Social Organizations, Violence, and Modern Growth

Although social institutions permeate the world in which we live, they are all but absent from our analyses of economic growth and development. This paper argues the need to mitigate this omission by demonstrating the importance of social institutions for growth and development while focusing on institutions providing social safety nets. Social institutions and policies render individual behavior contingent on the social status or category of the parties involved as is the case, for example, in the relations among members of the opposite sex, family members, rich and poor, young and old, nobles and commoners, and public officials and those whom they serve. Social institutions thus influence important outcomes such as human capital acquisition, wealth distribution, labor market opportunities, nutritional intake, and social safety nets. As such, social institutions complement and interact with economic, legal, and political institutions whose importance is well recognized (e.g., North 1990). The hallmark of a modern economy is useful knowledge progression that increases labor productivity. Explaining why this progression began by considering political and economic institutions, however, has thus far been elusive. There is no unified theory that accounts for three key puzzles: first, why China or the Dutch Republic was not the first to make the transition to a modern, knowledge-based economy. After all, China was the world technological leader for centuries, while the Dutch Republic had political and economic institutions conducive to bring about modern economic growth. Second, why Social Organizations, Violence, and Modern Growth