There are, we’re told, five stages of grief. A political party, in the wake of a devastating loss, goes through something similar. Shock gives way to a (short) season of self-reflection–but what emerges on the other side varies. Sometimes people draw opposing conclusions. Such is the state of the Republican Party right now.

Republicans seem to have broken into three camps. One is composed of those who believe that concerns about the party are vastly overstated. The argument goes something like this: America remains a center-right country. Barack Obama had a once-in-a-generation appeal to the Democratic base that can’t be replicated. All the GOP needs is an attractive torchbearer, better messaging, a tweak or two, and all will be right with the world once more.

A second camp argues that the problem with the GOP is insufficient purity. Those who hold this outlook believe that by nominating moderates like John McCain in 2008 and Mitt Romney in 2012, the Republican Party didn’t offer enough of a contrast with Obama. Victory depends on dusting off the old Ronald Reagan playbook. It worked in 1980 and 1984, and it would work for the GOP today. In the process, the party needs to expel heretics from the temple–which in this case means attacking RINOs (Republicans in name only) and members of the loathsome Establishment.

A third camp, in which I place myself, believes the party is in a precarious position because it faces systemic problems and alarming demographic trends. Which means a significant recalibration is in order. This doesn’t mean jettisoning the GOP’s core commitments to limited government, economic growth and protecting unborn children. Nor does it mean the Republican Party should become more moderate. What it does mean is that the GOP has to become more modern, more reform-minded and more aggressive in repositioning itself through a series of policy innovations. This involves identifying areas of weakness and designing a set of proposals to address them. Some examples: To combat the impression that the GOP is beholden to the top 1%, Republicans should champion ending corporate welfare as we know it, breaking up the megabanks, increasing the child tax credit and encouraging upward mobility through education reform. On immigration, we should support better border security and a path to legal status and eventually citizenship for undocumented workers. The GOP, perceived as hyperindividualistic, should demonstrate its commitment to the common good by supporting civil-society groups working to expand adoption, the next stages of welfare reform, overhauling our prison system and the cultural assimilation of immigrants. Republicans also have to accept that in large parts of America, opposition to same-sex marriage is a losing battle–but that cannot keep the GOP from being consistent about the importance of marriage itself and taking steps to fortify it.

But creative policy proposals, while essential, are insufficient. Something deeper needs to occur. The party must shake off an intellectual rigidity that has set in. Some examples of this include declaring that not raising taxes is an inviolable principle rather than a reasonable policy judgment and insisting that global warming is a hoax. And a self-confident conservative movement would not bar the gay group GOProud or New Jersey Governor Chris Christie from its events, as the Conservative Political Action Conference has done. The theory of addition through subtraction doesn’t work in mathematics or politics.

There is an alternative conservative tradition to draw on that seeks to accommodate timeless principles to shifting circumstances, that rejects unyielding orthodoxy and believes prudence, not purity, is the cardinal political virtue. And while it believes in limited government, it is not carelessly antigovernment. The 19th century economist Alfred Marshall elegantly described government as “the most precious of human institutions, and no care can be too great to be spent on enabling it to do its work in the best way. A chief condition to that end is that it should not be set to work for which it is not specifically qualified, under the conditions of time and place.”

Now for the good news: There is an unmistakable, if far from complete, movement in this direction since the 2012 defeat. An intellectual unfreezing is taking place. It’s actually a pretty interesting time to be a Republican. The Democratic Party found itself in a similar moment in the early 1990s. The party was open to a New Democrat–and out of this emerged William Jefferson Clinton. The GOP awaits its version of the man from Hope.

Peter Wehner is a senior fellow at the Ethics and Public Policy Center.