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Australia’s economic growth and job creation have fallen well short of what is possible and desirable. This combines with spreading insecurity among Australians, which can be related to systematic deficiencies in present day institutions by which individual conduct is coordinated. This essay, therefore, restates the fundamentals of the new and rapidly spreading discipline of Institutional Economics and explains the essentials of what has come to be known as the’constitution of capitalism’. The modern economy is a complex system that evolves in ways similar to an ecological system, where one intervenes at one’s peril. Discretionary market interventions by governments and powerful groups tend to have unforeseen and harmful side effects and, if allowed to to accumulate, make the entire economic system dysfunctional.
