I don't know about the situation, but from what you described that wasn't democratic socialism, it was social democracy; social democracy is a branch of capitalism. More specifically, social democracy emerged from a compromise made by capitalists to quell socialist and communist fervor.

In socialism, workers would be the owners of business and would distribute the profits among themselves. In social democracy, the states runs/manages some businesses with (in theory) the countries interests in mind, and creates several public support systems (i.e. public education and free healthcare) to improve overall quality of life for the average person; however the economy is still a capitalist one with free (but regulated) markets, where the only power workers have is voting on government elections.