The rise of institutions

In discussing the nature and influence of institutional elements, it is helpful to consider briefly the origins of institutions. If we understand their origins and history, we might appreciate their role in our lives more fully. Therefore, how do these social, political, and economic structures that define the contours of our behaviors come into being? Why and how do they continue to exist? These are topics most familiar to political theorists, institutional economists, and organizational behaviorists, the scholars who study the origins and development of political order and organizations, the roles of legal and economic institutions, and their impact on institutional and individual behaviors.8

Institutions emerge and adapt over time for two important reasons. First, humans are social beings, even if they have their own aspirations and self-interests. They may desire a separate space at times. But unless they are recluses, people need to associate with other people, to form groups and standards of conduct and fairness, for reasons of companionship, protection, safety, and predictability. Collective action results from people's calculations that they will be better off through collaboration than by being on their own.9

For much of human history, most people lived in or near the general regions where they were born.10 Along with technological improvements in travel and information, rising levels of wealth enabled people to move around and have greater choice ...

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