Adolph Lowe was born Adolf Lowe on 4 March 1893 to a liberal Jewish family in Stuttgart and died in Wolfenbuttel, Germany on 3 June 1995.

Lowe was one of the outstanding political economists of the twentieth century. Unlike most modern economists, he did not separate economics from the other social sciences, so that Kenneth Boulding (1965: 139) characterized Lowe, who during his whole life was striving for a humanist middle way between liberalism and socialism, as an “economic philosopher”.

The concern with a viable order, both stable and free, permeates Lowe’s entire economic, sociological and philosophical work: from the early analysis in Arbeitslosigkeit und Kriminalitat (Unemployment and Criminality) (1914) via his London School of Economics (LSE) lectures Economics and Sociology (1935) making a strong plea for cooperation in the social sciences, his analysis of “spontaneous conformity” in liberal Britain as central for balancing freedom and order successfully for a large-scale society in his essay The Price of Liberty (1937), and his elaborations of “Political Economics” as the science of controlled economic systems in On Economic Knowledge (1965), up to his last work Has Freedom a Future? (1988), in which Lowe has become more sceptical due to many destabilizing factors at work, such as technological unemployment, enormous inequalities of income and wealth, and ecological crises. Here Lowe stresses the danger that the failures of a free market system could be aggravated by failures of the political system, a danger which has become real in the current financial and economic crisis. This peril could only be avoided by revitalizing the Western tradition (going back to Aristotle’s philosophy) properly understood: an individualism rooted in social responsibility which balances the private and the public domains, that is, freedom and order (Hagemann and Kurz 1990).

Lowe strongly argues for an ethics in which individualism is combined with social responsibility. Although he shares his birthplace with Hegel, Lowe thus stands much more in a Kantian tradition.

His social liberalism is deeply rooted in his biography and has much in common with Keynes who also favoured governmental interventionism in periods of great economic and political crises to safeguard the democracy. The ends of these interventions are themselves subject to the checks and balances of the democratic process. Political economics and the social sciences are essentially recognized as moral sciences. The work of Lowe, who had been an active member of the group of religious socialists around his close friend Paul Tillich - the most distinguished Protestant theologian in Weimar Germany - to defend the young Republic, is deeply rooted in a common Jewish-Christian culture.

From 1911 to 1915 Lowe studied law, economics and philosophy at the universities of Munich, Berlin and Tubingen where he received his doctorate in law in November 1918. The main stimulus as an economist Lowe received from Lujo Brentano in Munich and Franz Oppenheimer in Berlin. At the end of World War I Lowe became a chief economic adviser to the young Weimar Republic. From 1919 to 1924 he served as Section Head in the Ministry of Economics, being involved with issues of reparation policy and drafting the memoranda which the German government presented at the conferences in Genoa 1922 and Paris 1924 (Dawes plan; see also Krohn 1996).

From 1924 to 1926 he was Head of the International Division of the German Bureau of Statistics and assisted the President Ernst Wagemann to found the first German

Institute for Business Cycle Research in Berlin in 1925. In early 1926 Lowe accepted an offer by Bernhard Harms, the President of the Kiel Institute of World Economics, to become Director of Research of a new department of statistical international economics and international trade cycles. Owing to outstanding scholars such as Gerhard Colm, Hans Neisser, Fritz (Frank) Burchardt (who in 1949 became Director of the Oxford Institute of Statistics), Wassily Leontief and Jacob Marschak, the department soon obtained international reputation and substantial research money from the Rockefeller Foundation.

In October 1931 Lowe, who had been appointed Professor of Economic Theory and Sociology at the University of Kiel in February 1930, moved to the Goethe University in Frankfurt, where in April 1933 he was among the first professors to be dismissed by the Nazis for racial and political reasons.

The first hosting country in exile was the United Kingdom where Lowe became special Honorary Lecturer in economics and political philosophy at the University of Manchester in 1933 and, together with Marschak in Oxford, one of the main advisers of the Rockefeller Foundation on emigre economists. In England Lowe also became a naturalized citizen in September 1939: ‘Lowe’ mutated to ‘Lowe’. In summer 1940 he accepted a renewed offer from the New School for Social Research in New York. There Lowe served as Professor of Economics until his retirement in 1963, and also as Director of Research at the Institute of World Affairs between 1943 and 1951. He continued teaching until the late 1970s and remained a very active researcher which is best reflected in the fact that his two main works On Economic Knowledge (1965) and The Path of Economic Growth (1976) were published rather late. After the death of his wife Beatrice Loewenstein, Lowe returned to Germany in March 1983, exactly half a century after his forced departure.

Lowe played a major role in the debates on business cycles in the 1920s. It was particularly his seminal Kiel habilitation thesis with the Kantian-inspired question “How is business cycle theory possible at all?” which had a significant impact on subsequent debates in the German language area and to some extent also internationally (see, for example, Kuznets 1930a, 1930b). In his “brilliant article” (Kuznets 1930b: 128) Lowe pointed out a fundamental methodological dilemma of business-cycle theory: how can the traditional equilibrium concept in economics - which Lowe, inspired by Schumpeter, also called static system - cope with an essentially disequilibrium phenomenon such as cyclical fluctuations? Lowe’s conclusion is clear: “Those who wish to solve the business cycle problem must sacrifice the static system.

Those who adhere to the static system must abandon the business cycle problem” (Lowe 1926 [1997]: 267). Lowe was fully endorsed by Kuznets who concluded that “equilibrium economics was... adding the dead weight of a barren doctrine to the burdens of a complex reality” (1930a: 390) and regarded “the equilibrium approach... to be a blind alley from the point of view of business-cycle theory” (ibid.: 399).

Hayek took up Lowe’s fundamental methodological challenge concerning the (in) compatibility of business-cycle theory with the equilibrium approach in the first chapter of his Monetary Theory and the Trade Cycle. He agrees with Lowe “that the incorporation of cyclical phenomena into the system of economic equilibrium theory, with which they are in apparent contradiction, remains the crucial problem of Trade Cycle theory” (Hayek 1929 [1933]: 33). However, in the conclusions drawn, Hayek differed substantially from Lowe (see Hagemann 1994). Whereas Lowe wanted to abandon the equilibrium approach in business-cycle theory, Hayek adhered to the equilibrium concept as an indispensable tool. In contrast to Lowe (and Schumpeter) who emphasized technical progress as the decisive impulse, Hayek (and Mises) attributed the cycle to monetary factors. Both, Lowe and Hayek, emphasized the importance of the underlying structure of production. However, whereas Lowe had found the basis of his later works on the structural theory of economic growth very early in Marx’s scheme of expanded reproduction, in which emphasis is on the “horizontal” or sectoral treatment of production, Hayek remained in the Austrian tradition, originated by Bohm-Bawerk, with a “vertical” treatment of production structures and emphasis on the time dimension.

In more than 60 years of research, Lowe focused on technological change as the mainspring of destabilizing tendencies in industrial economies. His attempt to develop a theory of accumulation, technical progress, and structural change culminated in his The Path of Economic Growth (1976).

It shows Lowe as a pioneer of traverse analysis along with John Hicks who in his Capital and Time (1973) had also been fascinated by Ricardo’s analysis of the machinery problem. However, whereas Hicks investigates the short- and medium-run consequences of innovations on the basis of a neo-Austrian representation of production structures, Lowe uses a horizontal model in which inter-sectoral interdependencies and the existing stock of capital goods as a decisive physical bottleneck are emphasized. Lowe had developed the structural model of production which he used for his traverse analysis already in two articles (Lowe 1952, 1955), written in the wake of the foundation of modern growth theory by Harrod and Domar. He modified Marx’s schemes of reproduction by splitting up the investment goods sector into two parts, thus extending the two-sectoral into a three-sectoral model (see also Hagemann 1990). Lowe’s instrumental analysis (Lowe 1965), the core of which consists in deriving suitable means from given ends - such as a successful compensation of technological unemployment - has two parts: structural analysis and force analysis, which reveals the crucial role of expectations and the significance of a functioning price mechanism in market economies.

Harald Hagemann

Adolph Lowe was born Adolf Lowe on 4 March 1893 to a liberal Jewish family in Stuttgart and died in Wolfenbuttel, Germany on 3 June 1995.

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