What motivates institutions?

Several days after the Boston Marathon bombing NPR transitioned from a story about the "alleged" bomber Dzhokhar Tsarnaev into news that "the Dow Jones jumped today thanks to improved consumer confidence numbers." The juxtaposition was striking.

The thing we know for sure is described as "allegedly" true, but the conclusion that ascribes sentience to the average of 30 arbitrary stock prices carries no qualifiers at all!

The question of what motivates institutions to act is a specific form of the more general quandary of social science causation. When two or three human beings act in concert, it is quite natural to transfer our understanding of individual motivation to that of the group. But is the process scalable up to very large collections of people? Do markets have "motivations"? What about countries?

There may be no perfect answer to this question, but some social scientists do a much better job than others in presenting plausible narratives describing how people move together. This blog post, however, is inspired by a passage in a comparative politics text that features a bizarre mapping of human motivations onto institutions.

The authors note that the Industrial Revolution happened first in Great Brittian (although, for no reason I can fathom, they say "first" in quotation marks, WTF?!?!) and then describe the events that followed in other parts of the world (emphasis mine):

In Europe, France, Germany, and Russia responded to the British challenge out of fear of national backwardness and political humiliation, but did so in their own ways, and hence their developmental histories differ from Britain's and from each other's." (Kopstein and Lichbach, Comparative Politics, 2000, p. 9).

What?!? Ok, fine, different countries, different political systems, but the first half of that sentence says that countries possessed a "fear of national backwardness"? A) How would anyone know that? and B) What, exactly, were they afraid of? Literally that people would say, "Look, Germany is backward"? Who doesn't get food or shelter in backwards Germany that does get food and shelter in forwards Germany? This magical causation  goes unremarked upon in all sorts of social science endeavors.