The Importance of Institutions

The Modern Survival Guide #86

This is the Modern Survival Guide, a guidebook I’m writing for things I think people need to know about living in the modern world. The views expressed here are mine, and mine alone. And I am fascinated with the way our world works — it’s why I’m writing this series. I have ideas on the way the world works, and this article is part 2 of a mini-series on this topic. Last time we talked about individuals, and how they work in society. If you haven’t read that article, I’d suggest starting with it, because a fair few concepts under discussion here were introduced earlier.

This time we’re talking about institutions. Let’s start with a standard definition, because it’s important to know what we’re talking about: .

Now don’t get me wrong, that makes “institution” a really broad term, but it’s important to apply it accurately. There are a righteous of institutions in any society — they run the gamut from corporations, governments, religions, marriages, financial groups… basically anything that exists according to an understood structure.

This quality of structure is important, because institutions have a major role in society and they require structure in order to work. Let’s return to the Society Wheel for a moment:

Society, in a nutshell

Institutions occupy the second point on the Wheel, and for good reason: they are the structured operation of individual will. Individuals create institutions in order to perform almost any action that requires more than one or two people. That gives these institutions a great deal of power, and it is a survival skill in the modern world to understand how this works.

Let’s start with a recap of the individuals’ contributions. In the last article we discussed the fact that individuals create and use institutions to get things done. Most things we do in life require more than one person’s contributions or assistance, and in order to accommodate multiple parties with multiple needs and incentives, people create institutions. These institutions have rules of operation which govern things like who joins, what people can do within the institution, and what the institution does. All institutions are built around the concept of orderly creation (or destruction).

Individuals have power over institutions because the institution itself is just an organization or a concept; it can’t make decisions, it can’t chart its own course. It simply follows the rules. That gives people the power to change the rules, and thereby change the institution. That has major repercussions.

This isn’t to say that institutions are powerless or undirected on their own accord. Far, far from it.

Institutions Have Power Through Order

The point of an institution is that it creates order from chaos. Order provides certainty, rules, regulations, and standard operating procedures. This gives institutions a trio of ridiculously influential powers: the power to get things done, the power to create “reality,” and the power to survive stupidity.

Let’s talk about getting things done. One man by himself ain’t worth a damn. He can’t do a lot of things, because he only has two hands, he’s vulnerable, and he’s got a time limit. Organizing people is how the human species does most things, because it’s the best way to get a lot of hands on problems and replace individuals as they burn out, die, or move on to other projects. Every organization is an institution, and institutions get things done.

Do you need to get medical care? There’s an institution for that called a hospital. Do you need to for medical care? There’s an institution for that called insurance. Do you need to get money to pay the insurance? There’s an institution for that called your job. Do you need to store your money? There’s an institution for that called a bank. Do you need to catch the people who stole your money from the bank? There’s an institution for that called the police. And so on, and so forth.

This isn’t to say that people can’t do things on their own. I shaved myself this morning, for example. But in order to do that, I used a razor, which I didn’t make myself, looking in a mirror that I didn’t make myself, using water from a tap that I didn’t build myself, etc. ad nauseam. Yes, people can act on their own. But unless you live on a desert island, you are surrounded by the institutions of your society, there’s no getting away from it, and you rely on them to get a lot of things done.

And even on the desert island, you’re at the mercy of all sorts of institutions that might want to get things done on that island. You’re only one board meeting away from some real estate developer planting a resort hotel on your deserted beach.

Let’s talk about “reality.” A lot of what we think of as “real” only exists in our minds or as a result of an institution telling us that we have achieved a new state of reality. How do you know that you’re mate-bonded to another human? You’re married. You had the ceremony and the certificate to prove it. How do you know you’ve paid your taxes this year? You filled out your 1080, and got an acknowledgement from the IRS. How do you know you’re right with God? You go to church (or mosque, or temple, or whatever). How do you know that you own a product? You pay money and get a receipt.

And so on, and so forth. These are all institutions where someone performs a ritual of some sort and receives an output — the certainty that Something Is Different. Each of these institutions rests on a foundation of orderly operation and rules.

This is one of the powers of institutions: they create a lot of the “reality” we think we live in. “Reality” in this sense means the world as we think it operates. I am married, therefore certain things are expected of me and I have certain rights and obligations. I am employed, therefore certain things are expected of me and I expect to get paid. I am a citizen, therefore I am expected to follow the law and the ideals of my nation, and in exchange I expect to be protected from many harms and have a voice in my government.

Note that none of these things exist unless we believe they do. Grind down the atoms of the universe to their finest constituent components, and you will never find any particle that corresponds to “citizens” or “obligations.” Like life itself, these are things that exist as a whole greater than the sum of its parts; unlike life, they exist purely in the conceptual realm. Without the institutions to support these concepts, they often cease to have meaning.

For example, there is no such thing as the “United States of America.” Not really. There a whole bunch of people who that the USA exists, who they are citizens, and who that those two things mean other things. They believe because the institutions that make up the operating functions of America . Without the Congress, without the courts, without the executive branch, without the elections, without the Constitution, without the laws, without the civil servants, without the involved citizens, without all the little bits that make up the USA… there is no USA. There may be something but it wouldn’t be the United States of America.

That’s the power of creating “reality.” Actions, assumptions, and understanding of the world all flow out of the operation of institutions.

The third major power of institutions is the power of surviving stupidity.

Let’s talk about procedures. I know, I know, Well, I have my reasons; they mostly boil down to the argument that just because something is boring doesn’t mean it isn’t very, very important. Procedures are one of those things.

Every institution creates standard operating procedures (SOPs), even if they don’t call them that or acknowledge them on paper. An SOP is like a default program in a computer; it’s something that is documented, understood, and is the normal action for an operation of the institution when presented with a particular stimuli. SOPs are important because they tend to represent one of two things: best practices, or traditions.

Best practices are SOPs that are most likely to give the best outcome for a particular situation, given a particular stimuli. Stop, drop, and roll is a best practice SOP for being set on fire, for example. I have no idea why this was given such importance in elementary school; neither I nor anyone I know has ever been set on fire, and yet we all remember to stop, drop, and roll.

Traditions, on the other hand, are SOPs that exist simply because that’s the way things have always been done. Traditions almost certainly started life as best practices (or at least good ideas) at some point, but have since lost whatever spark of understanding first gave them credence, and now exist simply as a way to get from point A to point B. It may not be the best way, but it probably gets the job done.

Institutions run on best practices and traditions; in fact, a huge amount of management time in any organization is focused on creating best practices, and evaluating or terminating traditions that have outlived their usefulness. And this gives an institution a very particular power — the power to be headless for a little while.

In the previous article, we talked about how individuals are important, and we made particular note of the idea that individuals give institutions their guiding direction. So what happens when there is no guiding direction? What happens when we get a numbskull in charge, or a ladder-climber who isn’t actually interested in the position but simply views it as a stepping-stone, or a corrupt leader who is more interested in the payoff than the duty? This is where SOPs come into play.

Functionally, these procedures allow institutions to continue to perform their purpose in the absence of inspired leadership and/or heroic action by members of the institution. It’s as simple as that. This is why it’s often so hard to see a difference in an institution’s actions after a change in leadership: a lot of the time, the leaders aren’t dynamic enough to change anything, or don’t need to change anything, and the work simply grinds on as per normal.

In cases where an individual in charge try to change things, it’s worth noting that an institution will try to resist the change, because change requires adjusting bunches of procedures that impact the lives of many, many people, and therefore impacts their incentive structures. Whether the change is good or bad in the long run doesn’t matter; the institution will resist regardless. In worst case scenarios, this can allow institutions to survive bumbling leadership for a while — as long as the resistance to change outlasts the leader, very few actual effects of poor leadership will manifest.

It’s also interesting to note that a lot of institutions are nothing more than an accepted procedure. Marriage has many forms, for example, depending on which religion or municipality is acknowledging the event. The overall institution of marriage is therefore a very high-level procedure by which two (or more) people commit to each other in some form or fashion. The details change, but the core purpose of the institution rests in a ritual action to confirm that commitment. This is an example of an institution that relies on other institutions for its survival.

Procedures exist so that the institution will survive no matter who is in charge or who is performing the actual work. This often creates an interesting situation where an institution’s SOPs determine a lot of its actions — it has sufficient processes in place that a stimulus kicks off a whole series of interconnected activities. This can create the perception that the institution is taking actions or making decisions on its own, without human intervention. Sometimes this is nothing more than an illusion; sometimes an institution really does become a sort of macro-organism. It often depends on the number and complexity of interconnected procedures in play.¹

Limits of Institutions

Naturally, institutions have some limits and weaknesses, and I’ll try to show them in short form here:

  • Change management: Although institutions sometimes have the appearance of macro-organism behavior, they aren’t actually sentient. Change always has to come from an individual contribution. If there are no individuals who can make the change, the institution stagnates.
  • Change resistance: No institution likes to change — there are usually too many people invested in its status quo operation to make any change an easy exercise.
  • Programmatic behavior: Because institutions often rely on processes and procedures, thinking outside the box or taking creative action is often very difficult.
  • The Iron Law of Institutions: All institutions will act first and foremost to protect themselves in their status quo condition, and only act towards their stated purpose for existence their survival is assured.
  • Bureaucratic complexity: The longer an institution exists as an organization, the more bureaucratic complexity it is likely to accrue. After a while this will make it inefficient.

Did you notice a theme there? It’s centered on the static nature of many institutions. That’s the trouble with order, you see; an orderly process is an process unless deliberate action is taken to shake things up on a fairly regular basis.

Institutions Create Culture

Let’s talk about the output of the institutions box on the Wheel: institutions tend to create the cultures in which we live. I’m using a fairly standard definition of culture here, so this shouldn’t be too shocking:

Our “culture” is nothing more and nothing less than the way in which we expect the world, or at least our piece of it, to operate. It’s as broad as the national fascination with Beyonce, as small-scale as how to flush a toilet, as intrusive as what brand of condom we buy, and as pervasive as fashion. It’s everything that makes us “us,” and not some other group of people.

Culture does not emerge from a vacuum. Institutions create it, nurture it, maintain it, and change it. The actions that they take, and the goals they promote, impact our social reality in all kinds of ways. The sum total of that impact is what we call culture.

For example, let’s talk about marriage culture. In America, we expect to get married at some point in our lives, or at least most of us do, and more particularly we have a very vision of what that action usually looks like. Why?

This isn’t a universal human understanding of mating. What we think of as “marriage” is very obviously the product of Western institutions — particularly the Church, but also numerous political institutions concerned with property rights, taxes, and broader socio-economic issues like birthrates and women’s rights. There are institutionally-traceable reasons why polygamy isn’t legal, for example.

The Western marriage ceremony is so common that we barely think about it, but consider all the assumptions that go into it:

  • The bride will probably wear a white dress.
  • The ceremony will probably be held at a church or a designated venue, or more uncommonly at a home.
  • The family is expected to attend.
  • The bride will probably have bridesmaids; the groom will probably have groomsmen.
  • The married couple or their family is expected to throw a huge, expensive party.
  • The couple will probably have a wedding registry, and if guests don’t get them gifts off the registry, they are expected to give a gift at the wedding.

And so on, and so forth. This is a cultural phenomenon that is sustained and encouraged by the various institutions of marriage. Literally thousands of venues, churches, wedding businesses, catering companies, ad agencies, film companies, and political groups exist to reinforce our current understanding of marriage and, in some cases, our economic assumptions of marriage. Every single one of these institutions is driven to this by the individuals who run them. The Wheel turns, and it produces marriage culture.

Now here’s the tricky part: institutions do not act in a vacuum. They act in an ecosystem of other institutions, many of which have competing interests, all of which are churning out actions that meet their individual masters’ needs and impact the culture. For that matter, large institutions are usually composed of smaller institutions. For example, the US Federal Government is often considered a monolithic entity, but that is laughably false — it’s an amalgamation of institutions, most of which have very little to do with one another, subsumed under the loose control of the institution of the Presidency and under the oversight of the institution of Congress.

This isn’t an a + b = c situation. It’s chaotic, unpredictable, and volatile. Institutions are important in this sense because they are the primary movers in the churn of society. If you want to , you have to … even if you’re not entirely sure what that will do.

Civil rights movements across the world have understood this point very clearly, which is why they quite often enjoy success. Desegregation changed the educational institution in America. BLM is changing policing institutions. The gay rights movement is changing the institution of marriage. The #MeToo movement is changing business and political institutions regarding sexual harassment. Some of this is happening in real time, and it’s fascinating to watch, because the lessons these groups are teaching are universally applicable.

If you want to change the world, you have to change the institutions to change the culture. Changing the culture will change the “reality” that we live in, and thereby affect how people see the world and the incentives they have to work with. That means you have to incentivize individuals who run the institutions in order to create change. We’ll get that to concept in a later article; the point here is that this is all one giant feedback loop, but you have to target particular points on the Wheel in order to achieve the results you want.

And this is why understanding institutions is a survival skill: in all likelihood, something is going on in the world that you think needs changing. Understanding the role of institutions is critical to making that change. It’s not easy. It’s not easy, because part of the point of institutions is to enshrine a particular set of actions and then deliberately make it hard to change them.

Institutions are all around us; we’re not getting away from them unless we want to go live a totally isolated life. But we shouldn’t to get away from them, because they’re how our species survives: organize, find best practices, implement them, make things happen. Forget opposable thumbs, this is the main thing that has put humanity on top of the food chain, and it behooves us to understand it. So, pay attention to institutions. They create the world in which you think you live.

Searching for truth in a world focused on belief.

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