The Place of Institutions

The purpose of the preceding two chapters was to take as seriously as possible the central claims of those who have argued that Keynesian full employment failed because the economic policies pursued by its advocates were inherently unsound. Apart from the manifest economism of the stance adopted by those who have advanced such arguments, it has been argued here that such arguments confront significant obstacles even on their own terms. The causal relationship that some attempt to establish between the practice of Keynesianism in the 1950s and 1960s and the onset of stagflationary economic conditions of the mid-1970s, as it has been shown, for example, encounters a number of significant theoretical and empirical obstacles. The evidence presented in Chapters 6 and 7 is such that satisfactory explanations about how and why Keynesian beliefs were abandoned are not to be found in the economic realm — at least not in an economic realm that ignores or neglects wider institutional, that is to say, political and social, forces.