In the man’s own words….
There’s more at the link:
Lowe has described ‘Peace, Love and Understanding’ as “the first actual original [song] idea that I had”. He wrote it at a time when “a mass of hippies were leaving the cult in droves and rediscovering booze, alcohol, amphetamine and, I suppose, cocaine. There was this new cynicism.” He placed himself into that category, and thus the song took “the point of view of an old hippie, seeing his commune leaving and starting to cut their hair and make fun of him. And he was saying, ‘You can laugh at me all you like, but what’s so funny about peace, love and understanding? You can’t argue with it.’”