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Institutional Systems and Their Dynamics, Including Good and Bad Transitions

The analytical institutional economics has been of enormous importance for correcting the statist bias of the mainstream economics and to direct the attention of the profession to the important problems of the real world. However, much remains to be done in every of the fours fields I have listed in the beginning of this paper, including especially the most complex one: the driving forces of various institutional transitions. However the main challenges for those who are rational believers in the institutional systems based on the extensive liberties within the framework of the rule of law, lie in organization and communication. Bad systems can unfortunately persist because of intimidation. Good systems based on freedoms and the rule of law are subject to various collectivist attacks, despite their superior performance. Only if these attacks are pushed back, can the liberal transitions be preserved and the statist ones – blocked. And this is an unending challenge for liberal forces.