Social democracy ….see Scandinavian countries.
The Scandinavian countries are as capitalist as they come. It is pretty obvious that most people don't even know what capitalism is.
https://www.aier.org/article/capitalism-saved-sweden/
Scandinavia: A World Center of Capitalism
Now that I have discussed the differences between capitalism and socialism, let’s consider the question I started out with: is Sweden socialist? I often participate in debates on capitalism vs. socialism, and students often give Sweden as an example of how socialism “works.” Well, yes, Sweden works, that’s true. But it works because it is one of the most capitalist nations in the world! It became capitalist after trying socialism, and reaching the (correct) conclusion that socialism just doesn’t work.
If you think Sweden is socialist, then you know something that just ain’t so. As has been documented repeatedly by popular
treatments and more scholarly
discussions, any use of the actual measures of economic freedom that constitute capitalism show Sweden is solidly in the camp of fully market-oriented economies. As Andreas Bergh points out in his 2016 book, Sweden and the Revival of the Capitalist Welfare State, it is inconceivable to think of the Sweden of the current decade as being anything other than a capitalist, and in fact libertarian, country.
It is fair to say that Sweden was socialist, at least in terms of temperament and the direction of public policy. In 1975, Sweden’s state owned well over half of the productive resources in the country, and directed prices in much of the rest. It subsidized debt, in part paradoxically by having enormously high tax rates with generous deductions for borrowers. Its attempts at “Keynesian” policy interventions were clumsy, were mistimed, and created disastrous uncertainty in investment returns even in the portions of the economy that were still market-oriented.
The state taxed successful industries heavily, and used the proceeds to subsidize industries that were inefficient, corrupt, and failing. This meant that interest rates on capital were prohibitive, especially when you tack on double-digit inflation.
To protect workers, the state required that wages could not be cut, and also enforced a panoply of restrictions on firing, layoffs, and other means of adjusting hours. Swedish products shot up in price, and the government was forced into a series of devaluations of the krona that made purchases of imported products beyond the reach of much of the middle class.
The electorate took a dim view of all of this. The tax system was a Rube Goldberg mechanism, with a level of complexity and arbitrary favoritism that encouraged distortion of investment into whatever happened to be taxed less, rather than whatever might produce useful products. Gunnar Myrdal, hardly a conservative, famously asked in 1978 whether Swedes “had turned into a people of swindlers.”
Fortunately for its citizens, but unfortunately for those who think Sweden is still socialist, the Swedish government, more or less by universal consensus,
turned sharply back toward capitalism beginning in about 1995. It deregulated domestic industry, privatized its education and pension systems, and opened the economy to international trade and competition. The reason it did this is precisely because capitalism, wherever it is practiced seriously in a system with rule of law and protection for property rights, always creates prosperity.
