In the land of Agrobeeragia lives a dispersed group of sustenance farmers, all growing the same variety of crops (e.g. corn lager, barley ale, barley stout, barley porter). Over the years the families inhabiting the plots begin a tradition of trading crops and livestock when one family has better luck with a particular product and another family better luck with another. Eventually the families luck with different products convinces them to focus on those particular products, since they can trade with their neighbors for the other products, and they begin to hone their skillsets for a particular crop (or livestock). This is the first step toward development.

Later, it happens that certain people and families show particular skill with indirect products and efforts. Fred, over in plot 33A, is pretty handy with putting together a pretty sweet plough in no time at all, and his neighbors are understandably envious. They try, but can’t match Fred’s skill, so they try to barter with Fred. Bob in plot 37C is willing to part with up to six cases of corn lager (his primary IPA) in exchange for a better plough. As it happens, Fred is willing to take the time to make someone else a plough in exchange for no less than five cases of corn lager. They trade, somewhere between five and six cases of corn lager for a plough, and they’re both pretty psyched. That’s text book trade.

It doesn’t make Fred a plough-maker yet though, and the first scenario doesn’t make Fred’s ancestors barley ale farmers either. In order to become a plough-maker he needs to devote all of his vocational attention to plough-making, just as his ancestors needed to devote the bulk of their acreage and time to barley ale (far superior to corn lager, a strange vegetable indeed) to become barley ale farmers. So for Fred to become a plough-maker there have to be enough families that want to trade for one of his ploughs and, in combination, can offer him an array of goods to replace the stuff he would have grown himself. At that point he’s a plough-maker.

There’s one more part to this short story. One year the growing season just happens to suck. A lot. Families in Agrobeeragia are growing just enough to keep themselves from starving and focus all of their energies on staying alive - no new ploughs! Since that’s all Fred has devoted his time toward, he doesn’t have anything more than a small garden patch. In this story, Fred the plough-maker dies (boo hoo, sob sob, very sad indeed). There won’t be a new plough-maker unless somebody else just happens to be good at plough-making. The “plough-maker” was just a transitory title, it was never institutionalized. In order to get to that point the group has to have some way of smoothing out their crop supply so that there is always a plough-maker employed.

Of course, there is a series of all kinds of step/bottleneck combinations. That’s one simplified bottleneck of development. But I think the same kind of institutional bottleneck shows up all over the place, like IT systems adoption, public policy, “change management,” etc. Institutionalism depends on a sustained network effect.