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Nalin Ranjan: Understanding Epistemology and Methodology in Adolph Lowe’s Political Economics

This otherwise simple man-matter relationship defined by the unchanging engineering
rules and laws of nature gets complex, when seen in terms of establishing a symbiotic
relationship vis-a-vis man-man relationship in a society. The attainment of aggregate
output in a social economy needs setting up a disaggregated production mechanism based
on known rules and coordinating actions of many individuals at different stages. The most
pronounced problem here is how to coordinate and maintain the requisite social patterns
of behaviour amenable to attainment of our final goal. Psychological manipulation of each
other is an indispensable part of this process. In Lowe’s view, two kinds of institution
namely system of communication which serves to express intentions and compliant
reactions and the system of sanctions which rewards or punish the actions according to
appropriateness of the same, are needed for the survival of economic society.

The basis of traditional theory of market is law of supply and demand based on premises of
how market participants react to price signals. Analysis of households, firms, interregional
trade and even modern theory of output and employment is based on this general law and
its basic premises (Lowe 1965, p.35). The law of supply and demand presupposes effective
communication through price signals and resulting expectations, and sanctions through
pecuniary gain and loss and thereby compliant reactions from market participants.

For the law of demand and supply to be operative, it is imperative that sellers must
maximize money receipts and buyers must minimize money expenditure, Lowe calls it
the “extremum principle,” culminating into specific expectations. Stabilizing expectations
and compatible motivational patterns are needed for market participants acting in
accordance with the law of demand and supply. Lowe identifies two constituents which
shape motivational patterns namely incentives or action directives which represent
purposive intent and expectation which represent strand of cognition (Lowe, 1968).

While identifying the persistence of “extremum principle” and seemingly logical
operation of equilibrating forces in classical as well as neoclassical reasoning, Lowe
underscores the necessity of discovering the truth value in traditional theory by its
empirical presence or absence. He suggests of a prevalent tendency towards extremum
principle in early periods of classical economics, but on the other hand doubts the neat
operation of the principle in presence of wide variety of incentives and their combinations
constantly manipulating the market space in modern times. In modern times, uncertainty
has increased much and expectations have no definite pattern, this feature of modern
industrialism makes it difficult to visualize any determinate rule of the market.

Economics is visualised as an open system in Adolph Lowe’s book On economic
knowledge. As an open system, Economics cannot have the methodological advantage of
hard sciences and disequilibrium in the system may be due to intra as well as extra-
systemic effects.

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