Page 42 - Azerbaijan State University of Economics

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

Michael Polanyi also advocates for the logic of discovery as a heuristic exercise, where
instrumental analysis is like crossing over a logical gap by drawing conclusions from
existing knowledge and experience. Political economics provides a logical framework
for discovering solutions to economic problems by correctly assessing, identifying,
and understanding the problem (Hanson 1965, Polanyi 1962, p. 126-39).

Instrumental analysis starts from identification of the knowns and the unknowns in the
system under investigation. In this inferential procedure, unknowns are derived from the
knowns. Unlike traditional theory where the final state or macro-goal is unknown, we take
this macro-goal as known in the instrumental analysis. For example, in traditional
mathematical models of planning like Mahalanobis’ model, Feldman’s model or Harrod-
Domar model, we put certain values of parameters in a given equation and thus arrive at
the final goal. The final goal is not postulated before-hand, it is observed later. The
“Knowns” in the instrumental procedure are a specified macro-goal, initial state of the
system under investigation, concerned law of nature, engineering rules and related
psychological laws linking specific behaviours to specific motivations and certain
generalization about economic motivations and environmental influences like political
control. The unknowns to be discovered from the “Knowns” are probable paths of the
system to achieve the final state, suitable patterns of behaviour and related suitable
motivations and finally a system of political control suitable to generate such motivations
(Lowe 1965, p.253-54). The strict description of initial state and final goal can help us
discover the suitable paths more easily but the inferential procedure as a process of
discovery may well differ for different macro goals.

Based on the above discussions based on Lowe’s book On Economic Knowledge
(1965), instrumental inference can be summarised in the following diagram:

Fig.1. Adolph Lowe’s Political Economics, Source: Ranjan (2016)

42