alternative economic system to capitalism and moved towards platforms that affirm market-based economic orders and private entrepreneurship, yet still seek to implement welfare and state intervention designed to improve the long-term outlook for underprivileged groups.
The original split between traditional socialists and social democrats occurred at the end of the 19th century, when the latter emerged as a new branch of socialists who originally shared their vision of a radically different post-capitalist society, but didn't want to participate in outright revolutions that Marxist orthodoxy considered necessary to bring such change about. Instead, they opted to form political parties that acknowledged the existing order for the time being and tried to attain power through elections. Nowadays, this definition would cover all of the mainstream democratic left parties, even though many of these still label themselves "socialist". Therefore, this definition is inapplicable.
These days, many social democrats are largely indistinguishable from their conservative opponents, as a result of both types of parties converging around the center of the political spectrum. Key elements of the welfare state remain popular with the major parties as well as the general populace. Rich media magnates have used their control over large sections of news outlets to make policies that tax rich people less popular, also have used their lobbying power to lower the taxes their community pays. In recent years, overall spending on welfare policies has been slightly reduced by both center-right and center-left governments in a bid to decrease government deficits (without increasing taxes on rich people) and enhance economic competitiveness.
There is still some debate over how well these policies worked. Social democratic thought and governance has had a lot of influence on post-war Western Europe; the respective parties used to dominate the political landscape in Scandinavia and introduced the modern European welfare state model in numerous other countries such as France, Germany, and the Netherlands. While economic growth was robust up to the 1970s, the much more market liberal United States performed better in recent decades, though practically all of these gains in America went to the wealthy. Nowadays, only Norway, which has a great deal of oil, has a higher (PPP) GDP per capita than that of the USA. This discrepancy is mostly due to shorter working hours in European countries, while worker productivity (GDP per hour worked) in the US and in advanced European countries is at similar levels. Economic growth, employment numbers, and inflation tend to either be comparable to the US or greater depending on the economic climate, while the Northern European countries are ranked extremely high in terms of economic competitiveness. While average personal income in Western Europe is somewhat lower (especially after taxes, though in nominal terms the Nordic countries actually outstrip the US by a far bit), this is offset by more leisure time and typically higher provisions of public goods such as education and health care. These free-at-the-point-of-use programs mean that, factoring them in, disposable income in Northern Europe can often exceed that of the US.
In social matters (for example, social mobility) however, the Scandinavian countries tend to outstrip the USA by a good margin. In terms of the Gini coefficient, which measures the equality of income distribution, the United States does very poorly (even worse than Russia) and is handily beaten by the European states. Human development and happiness are also indexes on which the Nordic counties perform considerably better.
In 2006, The Economist asserted that the Nordic Model, with what it deemed "grave defects", would break down, predicting that a new centre-right government in Sweden would dismantle the welfare state. This would not occur. Two years later, the economies of both the United Kingdom (where The Economist is based) and its less-regulated counterpart, the United States, crumbled into the worst recession since the 1930s. Sweden's total tax rate remains at near 50%, and every Scandinavian nation (excluding deregulated Iceland) has emerged with comparatively lower debt levels and unemployment rates than both the US and UK. "The Economist" has since, if begrudgingly, called Scandinavia "probably the best-governed in the world."
 Look at the fine print
The stereotype that the Nordic model is a bureaucratic, Soviet-style mess borders on the wilfully ignorant. In addition to exceptionally high union membership, there is a deep commitment to adapting with the times. To combat outsourcing and wage dumping as associated with globalization, Scandinavia is committed to free trade, trading corporate taxes for VATs. This regulatory environment is known as flexicurity, wherein ease of hiring and firing workers is offset with skills upkeep towards insuring that they won't go into poverty while unemployed.
 In the US
Social democracy in the United States has been associated with the left-wing of the Democratic Party and the right-wing of the United States Socialist Party. The latter party had both social democratic and Marxist wings. The Democratic Party's left-wing, during the post-World War II era, was typified by organized labor and writers like Arthur Schlesinger Jr., who viewed social democracy as the "vital center" of politics in opposition to both far-left communism and far-right laissez-faire capitalism. Other groups, like the Social Democrats USA, and the related Democratic Socialist Organizing Committee, were formed by former Trotskyists who had swung hard-right on foreign policy and advocated a strong anti-Soviet Union stance, but remained economically leftist; this group's main ideological influence was Trotskyist theorist Max Shachtman, who is sometimes also cited as an intellectual father of neoconservatism. The 1912 election was particularly memorable as a (possible) high water mark of leftist ideology on the national stage, as it pitted an outright socialist (Eugene V. Debs) and a candidate of the Progressive Party (Teddy Roosevelt) as well as a self-described "progressive" for the Democrats (Woodrow Wilson) against an incumbent Republican (Howard Taft) who got clobbered and placed third.
Currently the only self-described "Socialist" on the national political stage is Vermont Senator and 2016 Democratic presidential primary candidate Bernie Sanders. He seems rather unperturbed by all the red-baiting going on against him. Judging from current polls he seems to have a shot at winning at least some primaries or annoying Hillary and forcing her to the left. And who knows, Hillary was considered "inevitable" in 2008 as well... (But of course, she did lose)
 See also
- Social market economy
- Third Way
- School choice - some of the Nordics are experimenting with it, but it's far from the level that libertarians want.
- The surprising renaissance of the Nordic model, Nordic Investment Bank ("Be open, but share the fruits of openness.")
- The Nordics in the global crisis, Centre for Economic Policy Research
- Why Are Finland's Schools Successful?, Smithsonian
- Lessons from the Swedish/Nordic Model, OECD