ABSTRACT
This chapter shows that the drift to heterodoxy is contributing to a profound paradigm shift in political economy. The economists’ abiding commitment to develop and apply theory that is relevant, directly or indirectly, to the great issues and problems of the day is driving some economists out of orthodoxy and into other positions. The chapter explores four foci of convergence of John Maynard Keynes’s thought and institutional analysis: method and scope of inquiry, concern with institutional adjustment, focus on political economy, and instrumental value theory. Keynes’s approach to inquiry was a self-conscious concern to formulate theory, or revisions of theory, to guide conduct in problematic situations. The economic function is and must be continuous and developmental; the institutional structure is and must be discontinuous and replacemental at points of disjunction or breakdown. During the 1970s, the existence of concurrent inflation and unemployment led many economists to reflect on the adequacy and continued relevance of traditional explanations of instability.
