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- Elizabeth Warren's recent remark that she is a "capitalist to my bones" is nothing new.
- Warren's major policy project is to make markets work right for regular people.
- Warren's choice to own her capitalism is good news for the Democratic Party, and for capitalism.
Sen. Elizabeth Warren's recent remark that she is a "capitalist to my bones" is being treated as some kind of news, even though it is consistent with the policies and rhetoric the liberal Massachusetts senator has espoused for her entire career.
Warren's major policy project is to make markets work right for regular people. If you want to make markets work well, then obviously you are in favor of markets and capitalism.
"I love markets - I believe in markets," she told The Atlantic's Franklin Foer last year.
Good. Warren's choice to own her capitalism is good news for the Democratic Party, and for capitalism.
Capitalism's brand has had a rough 15 years
Many avowed capitalists have excessive faith in the wisdom and efficacy of markets, and dismiss proposed regulations as undue interference in a free market - even regulations in markets for things like intellectual property, where the thing being traded is itself a government-created license.
While Republicans have been the biggest offenders on this score, Democrats have often been too inclined to listen to industry representatives about why their industry shouldn't be regulated - and Warren has made enemies within her party by objecting to these failures.
She has a lot of fans who agree with her. Over the last 15 years, as markets have repeatedly failed, the markets-first approach has become a political liability for Republicans and is increasingly discredited within the Democratic Party.
As a result, there is a now fashion for people on the left to call themselves "socialists" - often while implicitly or explicitly supporting many of the markets-with-guardrails policies Warren herself favors.
America is going to be capitalist, so we had better make capitalism work
There are two, broad theoretical approaches that can lead you to the same left-leaning policy platform. You can start from free markets and layer on government interventions as necessary to make those markets stable, functional and fair. Or you can start from central planning and introduce market features where the government cannot efficiently allocate capital from on high.
You can even design the same policy platform from either of these approaches, calling it "capitalist" in one case and "socialist" in the other. This is how Warren and Sen. Bernie Sanders are not that far apart on policy, despite their very different rhetoric about capitalism.
But which direction you approach the policy from matters - and if your system will continue to rely on private capital, as virtually every modern political platform claiming to be "socialism" does, it's to your advantage to place markets front and center, as Warren does, because you'll have to explain how you'll make those markets work well.
Instead, Sanders's broad rhetoric about a "rigged system" counsels despair. His focus on wealth inequality is akin to Donald Trump's obsession with trade deficits - it elevates an economic indicator the government can't directly control, leading to sure disappointment when four years of policy fail to materially change its level.
Warren's markets-up approach has big advantages in the American political context. For one, it starts from where we are today: A market economy with insufficient and ill-designed regulation in many sectors, with less economic redistribution than is desirable, that is not working as well for ordinary people as it should.
And a bottom-up approach lends itself better to developing concrete, incremental, affordable policies that you can actually implement to make markets better, in everything from labor to health care to higher education to financial products.
Warren's vision of capitalism is especially suited for opposing Donald Trump
A year ago, I wrote about how Democrats should take their cues from Warren in developing an economic agenda:
Democrats should make a list of corporate practices that grind people's gears and ask whether there's a compelling economic rationale for them. If there isn't, they should propose to prohibit them, penalize them, or at least have the government stop subsidizing them.
Amusingly, one of the politicians in America who best understands the political appeal of this approach is Donald Trump, who has periodically seized on specific corporate actions - Ford moving auto production to Mexico, Pfizer raising drug prices, even Twitter "shadowbanning" conservative users - as market failures he will try to use his presidential powers to stop.
But of course, there are big problems with Trump's approach to "fixing" markets.
One is that his definition of "where markets have gone wrong" is centered around his personal self-interest - see his war against Amazon, driven by his ire at CEO Jeff Bezos, who also happens to own The Washington Post.
Another is that his public pronouncements are rarely followed up by policy action - see his administration's policies that have been fundamentally friendly to holders of pharmaceutical patents, even as he claims he will work to bring down branded prescription drug prices. (To Trump's credit, his Food and Drug Administration has taken positive steps on pricing for generic prescription drugs.)
Warren is better positioned than almost any Democrat to point out Trump's hollow approach to fixing markets. She can accept much of his premise - he's right that business is broadly a good thing, and he's also right that markets have often failed average Americans - while providing a more effective, more workable, less petty approach to fixing those markets.
In their ways, both Trump and Warren have promised to rescue capitalism from stupid people. It would be great to see those approaches debated head to head, instead of Democrats just ceding the question of what capitalism is to Republicans.