An institution is defined as collective action in control, liberation and expansion of individual action. Its forms are unorganized custom and organized going concerns. The individual action is participation in bargaining, managing and rationing transactions, which are the ultimate units of economic activity. The Control by custom or concerns consists in working rules which govern more or less what the individual can, must, or may do or not do. These are choices, resolved into performance, forbearance or avoidance while participating in transactions. The working rule of the Supreme Court is due process of law. The universal principles, that is, similarities of cause, effect, or purpose, discoverable in all transactions, are scarcity, efficiency, futurity, working rules and limiting factors under volitional control. These reveal themselves in a negotiational, or behavioristic, psychology of persuasion and coercion in bargaining transactions, command and obedience in managerial transactions, argument and pleading in rationing transactions. Transactions determine legal control, while the classical and hedonic economics was concerned with physical control. Legal control is future physical control. The three social relations implicit in translations are conflict, dependence and order. Social philosophies differ economically according to the kind of transactions which they place uppermost.
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