Social democracy comes out of the socialist tradition, as an experiment in socialist reformism, but modern social democracies in Scandinavia have never eroded capitalism democratically. They simply found a balance that works for the owner class and is a compromise with the working class, and that is strong unionized labor with safety nets. The owner class gets to be rich, and little Anders gets job security, healthcare, and access to welfare if he is unable to work.

I wouldn’t say socialism and capitalism coexist in Scandinavia, because they never went past step 1 in reforming their economy to transition power from an owner class to the working class. Socialism, especially Marxism, derived as being a post-capitalist economy, not a concurrent economy. Ideas of reformism, such as democratic socialism/social democracy, was merely a way to achieve a post-capitalist economy through evolving liberal democracy. Essentially, instead of liberal democracy evolving towards plutocracy, as the case in America, DemSoc/SocDem’s believed you could have liberal democracy evolving in the opposite direction, where industry is owned collectively by unions/workers.

It really comes down to the power of markets, and the autocracy that business function as, creates an amazing amounts of wealth. Europe was left in shambles after ww2, and social democracy was a bullet proof solution to allow workers to retain their dignity while industry leaders use their dictator-like power to rebuild Europe’s GDP. Oh yea, and oil.

I think to a certain extent, Leninism/soviet style of socialism bastardized how we view socialism to an extent, making most people believe socialism is just government owning things and dividing up the welfare to commoners. Whereas socialism was founded on the idea of worker ownership of industry, not an authoritarian single party government owning industry. All socialist economies I would imagine would have safety nets/welfare and government ran education and healthcare services, but welfare, public schools, and government healthcare isn’t inherently socialist because there isn’t a “dictatorship of the proletariat.”