In order for any subject to organize itself into a science, it needs to evolve clear definitions of concept, a basic philosophy, well-developed principles, and operative powers. In order for the subject to establish itself, it should also develop procedures, strategies, custom and usages. Language permits a wide variation in the use of words. But for the purpose of theoretical clarity, precise distinctions need to be made which do not exist in every day use.

The distinction proposed here between organization and institution is essential for formulating a complete theory of social development. In common usage we refer to a school or college as an educational institution. People frequently refer to the offices they work in as "our institution". At times we use the word with reference to institutions that are gross and physical and at other times with reference to things institutions that are less physical and more subtle. House and home are such words. A house is a physical building; a home is a subtle concept. School and education are equally so. A building can stand for a school, but education is a concept.

The words organization and institution are often used synonymously. While language permits this usage, theory requires that we make a clear distinction between the gross form (organization) and the more subtle form (institution). A school is an organisation; education is a national institution. Railways are an organisation; transport is an institution. Courts are organisations; law is an institution.

1. An organisation is centrally administered by authority from above moving down through a hierarchical structure.
2. An institution is not centrally administered. It is governed by values of an organization that are widely accepted and honored by individuals, such as a festival like Christmas.
3. An organisation has rules that are enforced; an institution has customs that are honored.
4. Organisation occupies the fourth place and institution the fifth place in the chain of social development that begins with an individual act and matures into social consciousness.

   Act - Activities - System - Organisation - Institution - Culture - Custom - Usage - Consciousness

5. Over the centuries an organisation matures into an institution.
6. An organisation is to be controlled; an institution is self-sustaining.
7. An organisation is partial; an institution is universal.
8. An organisation is physical; an institution is subtle.

• An army is an organisation; its traditions are subtle values.
• Elections are conducted by the government; festivals are celebrated by the people.
• Market is an organisation; trade is an institution.