The Macroeconomic Flow in Social and Institutional Economics


Over the past centuries, the United States has incorporated the world economy intensely. The international transactions share in the US national economy has tripled over the past years. This is because the United States depends on the external economic developments of the country.

Unlike other high income earning countries such as Japan who have thrived in the global competition than the United States. Further, the United States allows Capitalism whereby private individuals have control over the trade and business activities of the country. Therefore, the government has no or little control over the changes in the market.

Capitalism is the best way of achieving socialism and economic freedom in a nation as well as maintaining trading activities and taxes with minimal government involvement. Further, capitalism encourages property rights, profit motives among others in the economy of a country (Lipset, 2013). However, in times of crisis, the government gets involved to maintain and enhance stability in the market. Therefore, the Government combines with the economic system to improve stability in the market and influence global markets.

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Macroeconomics and the Relationship between Social Institutions and a Society

Social institutions refer to the various establishments in a society. They include religion, family, political, education and economic institutions. These institutions act as a backbone to the community as it helps a country to achieve its fulfillment regarding academics, economists, and relationships. Macroeconomics, on the other hand, is the study of a nation’s economy and how it works. It aims at enhancing the standard of living in a country as well as its economic level and the social well-being of individuals.

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Social institutions are imperative to the structure of human society as they offer a specific part of the social life of individuals in a country. Even though each institution deals with a different aspect of life, they are interconnected in the day-to-day activities of a nation. For instance, the existence of schools relies on the funds provided by the government. So, there is a connection between politics and education systems. Further, social institutions are related to society at large. That is, they have an impact on an individual’s life through the various aspects of a community such as social stratification, culture, socialization, and deviance.

A good example showing the interrelation of social institutions to society is mostly depicted in the case of educational institutions. Most American students spend most of their time in school learning and acquiring knowledge, specialized skills and abilities (Bennett, 2012). In line with that, schools teach children to be better members of society in the future. Further, it prepares them to be responsible in the working environment concerning how they handle essential issues such as time management, punctuality, and respect to higher authorities. On the other hand, economic institutions also correlate with society by creating an environment that allows the provision and distribution of goods and services. The society’s financial institution’s nature mainly depends on government regulations on the economy and the level of technological development.

Institutions in the realm of culture and religion also relate to the society as they provide value orientations and symbolic codes to the community. Through these institutions, an organization gets to understand the economic stats of a nation. Therefore showing the relationship of society and social institutions with macroeconomics studies.

Macroeconomics and the Relationship between Social Institutions and Societal Problems

Social problems mainly arise from different social institutions, and they differ from political and scientific issues. Social issues refer to the main subjects of serious concerns such as housing problems, child-welfare problems, and Labor problems among others. Each social problem is associated with a large group of individuals who are in distress. Further, each societal problems depicts a distinctive character in its problems (Schotter, 2008). For instance in the case of housing problems, individuals find it difficult to express their embarrassment due to the insufficiency in the supply of housing facilities.

On the other hand, the premature deaths of children are common and hence becomes difficult to be viewed with complacency. With such social difficulties, a country is concerned with finding the possible solutions that will stabilize and enhance markets both locally and internationally. Thus, increasing the economic growth of a state.

The examination of social problems indicates that each social difficulty is correlated with a particular social institution. For instance, the issue of housing relates to the private property institution. Undoubtedly, it is assumed that individuals will not continue suffering on house shortages if they did not face difficulties in the private property institution. Another social problem that relates to a social institution is that of maintenance of order and power distribution in a country. This problem relates well to political institutions (Freitag and Bühlmann, 2009) Socialization of new individuals to society is also another problem connecting to the educational institution. In such a case, learners should be guided on how to treat newcomers and help them adjust to the economy of a country.

The Historical Evolution of Social Institutions

Social institutions have an origin, and two methods have been set to explain the evolution of the institutions. The first model presumes that the source of social institutions is brought about by the nature of the human mind and the refining capacity. As a result, the history of institutions run parallel to the evolution of the human brain. Another model assumes that institutions’ origination is based on a particular context on which individuals get involved in rather than on the nature and capacity of their mind. The model is flexible and specific to the background of individuals and is likely to be favorable in determining the evolution and history of social institutions. Though, the adaptation of these models mainly depends on the nature and the extent of definitions of the social institutions concerned.

On the other hand, a community is defined as an essential unit of the human social organizations in a country. Also, it’s a point of a locus for the social institutions, and therefore, it is perceived that the social institution will evolve from the various characteristics of the community at large. For a better understanding of the evolution of each social institution, it is better to create a framework that allows us to know how the structure of the community varies. Also, the context should indicate how social institutions respond to such variations in the community (MacKinnon et al., 2009). The framework used is derived from the evolutionary theory which tries to explain how certain social behaviors are related to resource and resource allocation.

In addition to that, it is noted that human communities consist of different sizes and structures concerning resource allocation and exploitation. With the varying sizes and structures in the community, the social structure of a country is shaped. As a result, various institutions arise for the different structures and social behaviors in a state. For instance, family institutions emerge from the community as all patterns of the society as a whole originate from the structure of mating and parenting. Therefore, despite its various sizes and composition, social institutions evolved from the context of the community. Social institutions developed to facilitate stability in functions and relationships between cities.

Macroeconomics and Social Institutions in a Global Context

The emergence of a global economy creates opportunities that are to be exploited by a country to enhance economic stability in the market. Macroeconomics, on the other hand, explains the various dramatic events that arise in the international economy such as the financial crises and recurrent banking that occur in different countries. Most of the explanations provided by the macroeconomics theory focus on the expectations and level of confidence of individuals in a particular country. These factors lead to the general behavior of an individual which determines the demand in the economy of the United States.

Social institutions play a vital role in identifying possible macroeconomics outcomes in the global economy. For instance, in some nations, social institutions such as politics and economics coordinate capitalism which leads to stability and productivity in the economic markets. Weak developments of social institutions depict a slower growth rate and higher volatility in macroeconomics (Chimni, 2017). Therefore, it is crucial to understand how institutions can be designed to enhance economic stability as well as business behaviors in a country. With the various factors discussed above, macroeconomics and social institutions correlate in the global context.


Social institutions govern the behaviors and expectations of each in a nation. Therefore, they are crucial in the economic development of a country due to their association with individuals. A healthy institution should guide young learners on how to be responsible for adapting to the economic life of a nation. By doing so, the economic growth of a country is likely to grow since individuals are well equipped with skills and abilities that help them deal with difficult situations in a country. Further, social institutions correlate differently with both society and its societal problems. Therefore, a state should find possible solutions to correct such problems in society. Also, macroeconomics relates to the social institutions which in turn enhances the stability and enhancement in the economic world of a country.


  1. Bennett, P. R., Lutz, A. C., & Jayaram, L. (2012). Beyond the schoolyard: The role of parenting logics, financial resources, and social institutions in the social class gap in structured activity participation. Sociology of Education, 85(2), 131-157.
  2. Chimni, B. S. (2017). International institutions today: an imperial global state in the making. In Globalization and International Organizations (pp. 41-78). Routledge.
  3. Freitag, M., & Bühlmann, M. (2009). Crafting trust: The role of political institutions in a comparative perspective. Comparative Political Studies, 42(12), 1537-1566.
  4. Lipset, S. M. (2013). Continental divide: The values and institutions of the United States and Canada. Routledge.
  5. MacKinnon, D., Cumbers, A., Pike, A., Birch, K., & McMaster, R. (2009). Evolution in economic geography: institutions, political economy, and adaptation. Economic geography, 85(2), 129-150.
  6. Schotter, A. (2008). The economic theory of social institutions. Cambridge Books.

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The Macroeconomic Flow in Social and Institutional Economics. (2021, Mar 05). Retrieved from

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