ABSTRACT
Heterodox economists recognize that the state is central in establishing and modifying all market orders. Mainstream economists do not deny that markets cannot operate without the state’s provision of “the legal-institutional process through and within which markets function” (Medema 2003: 434). However, they typically do not allow a role for the state beyond the minimal functions of producing and enforcing the institutional framework that best protects a free market economy, viewed as an evolutionary end-point. In contrast, many heterodox economists believe that the state should direct economic evolution by designing and nurturing institutions that secure greater equality, social justice, and full employment, outcomes that might not emerge as a result of “unfettered operation of laissez-faire capitalism” (Petr 1987: 1453; see also Commons [1934] 1961; Galbraith 1973; Stanfield 1992; Mayhew 2001; Whalen 2008). Consequently, they argue for a profound reconceptualization of the mainstream vision of a minimal state with little remedial involvement in the economy.
