“Yet some people claim that the market system could only have resulted from deliberate action to establish social order. Even though nobody could have designed the modern global economy in all its details, there must have been a more general plan for social order, especially where the protection and enforcement of individual rights are concerned.”

Good article! However I disagree somewhat with the evolutionary model for institutions. There is a lot of truth to it in that institutions do evolve as the author claims. But sometimes major ruptures in institutions take place and I believe such a rupture was necessary for us to get to capitalism. Here’s why.

Until the16th century, the idea that the king and his nobles were above the law was ingrained in institutions. Property rights existed between members of the commoners, but not between nobility and commoners. And the nobility enjoyed little protection of property from attacks by other members of the nobility. The rupture came with the Protestant Reformation and war for independence from Spain in the late 16th century in the Netherlands which resulted in the creation of the Dutch Republic. The Dutch ended the theft practiced by the nobility and secured property rights for all individuals to a degree never seen before in Europe and probably the entire world. The resulting equality that the Dutch gave commoners shocked and outraged nobility throughout Europe, who considered such equality immoral and degrading.

There is at least some doubt that the institutions necessary for the arrival of capitalism would have been created without the Reformation. The Catholic Church had done little to rein in the nobility in spite of the official doctrine of the sanctity of property. And as cultural economists point out, institutions are largely a reflection of religious beliefs. See “Culture Matters: How Values Shape Human Progress”, edited by Lawrence E. Harrison and Samuel P. Huntington. This is especially true at a time in history when religious belief was so much more important to people than it is today. And as Harrison and Hungtington point out, that is why few institutions outside of the West and East Asia have evolved beyond the very primitive level. For example, markets in the Middle East are very different from those in the West and prevent economic development there.

I think the truth is that institutions evolve within certain ranges, but like the punctuated equilibrium concept in biological evolution, major ruptures in society must take place to raise the range of possible evolution to a higher level.

Think individually, act universally.