Social democracy is a political, social, and economic philosophy within socialism that supports political and economic democracy. As a policy regime, it is described by academics as advocating economic and social interventions to promote social justice within the framework of a liberal-democratic polity and a capitalist-oriented mixed economy. The protocols and norms used to accomplish this involve a commitment to representative and participatory democracy, measures for income redistribution, regulation of the economy in the general interest, and social welfare provisions. Due to longstanding governance by social democratic parties during the post-war consensus and their influence on socioeconomic policy in Northern and Western Europe, social democracy became associated with Keynesianism, the Nordic model, the social-liberal paradigm, and welfare states within political circles in the late 20th century. It has been described as the most common form of Western or modern socialism, as well as the reformist wing of democratic socialism.

The history of social democracy stretches back to the 19th-century labour movement. It is a left-wing political ideology that advocates for a peaceful democratic evolution from laissez-faire or crony capitalism towards social capitalism sometimes also referred to as a social market economy. Social democracy opposes the full centralization of an economy as proposed by some socialists. The main difference between social democracy and democratic socialism is that democratic socialism is a political philosophy within socialism, advocating an evolutionary and peaceful transition from capitalism to socialism, using established political processes, as opposed to the revolutionary socialist approach to transition associated with orthodox Marxism. On the other hand, social democracy seeks to improve the lives of people living within a free and democratic society, by having a well regulated market economy. In the early post-war era in Western Europe, social democratic parties rejected the Stalinist political and economic model then-current in the Soviet Union, committing themselves either to an alternative path to socialism or a compromise between capitalism and socialism. In this period, social democrats embraced a mixed economy based on the predominance of private property, with only a minority of essential utilities and public services under public ownership. Social democrats promoted Keynesian economics, state interventionism, and the welfare state while placing less emphasis on the goal of replacing the capitalist system (factor markets, private property, and wage labour) with a qualitatively different socialist economic system. Along with communism, social democracy became the dominant political tendency within the international socialist movement by the early 1920s.

While retaining socialism as a long-term goal, social democracy is distinguished from some modern forms of democratic socialism for seeking to humanize capitalism and create the conditions for it to lead to greater democratic, egalitarian, and solidaristic outcomes. It is characterized by a commitment to policies aimed at curbing inequality, eliminating oppression of underprivileged groups, and eradicating poverty, as well as support for universally accessible public services like child care, education, elderly care, health care, and workers' compensation. It has strong connections with the labour movement and trade unions, being supportive of collective bargaining rights for workers and measures to extend decision-making beyond politics into the economic sphere in the form of co-determination, or social ownership, for employees and stakeholders.

The Third Way, which ostensibly aims to fuse liberal economics with social democratic welfare policies, is an ideology that developed in the 1990s and is sometimes associated with social democratic parties; some analysts have characterized the Third Way as part of the neoliberal movement.