Howard Dean told CNBC on Friday that the Democratic Party is undergoing a shift because of younger voters who are socially liberal and fiscally conservative, views he's championed as a presidential candidate and governor.

"I'm a Democrat, but fiscally conservative," said Dean, who unsuccessfully ran for the Democratic presidential nomination in 2004. "The right play is down the center on economics."

Dean, also former chairman of the Democratic National Committee and governor of Vermont from 1991 to 2003, suggests his party is not being taken over by socialists who critics label as fiscally irresponsible.

The whole idea of "Democratic socialism" was popularized in the 2016 president race by Sen. Bernie Sanders from Dean's home state of Vermont. While unsuccessful in challenging establishment Democrat Hillary Clinton for the nomination, Sanders' ideology has been embraced by the more liberal members of the party.

Case in point, Democratic socialist Alexandria Ocasio-Cortez, 28, won her June primary race in a huge upset against New York Rep. Joe Crowley, 56, the fourth-ranking Democrat in the House of Representatives.

In making his argument, Dean said it's better to look at the gubernatorial race in Virginia last year, when Democrat Ralph Northam beat Republican Ed Gillespie.

"If look at the results in Virginia, which were just shocking, Ralph Northam, who by anybody's description is a moderate centrist, got 69 percent of the under-30 vote," Dean said.

"These young kids are very liberal on social issues and inclusion and diversity and the environment. They are libertarians economically at heart," Dean said.

Libertarians believe in limited government and robust individual liberty. They are generally fiscally conservative.

Looking ahead to the House and Senate midterm elections, Dean said, "I think most of the people who will win the new seats are probably under 40. Some will be under 35."