Abstract

The relationship between social development, technology, institutions and economic growth is complex and is often the subject of a branch of sociology known as socio-cultural evolution. According to this theory, all societies start as simple communities. The need to feed its members leads to organization and use of technologies. If favorable conditions are encountered, the community increases in size. The interaction between population growth and technology leads to a stage called intensification that results in resource scarcities. Ultimately it leads to the formation of institutions to manage the society and its technologies. Simple societies then evolve into more complex societies with greater political, economic and technological organizations. In this paper, we link transactions to these variables and empirically establish the law of transaction volumes. The law states that “the volume of transactions will increase with the stage of development of a society.” Even though social development is frequently taken for granted, we will first establish that there has been social progress, focusing on the U.S. between 1965-2005. Then we will show that the volume of transactions in a number of areas such as housing starts, automobile sales and credit cards has been increasing during the same period of time, thereby establishing the law.