How progressive capitalism can be the recipe for economic growth and innovation

California Rep. Ro Khanna, D-Calif., has come up with a new plan for America that he calls progressive capitalism.

"I call myself a progressive capitalist," he told FOX Business' Charles Payne on Wednesday. "That means I believe in free enterprise but free enterprise that rewards work and innovation, not just those privileged and connected and that I think is the recipe for both economic growth, innovation and for giving people a stake in the economy."

But when Charles Payne pointed out that there are some people who view a paycheck as the reward for work, Khanna responded that the majority of the population has not been getting as much as they deserve.

“I want the paycheck to go to workers for their productivity gains. In this country, you’ve had 30 years of increases often in productivity but most of those returns are going to owners of capital, not to the workers. Workers haven’t really gotten a meaningful raise for 30 years. So you have cases of billions of dollars accumulated in the investor class and workers haven’t benefited,” he said. “A lot of rural America and many small towns have been left out of our prosperity… we’ve neglected the heartland of this country and many communities of color.”

But Payne pushed back saying that the productivity miracle in America is shut down.

“We’re starting to see glimpses of it. In the future, [productivity] will be measured by robots, measured by artificial intelligence. Those things are going to take jobs away from people. How does a capitalistic society share in the gains when the gains are being driven by a computer?” Payne said.

While Khanna acknowledges that new technologies like artificial intelligence will change the job landscape, he believes that capitalistic society can still share the gains and embrace technology at the same time.

“It depends how we use artificial intelligence and technology to create jobs in advanced manufacturing, in telehealth, in telemedicine, in areas of software architecture and in agriculture. One of the things that grew the economy in this country and jump-started America is the federal government investing in new technologies, partnering with research universities and also partnering with the private sector and doing that in communities across America," he said. “We need to have a 21st century where we understand that we’re going through a technology revolution, lead in these new technologies, and empower communities to have those new jobs.”

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A major question always on people’s minds is how ideas like progressive capitalism would be funded. Khanna said that it may involve higher taxes so that the government can invest in new technology.

“It may mean the investor class paying some higher taxes of course but here is where I would invest. I would invest in technology institutes in rural America. I would make sure for $40 billion we had high-speed internet everywhere and not leave out minority communities. I would make sure that we gave software, federal software contract preferences to rural communities so that they could be part of the 21st century economy and I would have cooperatives between the federal government and research universities in cities across this country so you had economic growth and so that we could compete with china. I think there are common sense things we do, that will help prepare our country for the 21st century.”