Page 44 - Azerbaijan State University of Economics

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

Through the lens of instrumentalism, a planning process can be envisioned in five
steps. The first step is goal-setting, which is essentially a political process in Lowe’s
political economics (Lowe 1968; Oakley 1987). A passive role for community in the
planning process may lead to ill-informed and misperceived aggregation of social
preferences at the central level which may ultimately derail the public- friendly plan.
In this context flow of information and relevant messages across the political system,
bureaucratic system and civil society is important. Processing of available information
and knowledge to arrive at an optimal decision is crucial in planning. A deliberative
and democratic process of goal-setting is amenable to operationalising control to
achieve the macro-goal.

The second step is structural analysis, which is about knowing the initial state of the
economy. As earlier pointed out, it is concerned with the elements of an economic
system e.g., input, output, employment, savings, investments and so on and their
arrangement to achieve the final goal. The third step is to identify the feasible paths
for the economy (goal-adequate paths/adjustment path) connecting the macro-goal and
the initial state of the economy. Adjustment path of a system is a path defined by
progressive succession of states which are achieved by a system in due course of
achieving a macro-goal. The succession of states is concerned about the arrangement
of micro activities in a certain manner. Path describes itself as structured states defined
in terms of physical and price relationships among different variables e.g.,
employment, income, savings, investment and soon. At each different stage these
variables shift and adjust to achieve the terminal state.The fourth step is behavioural
analysis (force analysis) to find goal-adequate behavioural and motivational pattern to
keep economy on its adjustment path. For example, to achieve certain level of savings,
investment and growth, certain behavioural and motivational pattern among civil
society, bureaucracy and investors’ community is required.

The last and the most important step, keeping in view the decentralized decision making
among various actors in the modern economy, is the establishment of goal-adequate
controls. Political economics as a controlled economic system strives to design controls
for keeping the economy on goal-adequate path based on the findings of instrumental
analysis. Controls here are only to shape preferences and behaviours of economic agents
to conform to the desired macro-goal. Design and establishment of controls are steps of
intervention which drive economy towards a goal. For Lowe, control means providing an
‘environment’ that will motivate microeconomic decision makers to conform to
behaviours that are goal-adequate. The choice of controls is immediately constrained by
the specification that the maximum degree of freedom consistent with the achievement of
the goals pursued must be sustained (Oakley, 1987).

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