Institutions in human society can evolve in two ways.
For one, transactions which start to repeat get recognized by the relevant actors as conventions. Over time these conventions may give rise to more rigid institutions. This is emergent variety of the evolution of institutions.
Secondly, someone with coercive power (generally a state but in a narrower settings can be corporate head office or military general) imposes set of rules. These rules are either accepted by the recipients or rejected. When accepted they become institutionalized. (Even when rejected there might be a counter-institution that may develop in some cases.) The question of whether these rules are imposed on account of soft paternalism or vested interests or general lunacy (or idiosyncrasy) is immaterial. The common thread is that they are imposed from outside. They may be ‘sold’ to the recipients by their proponents – and if they are, it may be with the true intent or with a façade or some combination. It is also possible that the proponents are not all on the same page regarding the intent and that fact itself drives how the rules are sold.
In either case, once an institution evolves into more rigid form, it starts to guide/restrict behavior (that is whole purpose of any institution.) Since it is the transactions arising out of the behavior that gives rise to institutions in the first place, the evolution of subsequent institutions is then affected by the combination of transactions and current institutions. This also includes the modifications in the institutions.
Thus we come to the reflexive relationship between transactions of actors and the institutions that evolve out of them and guide their subsequent evolution.
It can be likened to the interrelationship between water and the ground shaped by it. The water has some tendencies, which are inherent to it. The ground has some starting structure. The movement of water then alters the ground in some ways. The evolved structure of the ground itself starts to affect subsequent behavior of water (with the same tendencies). The structure of the ground at any given point of time is hence an outcome of a complex process of interaction between the ground and the water.
In general self-emergent institutions tend to be solving some felt need. The imposed institutions may not necessarily do so. The ideological variety on paper at least aspires to address some need. The vested interests driven one will typically find a façade of a need to address.
How real the need is and how long it lasts will have an important bearing on the success or failure of the institution. However, the strength of the sponsor of the institution also has an equally important bearing on the success. It is entirely possible that a very naturally emergent institution was so strongly opposed by a powerful opponent that it failed to evolve. Its time having gone and it being replaced by something else, it may never evolve again. (some standards in the internet space are an example). On the other hand, it is possible that some institution exists primarily because its sponsor was so powerful and purposeful. (the continued presence of autocratic governments in middle east are an example). Most of the cases will of course be of an intermediate variety. Here the success of an institution will be a combination of inherent coherence of the institution with its context, its appeal to the audience and the strength of its sponsor.
Path of evolution
The other noteworthy aspect of this phenomenon is that the path of evolution of the institutions is not unique. Since the stimuli from transactions are partially stable and partially random, it is hard to imagine that the institutional evolution is unique and will flow from the starting point of the society and the tendencies of people.
Who builds them then?
Also noteworthy is the inference that the institution building is open to vested interests, soft paternalists/ideologues and the society itself. At all times some combination of these are trying to build institutions to their ends. The vested interests have selfish ends, the ideologues/soft paternalists have ideological ends and the society itself has no stated and coordinated goals (its behavior as a collective is emergent).
Who succeeds at what times is not a foregone conclusion. In fact these forces may be allying with each other as also opposing each other from time to time.
E.g. the "Nudge" theorists are trying to work against the natural dispositions of people which are supposed to be in their bad interest. Sometimes vested interests may have a common agenda in exploiting these natural dispositions (case in point is fatty food). So we have the ideologues vs vested interests plus society. At other times, some other combination may be at loggerheads. Sometimes it might boil down to just two out of these three participants.
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