- This article is about institutions as social mechanisms. Please see Organization for formal establishments.
Institutions are
social structures and
social mechanisms of
social order and
cooperation governing the
behavior of two or more
individuals. Institutions are identified with a
social purpose and permanence, transcending individual
human lives and intentions, and with the making and enforcing of rules governing cooperative human behavior. The term, institution, is commonly applied to customs and behavior patterns important to a
society, as well as to particular formal organizations of
government and
public service. As structures and mechanisms of social order among humans, institutions are one of the principal objects of study in the
social sciences, including
sociology,
political science and
economics. Institutions are a central concern for
law, the formal regime for political rule-making and enforcement. The creation and evolution of institutions is a primary topic for
history.
Aspects of Institutions
Although individual, formal organizations, commonly identified as "institutions," may be deliberately and intentionally created by people, the development and functioning of institutions in society in general may be regarded as an instance of
emergence; that is, institutions arise, develop and function in a pattern of social self-organization, which goes beyond the conscious intentions of the individual humans involved.
As mechanisms of social cooperation, institutions are manifest in both objectively real, formal organizations, such as the U.S. Congress, the Roman Catholic Church or the Bank of England, and, also, in informal social order and organization, reflecting human psychology, culture, habits and customs. Most important institutions, considered abstractly, have both objective and subjective aspects: examples include money and marriage. The institution of money encompasses many formal organizations, including banks and government treasury departments and stock exchanges, which may be termed, "institutions," as well as subjective experiences, which guide people in their pursuit of personal economic well-being and wealth.
Powerful institutions are able to imbue a paper currency with certain value, and to induce millions into cooperative production and trade in pursuit of economic ends abstractly denominated in that currency's units. The subjective experience of money is so pervasive and persuasive that economists talk of the "money illusion" and try to disabuse their students of it, in preparation for learning economic analysis.
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