Social democracy is a government system that has similar values to socialism, but within a capitalist framework. The ideology, named from democracy where people have a say in government actions, supports a competitive economy with money while also helping people whose jobs don't pay a lot. This makes it easier for people to support themselves in society by having more protection if they lose their jobs. Socialism places an emphasis on equal rights for everyone, and there is plenty of government ownership or regulation of various industries that make companies play by the government's rules. This way of governing is appreciated by people living in countries who have to battle the cold more than others, like the northern Nordic countries of Sweden, Denmark, Finland, Norway, and Iceland. The ideology's movement has seen some interest in other countries whose systems do not work this way, because it has worked well for those who have it.

Despite a common belief that social democracy is socialist by principle, its policies keep capitalism in place and socialists often dislike social democrats. Social democrats support Keynesian economics, where the government should step in and help people without jobs. In social democracy entrepreneurs own the industries just like they would in a standard capitalist economy. In socialism the workers own them instead which is very different.