Now, Even ‘Corporate Democrats’ Are Saying American Capitalism Needs to Be Radically Reformed

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Fed Chair Janet Yellen Testifies Before Senate Banking Committee
Mark Warner.Photo: Pete Marovich/Bloomberg via Getty Images

Donald Trump and Bernie Sanders have put the fear of God (and/or populist revolt) into the Democratic Establishment. Typically, when pundits wish to illustrate the Democrats’ leftward drift, they excerpt the remarks of Sanders, Elizabeth Warren, Sherrod Brown, or some other proud member of Team Blue’s progressive wing. But on Wednesday in Philadelphia, one of the Party’s leading ‘corporate shills’ offered a far more telling testament to the shifting center of Democratic politics.

During a discussion of economic policy hosted by Politico, Virginia senator Mark Warner railed against the decadence of a capitalist system in which record corporate profits are being channeled into stock buybacks and dividends, instead of long-term investment.

There needs to be a reexamination of corporate behavior,” Warner said, suggesting that new regulations could encourage corporations to maximize “stakeholder value,” instead of “shareholder value.”

The senator then called on his party to acknowledge that the rise of the gig economy has undermined “the social contract that the Democratic Party created in the 1930s, that was tied to workplace employment.” With an expanding portion of the workforce locked out of the employer-based system of social benefits (health care, retirement accounts, unemployment insurance, worker’s compensation), Warner argued that the government should work to establish a portable benefit system.

Warner’s remarks were so uncharacteristically progressive, Pittsburgh mayor Bill Peduto mistakenly referred to him as “senator Warren” later in the panel.

Warner had offered a similarly biting analysis of our economic system one day earlier.

Modern American capitalism is focused on short-termism,” Warner said, during a panel hosted by the centrist think tank Third Way. “Twenty-five years ago, businesses would invest over 50 percent of their profits. We invested in our work force — built new plants. Today … 95 percent of the profits were spent on dividends and shareholder profits.”

I believe in free enterprise, but we’ve got to make it work for all Americans,” Warner continued. “If a company offers stock options to its senior executives, it ought to offer stock options and profit-sharing for all its employees.”

Expanded social insurance, profit-sharing, and government intervention to push corporate America into more socially useful investment: This is now the agenda of the Democratic Party’s right wing.

Make no mistake, Mark Warner is no socialist gadfly. Rather, he’s a former venture capitalist turned anti-debt crusader, who recently bemoaned his party’s failure to cut Social Security — and then called for big business to play a more active role in our politics.

The sincerity of Warner’s call for drastic reform is uncertain. Both Warner and the Democratic nominee are committed to shrinking the deficit without raising taxes on the upper-middle class. How this goal can be reconciled with a significant expansion of social insurance remains unclear.

But the ascendance of both left-wing and right-wing populism, in the United States and across the Western world, seems to have whet Establishment Democrats’ appetite for egalitarian reform.

If we don’t reframe capitalism for the 21st century, then the anger is going to become a movement that is going to disrupt what is working,” Warner said Wednesday.

Earlier in the panel, CEO of the Center for American Progress Neera Tanden put this point in starker terms. After arguing that the failure to address wage stagnation could invite an illiberal challenge to America’s political system, Tanden observed, “Democracies don’t last forever. Look at Turkey.”