Luigi Pasinetti and Adolph Lowe: Bridging Capital Theory and Institutional Analysis

ABSTRACT This article examines the convergence of Luigi Pasinetti's and Adolph Lowe's political economy, linking capital theory, institutions, and normative methodology. Pasinetti's two‐stage approach and Lowe's instrumental method share a common emphasis on the structural requirements and institutional arrangements for attaining and maintaining full employment. Pasinetti's analysis of structural dynamics and Lowe's traverse analysis are complementary methodologies for analyzing the employment consequences of structural and technological change within dynamic industrial economies. Synthesizing the methodology of Pasinetti and Lowe underscores the policy relevance of government‐led intervention to attain and maintain full employment and provide a robust foundation for normative macroeconomic analysis.