The tradition that accepts a predominantly capitalist economy and commits to civilising it: universal welfare provision, progressive taxation, strong labour market institutions and regulation sufficient to blunt the insecurity markets generate. Its wager is that capitalism's productivity can be harnessed to egalitarian ends without changing who owns productive assets.
This is precisely where it parts from democratic socialism, with which it shares an ancestry and is often confused. Both descend from Bernstein's revisionism and both reject the Leninist road; but democratic socialists hold that ownership itself must change, while social democrats concluded that it need not. The German SPD made the break explicit at Bad Godesberg in 1959, formally abandoning Marxism and accepting the market economy — a moment other European parties reached at their own pace.
Its practical achievement was the postwar settlement, and the Nordic countries remain its most complete expression: high taxation, universal services, centralised wage bargaining, and an active labour market policy designed to let firms fail while protecting workers rather than jobs. Esping-Andersen's comparative work established that these arrangements form a coherent regime type rather than a matter of degree, distinguishable from both liberal and corporatist welfare states.
Its late-century difficulties are unresolved. Capital mobility weakened the national bargaining on which the model depended; the Third Way of Blair and Schröder accepted much of the market-liberal turn and is blamed by the left for the collapse in the parties' working-class vote that followed. Social democratic parties across Europe have shed support so consistently since the 2000s that the phenomenon has its own name. Its defenders answer that no political tradition has delivered as much measurable reduction in poverty and insecurity, and that the record is worth more than the trend.