The objectives of American conservatism are unchanging and necessary—strong, self-reliant families and a strong, self-reliant nation. The economic program of American conservatism should promote those goals. Tragically, for the past half-century, conservatives have instead borrowed a radical free-market economic strategy from the libertarian movement that pursues and has delivered the opposite.

Libertarianism is not conservatism, and never has been. In the 19th century, free-market libertarianism was called “philosophical radicalism.” In the 20th century, the libertarian thinkers Milton Friedman and Friedrich von Hayek insisted they were not conservatives. The conservative philosopher Russell Kirk dismissed libertarians as “chirping sectaries” and William F. Buckley, Jr. purged the mainstream right of Ayn Rand’s followers.

And indeed, libertarian economics is at odds with the goals of conservatism. Libertarianism endangers national security by celebrating the offshoring of essential dual-use civilian-military manufacturing to foreign countries—including adversaries like China. Often it rejects the relevance of borders and value of nation-states altogether. Libertarianism weakens the family, by allowing employers to pay workers too little to support themselves, much less to provide for children. Libertarian economics treats the unpriced value of family and community as worthless, and libertarian philosophy regards the obligations they impose as unjust and invalid.

Libertarian economics treats the unpriced value of family and community as worthless, and libertarian philosophy regards the obligations they impose as unjust and invalid.

A New Right must replace family-wrecking, nation-weakening libertarian globalism with a conservative economic strategy that achieves conservative goals instead of subverting them. That strategy is what the economist Robert D. Atkinson and I call “national developmentalism.” Far from novel, developmentalism is rooted in the “American School” of economics associated with Alexander Hamilton and Henry Clay in the 19th century and with successful U.S. economic development in the 20th century under Republican and Democratic leaders alike.

Private property and markets are fundamental to national developmentalism. But developmentalists reject the fundamentalist clichés of libertarianism that promise a mythical “self-regulating market” that will optimally allocate resources in favor of the tried-and-true, pragmatic recognition that technological innovation and economic growth result from the partnership of private enterprise with public investment and support. Government should be limited in its scope, but within its proper sphere government should be competent and powerful. From a genuine conservative point of view, being “for” the market and “against” government is like being “for” the respiratory system and “against” blood circulation, even though both are necessary for bodily health.

Unlike libertarians, for whom all markets are alike and operate according to the abstract laws of Econ 101, economic realists, a category which should include all conservatives, understand that different industries have different structures. Some are competitive but others are naturally monopolistic or oligopolistic. No one-size-fits-all theory or system of regulations is appropriate.

And all industries are not created equal. Industries in the traded sector, like consumer electronics or automobiles or aerospace, which produce goods or services that can be sold outside a local area (and potentially in global markets), enrich a community and ultimately a country more than industries in the nontraded local service sector, like hair styling, whose markets are small and local. Among traded sector industries, manufacturing is the most important, for three reasons. First and foremost, no country can be a great military power if it cannot manufacture most or all of its own armaments and weapons platforms. Second, thanks to increasing returns to scale, manufacturing firms that dominate large national or global markets are more efficient than small ones. There are no local mom-and-pop auto companies or steel mills. Third, manufacturing has a “multiplier” effect both “upstream” (suppliers) and “downstream” (users of manufactured parts).

Most state, county, and urban development agencies seek to encourage local production by national or global manufacturing firms, if they can, to anchor local development strategies. They know what they are doing. A county is better off with one auto parts supplier with national or global sales than with a hundred walk-in hair salons. It is the auto parts supplier that allows the hair salons to thrive.

Conservatives should favor an economic system that favors those who value children over granite countertops more than those who value granite countertops over children.

What about workers replaced by mechanization or automation? By lowering the price of goods and services, technology-enabled productivity growth can provide everyone with more discretionary income, some of which can lead to greater hiring in sectors like health care that cannot yet be automated. Another alternative that should be of particular interest to pro-family conservatives is sharing the gains from technology-enabled productivity growth with workers in the form of more leisure time that can be used for family activities, rather than in the form of higher wage income or more material consumption. Conservatives should favor an economic system that favors those who value children over granite countertops more than those who value granite countertops over children.

A genuine conservative economics would distinguish technological progress from growth in gross domestic product (GDP). When higher productivity leads to higher GDP, people can prosper. But GDP can also increase by three methods, each harmful to family cohesion in some cases. One harmful method is the outsourcing and marketization of formerly unpaid labors of love—fast food rather than a home-cooked meal, or paid childcare rather than a parent or relative raising a child at home. Formal economic activity and profits increase when labor moves from the unpaid household sector to the paid market sector, even though productivity may not increase at all. The other two harmful methods of growth involve working more or more workers. When additional family members are pulled into the workforce, or people work more hours or take on additional jobs, GDP does grow. Here the tradeoff is leisure and family time (unvalued by the market) for market-valued output, again with costly consequences for family and community health.

A healthy manufacturing sector and strong productivity would help to ensure that the typical worker’s wages begin rising again and that a family can support itself on one income. A living wage, whether it is imposed by law or negotiated with workers alone or collectively, should be high enough to pay not only for recurrent expenses like housing, food, and transit, but also for private premiums or public payroll taxes for health insurance and contributions to retirement programs.

The most popular and effective social insurance program is Social Security, which radical libertarians have tried for decades to repeal or cut. But genuine conservatives should embrace social insurance, in preference to the libertarian and progressive alternative of means-tested welfare. Social insurance supports self-reliance because it is earned by work effort and paid for by a payroll tax. It is an earned benefit, not “welfare” in the pejorative sense.

Social insurance supports self-reliance because it is earned by work effort and paid for by a payroll tax. It is an earned benefit, not “welfare” in the pejorative sense.

Most Americans say they would prefer to ensure Social Security’s solvency primarily by means of higher payroll taxes, not benefit cuts. With good reason both Ronald Reagan and Donald Trump refused to cut Social Security; when George W. Bush attempted to partially privatize it, the backlash among conservative Republican voters wrecked his second term. Social Security is efficient because benefits guaranteed by government and adjusted for inflation have lower risk than private benefits invested in the casino of the stock market or eroded by inflation in private savings accounts.

The same logic calls for a robust social insurance program to support families raising children. Families face concentrated costs as well as constraints on their income during the limited number of years when their children are young and dependent; rather than expecting a “family wage” to always cover that highest level of costs, adults should pay throughout their working lives into a social insurance program that offers the necessary support to working families in those crucial child-rearing years.

Does embracing pro-manufacturing industrial policy and pro-family social insurance make conservative economics nothing but progressivism under another name, as radical libertarians might claim? No. A genuine conservative economic industrial policy would focus on national security and productivity growth, unlike the industrial policy of progressives that seeks to steer funding to renewable energy boondoggles and institutional childcare. Genuine conservatives would strengthen the family by adding a new, work-earned social insurance benefit for stay-at-home parents. In contrast, the objective shared by progressives and the U.S. Chamber of Commerce is economic growth based on labor force growth, so that all mothers of young children are in the workforce, with their children raised en masse by paid strangers in government-subsidized institutional daycare.

Libertarian economics and progressive economics alike undermine the values that conservatives hold dear. It is time for a genuine third way, a conservative economics that strengthens rather than undermines the family, the community, and the nation.