In his 1989 classic The Rise and Fall of the Great Powers Paul Kennedy wrote, “To be a Great Power—by definition, a state capable of holding its own against any other nation—demands a flourishingeconomic base.” Kennedy should have added, “an economic (and technology) base that is flourishingmore than its competitors.”

If that is the sine qua non of being a great power, the United States faces significant challenges and isat risk of losing its 75-year great power status. If the United States is to stay ahead of China militarily andtechnologically, it will need to essentially put in place a new national innovation (and production) system,because the current one suffers from serious shortcomings.After World War II, the United States created the world’s best innovation system (for example, the rules,incentives, funding, institutions, and relationships that support innovation and production). Once we won thecold war, U.S. leaders let it languish and shrink, while in turn embracing market fundamentalism (a belief thatgovernment should play a minimal role in supporting innovation) as the overarching economic policy doctrinethat limits American freedom of movement to this day. Now facing a multi-decade great power conflictwith China, it is time for the establishment of a revised and renewed U.S. national innovation system.1To increase the chances of that happening, U.S. national security officials need to become more forcefuladvocates not just of an improved U.S. national security system, but of a greatly improved Americaninnovation and production system. This new system needs to be grounded not only on a rejection of marketfundamentalist thinking and the minimalist policies stemming from it, but also on a recognition that thecurrent advocacy of many progressives for an industrial policy grounded in climate mitigation and “inclusivegrowth” will do little to address the China challenge.