Abstract
In contrast to prevalent institutional theory this article offers a multi-motivated institutional analysis. Institutions are supposed to channel human behaviour, which is economically, socially and psychically driven, so as to maximize wealth, status and self-respect, respectively. The analysis shows that extractive institutions are the result of the irrationality and immorality, especially of the people in power. The significant reduction of these two characteristics is a necessary condition for a society to become more inclusive.
Highlights
The analysis shows that extractive institutions are the result of the irrationality and immorality, especially of the people in power
The same holds for other types of spontaneous institutions, as analyzed by the New Institutional Economics (NIE), such as the design of private contracts, in which transaction conditions are described
Social policies, which aim at an increase in the degree of genuine morality might contribute significantly to a more prosperous and just society, ruled by more inclusive institutions
Summary
People live in groups; most of them cannot live a solitary life They need recognition from important others, and the higher their group is ranked, the more status the group members experience. In a fourth section the three primary forces, which steer human behavior are discussed. It gives us three mechanisms of allocation of human energy: market, arena, and mind. In section five the historical approach to the evolution of institutional frameworks will be discussed. The third type refers to the know-how on human behavior. It will be explained why an inclusive society needs more progress in αγ-technology—which means growing reasonability, to “accompany” the ongoing progress in αβ-technology.
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