Effective institutions raise the benefits of cooperative solutions or the costs of defection, to use game theoretic terms. - Douglass North

Order in the societies they describe is the result of a dense social network where people have an intimate understanding of each other and the threat of violence is a continuous force for preserving order because of its implications for other members of society.

By that time a structure of property rights had developed in the Netherlands and England which provided the incentives necessary for sustained growth. These included the inducements required to encourage innovation and the consequent industrialization. The industrial revolution was not the source of modern economic growth. It was the outcome of raising the private rate of return on developing new techniques and applying them to the production process.

Institutions are the humanly devised constraints that structure political, economic, and social interactions. They consist of both informal constraints (sanctions, taboos, customs, tradition, and code of conduct) and formal rules (constitutions, laws, property rights).