Page 49 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.80, # 1, 2023, pp. 35-53

Lowe’s political economics emphasizes uncertainty in the capitalist system and this
emphasis gives large scope for introducing social dimensions to an economic system,
as in most post-Keynesian theories (Dymski 2014). Lowe’s theoretical approach is
embedded in socio-political and environmental structures to conceptualize a modern
capitalist economy. This systemic openness makes it imperative to consider that
changes in an economy can happen in variety of unpredictable ways and people’s
preferences can also change with changes in economy (Ramazzotti 2021).

Lowe’s political economics brings us to the idea of cooperation among social sciences
to deal with this evolutionary nature of an economy, economic agents, and their myriad
expectations. Thus, goal setting in Lowe’s political economics falls in the realm of
politics and description of initial state is done keeping in mind the macro-goal and
both inform each other, identifying goal-adequate behaviours of various economic
agents fall in the realm of sociology, psychology, and other social sciences while goal
adequate path is more in the realm of economics. Overall, the major task of economics
is to achieve a macro-goal through public policy in a policy environment with dynamic
feedback which makes the models and policy to evolve with evolving society to
achieve the goal, thus economic system becomes a goal-oriented controlled economic
system. Lowe envisaged controls as a major component of this controlled economic
system and have a major role in keeping the economy on a desired path. As described
previously, controls have a wide spectrum encompassing incentives, persuasion, and
education to coercion.

Lowe’s framework of instrumental inference can also be seen as a guiding principle
of policy processes. Theories in pure economics rarely talk about policy processes to
achieve a goal. Policy processes have been studied in political science. Lowe’s
framework does not give any specific policy conclusion about any economic
parameter; however, it gives us a framework to think about goal-seeking economic
policy and the associated policy processes. Lowe’s framework of controlled economy
is different from Abba Lerner’s controlled economy where Lerner developed specific
rules of policy from pure theory and proposed that to maximise social welfare,
government should follow these rules e.g., Lange-Lerner rules and functional finance
(Colander 2005). Lerner prescribed policy rules as goals to be achieved but does not
provide rules for elements of policy processes like policy design, policy agenda, policy
implementation policy learning etc.

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